Vertically integrated or virtual organisation, Operation Management

Vertically Integrated or Virtual Organisation

An organisation might decide not to source goods or services externally but to own the supplier company itself. For instance a media company may also own or part own a publishing house or a paper mill or a distribution company. This is known as vertical integration. There are considerable difficulties with vertical integration as it expands the breadth of competencies required by an organisation. This is very much in the opposite direction to the business excellence - operational strategy.

The alternative is horizontal integration with chains of suppliers working in harmony to create a virtual organisation. This kind of organisation may manage to supply markets which individual companies working alone could probably not achieve. It can be a long- term relationship. However, the life cycle of virtual organisations may also be brief as they serve markets where change and fluidity are common features. Their alliances form and reform to adapt to changing market behaviour. This kind of organisation may be very efficient by achieving agile and lean performance with low capital investment. There is one further strategy which operates in Japan. Keiretsu is a coalition of vertical and horizontal integration as groups of companies operate in close co-operation. These groups often incorporate their own banks and distribution network. This approach however is limited to Japan.

Posted Date: 3/15/2013 1:36:55 AM | Location : United States







Related Discussions:- Vertically integrated or virtual organisation, Assignment Help, Ask Question on Vertically integrated or virtual organisation, Get Answer, Expert's Help, Vertically integrated or virtual organisation Discussions

Write discussion on Vertically integrated or virtual organisation
Your posts are moderated
Related Questions

Why is it necessary for an organization to appraise performance formally? Describe some situations in which an organization would be wise if it did not appraise performance formall

CanGo is looking at ways to grow its business. How should they approach the decision on how to do it?

Communication - Customer Satisfaction and Service Quality Involves keeping customers informed in language they can understand and listening to them. It may mean the company ha

A manufacturing process has a fixed cost of $150,000 per month. Each unit of product being produced contains $25 worth of material and takes $45 of labour. How many units are neede

Explain the objectives of work study for any management. The objectives of work study for any management are:- a) Enhanced working processes and standard procedures. b) L

_____ is the objective under JIT and time-based competition. WIP reduction Material velocity Lead-time reduction Decreasing material wait time

A) supply node is one where the total flow into the node is less than the total flow out of the node B) A transshipment node is one where the total flow into the node equals th

Are there situations in which self-preservation is not the highest value?

How can a wireless network compensate for fading and delay?