1. A means of
production in which different parts of the supply chain are located in different countries. Fragmentation occurs to reduce
costs of production. For example, the least
expensive materials may be in India and the cheapest factory workers in China, while the target
retail customer is in the United States or Canada. Fragmentation can occur most easily when there is
free trade, or at least low
tariffs between all the countries on the supply chain. See also:
Globalization.
2. A situation in a decentralized
market. This often renders
investors unaware of the best
price available for their
trades, resulting in
inefficiency in the market. Fragmentation has become less of a problem with the advent of electronic
exchanges and other, similar products.