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Vertical integration is often closely associated with vertical expansion which, in economics, is the growth of a business enterprise through the acquisition of companies that produce the intermediate goods needed by the business or help market and distribute its product.
Backward Integration This is a process by which a company acquires another company that produces the raw material or the ancillaries which are used by the former. This type of takeover guarantees, to a certain extent, an uninterrupted supply of raw materials and components at fair prices. Bear Hug It is used in takeover situations. It is an ...
Tapered integration is a term from organization theory that refers to a mix of vertical integration and market exchange. [1] Upstream, a producer might manufacture some of the input itself and buy the remaining portion from independent firms.
A vertical merger occurs when two firms combine across the value chain, such as when a firm buys a former supplier (backward integration) or a former customer (forward integration). When there is no strategic relatedness between an acquiring firm and its target, this is called a conglomerate merger (Douma & Schreuder, 2013). [14]
The Tupolev Tu-4, a Soviet bomber built by reverse engineering captured Boeing B-29 Superfortresses. Reverse engineering (also known as backwards engineering or back engineering) is a process or method through which one attempts to understand through deductive reasoning how a previously made device, process, system, or piece of software accomplishes a task with very little (if any) insight ...
Hence the strategy profile in which the entrant enters and the incumbent accommodates if the entrant enters is a Nash equilibrium consistent with backward induction. However, if the incumbent is going to fight, the best response for the entrant is to not enter, and if the entrant does not enter, it does not matter what the incumbent chooses to ...
Horizontal integration is the process of a company increasing production of goods or services at the same level of the value chain, in the same industry. A company may do this via internal expansion or through mergers and acquisitions .
The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion ...