Question

Why is a vertical integration strategy more appropriate in some industries and not in others

Answer 1

Vertical integration highlights the fact that the company has control over the end product as well as the parts which make the end product. Apple has been in business and has mastered the art of managing its vertical integration quite well. However the same factors may not prove beneficial for every company like Apple.

Taking the example of Microsoft Corp.

The factors which may prove beneficial for Microsoft in its vertical integration:

• Imitation of parts of Apple’s integration strategies
• The alignment between the OS and end product i.e. laptops and mobiles may prove favorable for the vertical integration

The factors which may become bane for Microsoft in its vertical integration:

• The lack of rich experience in implementation of the vertical integration
• The ecosystem is not binding Microsoft strategies together and may prove bad for the company eventually