【正文】
considers only two petitive environment factors– relative market share and industry growth rate. ? High relative market share is no guarantee of a cost savings or petitive advantage. ? Low relative market share is not always an indicator of petitive failure or lack of profitability. ? Multifactor models such as McKinsey/GE matrix are better though imperfect. 10 Vertical Integration for a single business ? Integration backward into supplier functions ? Assures constant supply of inputs. ? Protects against price increases. ? Integration forward into distributor functions ? Assures proper disposal of outputs. ? Captures additional profits beyond activity costs. ? Integration choice is that of which valueadding activities to pete in and which are better suited for others to carry out. 11 Full and Taper Integration Full Integration Taper Integration 12 Creating Value Through Vertical Integration ? Advantages of a vertical integration strategy: ? Builds entry barriers to new petitors by denying them inputs and customers. ? Facilitates investment in efficiencyenhancing assets that solve internal mutual dependence problems. ? Protects product quality through control of input quality and distribution and service of outputs. ? Improves internal scheduling (., JIT inventory systems) responses to changes in demand. 13 Creating Value Through Vertical Integration ? Disadvantages of vertical integration ? Cost disadvantages of internal supply purchasing. ? Remaining tied to obsolescent technology. ? Aligning input and output capacities with uncertainty in market demand is difficult for integrated panies. 14 Bureaucratic Costs and the Limits of Vertical Integration ? The costs of running an anization rise with integration due to: ? The lack of an incentive for internal suppliers to reduce their operating costs. ? The lack of strategic flexibility in times of changing technology or uncertain demand. ? Bureaucratic costs reduce the value of vertical integration. 15 Alternatives to Vertical Integration: Cooperative Relationships and Strategic Outsourcing ? Shortterm contracts and petitive bidding ? Strong petitors attempt to control supplier costs with minimallength contracts. Poor treatment of suppliers raises petitor input costs. ? Strategic alliances and longterm contracting ? Longterm contracts foster cooperative relationships. ? Alliances reduce the need for vertical integration. 16 Building LongTerm Cooperative Relationships ? Hostage taking ? Both parties arrange to bee mutually dependent on each other, fostering a cooperative relationship. ? Credible mitments ? A believable mitment to support the longterm r