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, automation and robots have in-effect resulted in a far greater (proportionate) loss of jobs in the manufacturing domain.
Recent scholarship highlights the prevalence in high-technology industries of vertical disintegration, in which separate entities along a value chain transfer knowledge-intensive assets between them.
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 1.7 million employees." While Chinese authorities do possess considerable advantages in working with a government that is less prone to populist concerns or land acquisition problems, other efficient measures from eliminating cross- subsidies to staff cuts and shedding of extraneous operations have allowed Chinese Railways to grow almost exponentially.
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).
Leyshon pointed to a 'vertical disintegration' of the business, a destruction of the sector's core functions.
There are two different ways to organize the production of the improvement: the pioneer may develop an improved product in-house (vertical integration) or it may set up a separate firm, an "outsourcee", to do the job (vertical disintegration or outsourcing).
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.
One strategy was to concentrate their activities in "core competencies" (vertical disintegration), creating an opportunity for some skilled workers to create their own small startup companies.
This suggests that the growth of operating leases over time is an additional aspect of the vertical disintegration of production.

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