vertical disintegration


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Vertical Disintegration

The separation of one company into several, with each performing activities leading to a single, finished product. Vertical disintegration occurs generally because diseconomies of scale, which are the result of inefficiency due to large size, make it more advantageous than remaining one corporation.

vertical disintegration

the withdrawal of a firm from a particular stage in a vertically linked production and distribution chain.

A firm which is currently vertically integrated into a number of stages may decide to exit from a particular stage for cost or strategic reasons. For example, as a result of technical advances or a change in competitive conditions, it may be cheaper for the firm to buy in materials from outside suppliers than continue to self-supply (see MAKE OR BUY); or the emergence of new distribution channels for the firm's products may remove the imperative for it to own distribution outlets. In some cases the volatility of profits in the face of cyclical downturns in demand or a long-term secular decline in demand may force a firm to reduce the size and depth of its investment in a multi-stage operation. See VERTICAL INTEGRATION, SOURCING, OUTSOURCING, DIVESTMENT, VIRTUAL CORPORATION.

vertical disintegration

the withdrawal of a firm from a particular stage in a vertically integrated production and distribution chain. A firm that is currently vertically integrated into a number of stages may decide to exit from a particular stage for cost or strategic reasons. For example, as a result of technical advances or a change in competitive conditions, it may be cheaper to buy in materials from outside suppliers than to continue to self-supply, or the emergence of new distribution channels for the firm's products may remove the imperative for it to own its own distribution outlets. In some cases, the volatility of profits in the face of cyclical downturns in demand and a long-term secular decline in demand may force a firm to reduce the size and depth of its investment in a multi-stage operation. See VERTICAL INTEGRATION, DIVESTMENT.
References in periodicals archive ?
Also, one is seeing that some vertical disintegration of the service components of manufacturing has in-effect resulted in a far greater (proportionate) loss of jobs in the manufacturing domain.
Vertical disintegration between transportation, distribution, storage, trading and end users: Parties engaged in transportation by pipeline and storage of hydrocarbons will not be able to sell hydrocarbons, LP gas, petroleum by-products and petrochemicals transported or stored in their systems, except when sale is necessary to resolve "an operational emergency, force majeure or act of God.
In sections on vigorous entry, environment, and low prices, they consider such topics as the "make or buy" decision and supply-chain governance, television and air conditioning product innovation under vertical disintegration, the role of policy and markets in the wind turbine industry's catch-up process, foreign technology introduction and market entry, and pricing reforms and the end of low energy prices.
CR has undergone major restructuring since 1999, a vertical disintegration that has separated non- core activities and cut CR staffing rosters by half, down to 1.
This increase in activity has sparked a debate over whether these mergers represent a general movement towards vertical integration, reversing several decades of outsourcing and vertical disintegration (Gross, 2006; Denning, 2009).
Globalization of production and trade has led to a vertical disintegration of transnational corporations (TNCs) and a general fragmentation of production processes across firms and countries (Gereffi et al.
Although in a quite different setting, Chen (2005) considers such a strategic effect of outsourcing or vertical disintegration.
Chief among the theories Krims adopts is an economic world-view known as "post-Fordism," which recognizes a global economy built upon flexible labor and production, vertical disintegration (outsourcing), liberalized trade, the centrality of information in production, and the increased role of regional and urban specialization (p.
Vertical disintegration is the separation of a firm's vertically related businesses into independent firms.
This suggests that the growth of operating leases over time is an additional aspect of the vertical disintegration of production.
From the Firm to Me Market: The Vertical Disintegration of Land Transport in Spain Raul Compes Lopez
THE MORTGAGE BANKING INDUSTRY IS ONE OF THE MOST FASCINATING EXAMPLES OF VERTICAL DISINTEGRATION AND RECONFIGURATION IN MODERN BUSINESS HISTORY.