Vertical disintegration

Under vertical disintegration is understood in the industry, the outsourcing of upstream and downstream stages of production of a product into legally independent companies with their own management. Counterpart of vertical disintegration is the vertical integration.

Motives for vertical disintegration

  • Distribution of business risk on a number of companies
  • Specialization
  • Flexibility
  • Different levels of production of
  • Faster response to changing demand by smaller units

Examples

While before the 2nd World War, the entire production stages of film productions in Hollywood were covered by some large companies have emerged after the 2nd World War, many small, specialized parts of companies.

  • Competition Theory
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