Vertical Integration 101
This corporate strategy occurs when a firm controls multiple stages of its industry’s value chain.
What is vertical integration?
If a coffee shop buys a coffee bean farm in Colombia, it is pursuing this strategy.
What is backward vertical integration?
This term describes self-interested behavior with guile in business transactions.
What is opportunism?
This documentary followed the failed vertical integration of American Apparel.
What is Trainwreck: The Cult of American Apparel?
This was the original mascot of Thiel College before it became the Tomcat.
What is the Huskies?
This type of vertical integration moves a firm closer to its sources of raw materials and components.
What is backward vertical integration?
If Nike opens its own retail stores instead of relying solely on Foot Locker, it is pursuing this strategy.
What is forward vertical integration?
These highly specialized assets are worth much less outside a specific exchange relationship.
What are transaction-specific investments?
This controversial founder led American Apparel until allegations and governance issues led to his removal.
Who is Dov Charney?
Thiel College is located in this Pennsylvania county.
What is Mercer?
This type of vertical integration moves a firm closer to the final customer.
What is forward vertical integration?
This juicy company uses vertical integration by designing its own chips and operating its own retail stores.
What is Apple?
The pipeline-and-refinery example illustrates this risk after one party makes specialized investments.
What is the hold-up problem?
American Apparel manufactured most of its clothing in this famously expensive U.S. city.
What is Los Angeles?
Thiel College was founded in this century.
What is the nineteenth century?
According to Barney and Hesterly, this determines how many stages of the value chain are brought within a firm’s boundaries.
What is the level of vertical integration?
Walmart’s legendary logistics system illustrates this explanation for vertical integration.
What is the capabilities explanation?
Firms often use this strategy to eliminate opportunism by bringing transactions inside the company.
What is vertical integration?
Despite controlling design, manufacturing, and retail, American Apparel filed for this in 2015.
What is bankruptcy?
This graduate program is helping one English professor become unexpectedly interested in vertical integration.
What is the MBA program?
This oil company, controlling exploration, refining, and retail gasoline stations, exemplifies extensive vertical integration.
What is ExxonMobil?
In uncertain environments, firms may prefer outsourcing or alliances to preserve this valuable strategic attribute.
What is flexibility?
Oliver Williamson won a Nobel Prize for his work on this field, which explains many integration decisions.
What is transaction cost economics?
This concept describes the organizational systems and oversight that American Apparel sorely lacked.
What is corporate governance?
This Shakespeare scholar can now explain both Hamlet and transaction-specific investments with equal enthusiasm.
Who is Jared Johnson?