Vertical integration for full outsourcing: growth and internationalization of a...

• Author(s): Ferreira, Manuel Portugal ; Armagan, Sungu ; Li, Dan
• Date: 2007
• Persistent ID: http://hdl.handle.net/10400.8/25
• Origin: IC-online
• Subject(s): Strategic outsourcing; Vertical integration; Internationalization; Case study
• Document Type: Other
• Language: English

Description

Based on a case study of a Portuguese packaging firm, this paper examines how vertical integration of the supplier serves as a vehicle for the full outsourcing of the client firms' needs in a solution that reduces transaction costs, favors specialization, and permits small and mediumsized firms to develop competencies that may be exploited in a wide array of projects. Vertical integration by the supplier (a governance decision) is a strategic response to changes in the sourcing model of the clients. Client-supplier relationships have inter-spatial and inter-temporal value that surpasses spot market exchanges.