Vertical Disintegration In The Pc Industry Case Study

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Vertical Disintegration:
The division of one organization into a few, with each performing activity leading to a single completed product. Vertical disintegration occurs generally because of diseconomies of scale, which are the consequence of inefficiency because of huge size, make it more advantageous than remaining one corporation.

Vertical disintegration means dividing an industry into several segments, from upstream to downstream, with each firm concentrating on certain functions of certain segments. The firms in the segments comprise supply chains.

Vertical disintegration Features:
The operation time of each segment will be shorter than the entire supply chain and it is easy to predict, calculate and control the flow of inputs and outputs.
Each segment of firm in supply chain is more flexible and quicker to respond to the changes in external events.
Vertical disintegration can shorten the time to bring products to market.
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Competition within the industry drastically pushed prices down and threatened the company 's profit. In early 2000s, the company spun-off its manufacturing units and transformed itself from manufacture to a designer, marketer and distributor of computer products. So by following vertical disintegration company 's sales increased as company shifted to a customer service- oriented company.

Vertical Disintegration in semiconductor industry:

In semiconductor industry, vertical disintegration divides all firms in different production stages including upstream IC design, midterm IC manufacturing and downstream IC packaging and testing firms. Each firm can provide with separate public financial statements. Since each step in IC manufacturing or packaging and testing Stages is fixed with standardized machinery and equipments, the innovative activity focuses on

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