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 ?
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).
of vertical disintegration, or "separation," by the regulated
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.
THE MORTGAGE BANKING INDUSTRY IS ONE OF THE MOST FASCINATING EXAMPLES OF VERTICAL DISINTEGRATION AND RECONFIGURATION IN MODERN BUSINESS HISTORY.
Vertical disintegration and the role of value networks and alliances
The purpose of this article is to discuss competitive problems caused by overintegration, and how the strategy of vertical disintegration can be used to solve those problems and thus to restore competitive advantage.
I have seen and participated in such drive to vertical disintegration in other industries, and I like Presto's first-mover position in that regards.
While the law has the potential to meet its aim through the separation of supply and retail, which could also mean lower prices, its downside is the fact that both wholesalers and retailers would seek increased margins in order to compensate for the efficiency losses from the vertical disintegration.