Difference between revisions of "Vertical integration"
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'''Vertical integration''' is the process by which a [[corporation]] acquires related businesses in a [[supply chain]]. For example, a [[steel]] mill may acquire a smelter, a mining corporation, and a [[transport]] network. This process is also referred to as "internalization"; the famous [[economist]] [[Ronald Coase]] theorized that, ideally, a firm would internalize all possible functions, until the [[transaction cost]] of internalizing outstripped the transaction cost of doing business with an unaffiliated firm. | '''Vertical integration''' is the process by which a [[corporation]] acquires related businesses in a [[supply chain]]. For example, a [[steel]] mill may acquire a smelter, a mining corporation, and a [[transport]] network. This process is also referred to as "internalization"; the famous [[economist]] [[Ronald Coase]] theorized that, ideally, a firm would internalize all possible functions, until the [[transaction cost]] of internalizing outstripped the transaction cost of doing business with an unaffiliated firm. | ||
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Latest revision as of 21:22, July 13, 2016
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Vertical integration is the process by which a corporation acquires related businesses in a supply chain. For example, a steel mill may acquire a smelter, a mining corporation, and a transport network. This process is also referred to as "internalization"; the famous economist Ronald Coase theorized that, ideally, a firm would internalize all possible functions, until the transaction cost of internalizing outstripped the transaction cost of doing business with an unaffiliated firm.
