Tapered Integration Framework
Integrate partially to balance benefits and costs
Tapered integration involves partial integration to balance the benefits of integration with the costs and risks.
- Partial integration can balance benefits and costs
- Tapered integration can reduce risks and costs while achieving some benefits
- Firms must consider the degree of integration needs and costs when deciding on tapered integration
- Assess Integration NeedsEvaluate the level of integration needs and the potential benefits and costs.Pro tipConsider the industry's competitive landscape and the firm's position within itWarningIgnoring integration needs can lead to poor decisions
- Evaluate Tapered Integration BenefitsWeigh the potential benefits of tapered integration, including reduced costs and risks, and improved bargaining power.Pro tipConsider the firm's ability to achieve benefits through partial integrationWarningOverestimating benefits can lead to poor decisions
- Consider Alternative StrategiesEvaluate alternative strategies, such as full integration or no integration, to achieve similar benefits.Pro tipConsider the risks and costs associated with each strategyWarningIgnoring alternative strategies can lead to suboptimal decisions
Major Automobile Companies
The major automobile companies have used tapered integration to achieve benefits while reducing costs and risks.
OutcomeSuccessful integration
Ignoring Integration Needs
Failing to assess integration needs can lead to poor decisions
Overestimating Benefits
Overestimating the benefits of tapered integration can lead to poor decisions
Ignoring Alternative Strategies
Failing to consider alternative strategies can lead to suboptimal decisions
Companies like the major automobile companies and international oil companies have successfully used tapered integration to achieve benefits while reducing costs and risks.
Source · BOOK
Competitive Strategy