TCM HD will come to Verizon FiOS

To the depth of added value of companies


Since the beginning of the outsourcing debate in the 1990s, vertical integration has been viewed as an outdated organization of the value chain. The corresponding explanations are based on cost analyzes and refer to the economies of scale with horizontal integration as well as the falling transaction costs due to the development of information technology.

On the basis of an empirical analysis of the restructuring in twelve value chains from different areas, Walter J. Koch refutes this general assumption and makes it clear that it is one-sidedly oriented towards the supporting activities and production. Including the entire value chain - structured in research & development, production, marketing, wholesale, retail and customer service - he shows that vertical integration is still very attractive. The expansion of the vertical integration is primarily determined by strategic motives, while cost-oriented considerations take a back seat. The author replaces the paradigm of complete vertical integration with partial vertical integration.


Development organization outsourcing strategy vertical integration value creation value chain

About the authors

Dr. Walter J. Koch is Manager Strategy and Portfolio Management at BASF Plant Science in Limburgerhof.

Bibliographic information