Vertical Combination Case Study

A disadvantage is that the profits will have to be shared and there will be arguments on how to run the business. A solution to this problem is to split the profits in advance so there wouldn’t be a problem in the

This allows them to maximize the benefit that is seen

Horizontal integration is when one major company gains control of the smaller businesses that are manufacturing the same thing as the large company. Eventually, Rockefeller owned upwards of 90% of all of the oil companies in America. Both men transformed the way the economic market ran and forever changed the way companies accumulate

1) Andrew Carnegie used vertical integration, controlling every step in the process of manufacturing a product, dominating the market. Vertical integration is when the company owns all means of distribution from beginning to end, this makes supplies more reliable and improved efficiency. It controlled the quality of the product at all stages of production. Horizontal integration was used by John D. Rockefeller and is an act of joining or consolidating with one’s competitors to create a monopoly. In Ohio in 1870 he organized the Standard Oil Company.

1. Dodd Frank law & the implication on Hedge funds After 2011, Dodd-Frank raised the lower bound for hedge funds advisors to register with the SEC to $100 million and also put in place a new category of advisors, called mid-sized advisors. They should have regulatory assets under management between $25 million and $100 million. On the other hand, an advisor to a mid-sized hedge fund does not have to register with the SEC if he is registered with the state where his major office is based. However, an advisor to a mid-sized hedge fund is required to register with the SEC if his home state has inadequate regulation and he does not have the private fund advisor exemption.

Although taxation is an important factor to consider, non-tax incentives are normally the driving force in acquisitions. Below are five non-tax related reasons HugeCo should consider the acquisition of Bitty, Ltd. 1. The acquisition of Bitty will allow for the isolation of assets from liabilities of other ventures. This type of setup occurs often when real estate holding companies are established to own the asset used by an operating entity. The operating entity will lease the building from the holding company, therefore protecting the building from the liabilities associated with the operating company.

Andrew Carnegie used vertical integration in the steel business to great profit. His operation controlled every step of the process from mining the ore, mining the coal, shipping the ore and coal to the foundry, actually making steel from the ores, owning and operating ships and railroads to transport the raw materials and finished goods, etc. What better way to make your business profitable than to arrange for much of the money it spends to be paid to another one of your businesses? Keeps the money in the family, prevents some other company from putting the screws to you by cutting availability or raising prices, and the peripheral businesses (such as railroads and shipping) may be stronger competitors for other business because they have

6.2 Purchasing and acquiring system in MEVO Company ................................................. 33 6.3 Strategic acquiring approach in MEVO Company......................................................... 34 6.4 Purchasing (Cycle) system in MEVO Company .......................................................... 35 6.5 Purchasing capacity and acquiring division in MEVO Company............................. 36 6.6 Centralized buying procedure in MEVO Company ....................................................... 37 6.7 MEVO Company 's provider sourcing strategy................................................................. 38 6.8 MEVO Company Supplier sourcing assessment criteria.................................................... 40 6.9 Purchasing and corporate arranging in MEVO

Establishing an internal new venture: This alternative will enable the company to design and produce their own products. And will give them full control over the production and sales. But it will require more research and development efforts since this is a new market for the company. It will also be so expensive to invest in this new product line.

Vertical integration can occur through both backward and forward integration. Backward integration occurs when a parent company invests in a subsidiary that is involved with the inputs for their product, so they are moving backward through the supply chain. Anytime a company invests in a firm that produces works with extracting/refining the raw materials for their product they are participating in backward integration. A real world example of backward integration would be within the oil industry, where production subsidiaries are located in the middle east while it is then refined and marketed in western countries. The other form of vertical integration is forward integration.

Vertical and horizontal integration are an activities allowed companies to gain competitive advantages, First the vertical integration is the complain of firms at a different level of production or distribution in the same industry ,When the company distribute its work in different areas but in the same way of production like when Zara have a retailer and supplier this can help Zara to reduce the cost and improve the quality from decreasing the cost of transporting and the time that take it ,But some time it good for the company to depends on the specialized knowledge and economic of scale from another companies(4) , On the other side the horizontal integration known as the companies between the company in the same level of production or

HORIONTAL AGREEMENTS Horizontal agreements are co-operative agreements that are entered between the competitors of the same industry . The primary objective of competitors to enter into a friendly agreement is to avoid the competition and regulate the market according to its own whims and fancy. The major subject matters of these agreements relate to pricing of the product, distribution channel, selling strategies and the production channel. The competitors agree to share details of the product as well as the market that it would target.

This creates the opportunity to reap the success of what could be the next innovational product. The company objectives are to create profit no matter

Horizontal integration refers to the interconnectedness and network between different organizations, the customer, and suppliers. (See Figure 4.) It facilitates the value chain and maximizes the flow of information between different stakeholders. For instance the item can be fully customized to the buyer’s needs and also can react quickly if there is a changing level of demand, or a shortfall of inventory. The responsiveness of the firm to the changing customer needs can be an important base of competitive edge.

The strategies of diversification can include internal development of new products or markets, acquisition of a firm, alliance with a complementary company, licensing of new technologies, and distributing or importing a products line manufactured by another firm. Generally, the final strategy involves a combination of these options. This combination is determined in function of available opportunities and consistency with the objectives and the resources of the company. There are three types of diversification: concentric, horizontal, and conglomerate. 2.3.4 Concentric