Partial vertical integration

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Partial vertical integration
In this case, the holding unites a group of enterprises that, taken together, do not provide a closed production cycle, but at the same time there are partial coincidences with the production chain for the release of finished products by the holding.

Partial vertical integration of a holding is typical for the initial stages of its development and is determined by the desire of the management to include in the holding companies that have sufficient production capacity to form a closed production cycle. Implementation of full vertical integration within a holding is not always justified, since the production of final products requires a lot of material resources.

Partial vertical integration

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Partial vertical integration is malta email list used, for example, by construction holdings. In this area, it is almost impossible to develop a closed production cycle that includes stages from the production of all building materials to the construction of facilities. This is due to the large amount of total costs for organizing continuous production activities.

To produce construction materials, expensive professional equipment is often required. It is necessary not only to prepare the site, but also to establish effective management of the mechanisms. Thus, the formation of a holding company capable of ensuring the release of all the materials and devices required in construction, in fact, turns out to be impossible.

At the same time, it is worth considering that during procurement, the construction company shares a significant portion of the profit with suppliers. Also, an increase in prices for the products of suppliers is inevitable, which can be set arbitrarily. The cost of materials increases by the amount of the supplier's overhead costs, which are reimbursed by the customer company.

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Alexander Kuleshov
Alexander Kuleshov
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