Vertical Integration vs. Outsourcing “Following the Crowd”

7050 Words29 Pages
Vertical Integration vs. Outsourcing
“Following the Crowd”

Collaboration issues in an SCM context

Table of Content

1. Thesis and Introduction
1.1 Thesis
1.2 Purpose
1.3 Introduction into the topic

2. Logical Problems and Sub-questions

3. Methodology and Justification of Sections

4. Literature Review
4.1 Literature Concerning the Terminology
4.2 Literature Concerning the Main Theories of Outsourcing and Vertical Integration and the Examples of Carnegie Steel Company and Nike
4.2.1 Literature Concerning Vertical Integration and Carnegie Steel Company
4.2.2 Literature Concerning Outsourcing and Nike

5. Vertical Integration
5.1 The Concept
5.1.1 Introduction into
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It is at first hand not understandable why many companies proceed in such an irrational way although their goal should be profit-maximization especially today where most markets are commodity markets and cost advantages are low (Christopher, Ch.1). Companies in the pre-outsourcing time used to be very successful in profit terms and the change in strategic policy must have more reasons than just an increased flexibility to compensate the “abdicated” advantages.

(1.3) Introduction into the Topic

At the end of the 19th century and the beginning of the 20th century almost every market in the world was a seller’s market providing the companies with an extensive power since the customers’ demand for goods was almost always higher than the manufacturers could supply (M. Christopher, Logistics and SCM, Ch. 10, p. 287). This fruitful condition helped several companies that possessed a small know-how advantage to grow at unbelievable growth rates compared to today. Responsible to a small extent is the fact that there was no need for big advertisement campaigns entailing high advertising costs, but especially the fact that those companies had an immense competitive advantage compared to smaller rivals. They possessed an advantage on economies

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