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Tim McDermott

Strategic Management



- they are active in every step of the supply chain from locating crude oil deposits, drilling and extracting crude, transporting it around the world, refining it into products, and distributing the fuel to company-owned gas stations, where customers can buy the gas from the company that drilled it.

Apple Inc.

- The company designs the computer hardware, accessories, operating system and much of the software itself. The company ahs recently established high quality retail centers. This helps them cntrol their image and marketing as well.



+ lower transaction costs

+ able to monopolize market

+ lower uncertainty

+ increase investment

- Higher monetary and organizational costs of switching to other suppliers/buyers

- As techonolgy changes rapidly, vertically integrated companies must constantly invest in updated infrastructure to keep up with competition. This is very costly

2) An example of a companies value chain that has been outsourced is Apple's computer manufacturing department. They have decided to do this because it is cheper and more efficient for them. Instead of hiring and training employees to assemble these computers, Apple can ship their plans and parts over to a company that's core compentency is assembling and manufacturing computers. Apple therefore cuts down on agency cost by not hiring excess employees, and by sticking to the parts of th ebusiness they specialize in.




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