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88-512: Buick City was a massive, vertically-integrated automobile manufacturing complex in northeast Flint , Michigan , which served the Buick home plant between 1904 and 1999. In the early 1980s, after major renovations were completed to better compete with Japanese producers, the plant was renamed to "Buick City". From 1904 to its closure in 1999, Buick City was the central plant for Buick and one of General Motors' largest factories; for those years,

176-440: A gray iron foundry; after remodeling that year, it was converted to a manufacturing and assembly plant for torque converters . Factory 83/84 included 950,000 sq ft (88,000 m) of building space, divided between Buildings 11, 32, 66, and 83. Prior to 1981, it was used to manufacture front and rear axles; after the remodeling, it built "white metal" engine components, including pistons, water pumps, and manifolds. This

264-510: A monobloc . The main structure of an engine typically consists of the cylinders , coolant passages, oil galleries, crankcase, and cylinder head(s) . The first production engines of the 1880s to 1920s usually used separate components for each element, which were bolted together during engine assembly. Modern engines, however, often combine many elements into a single component to reduce production costs. The evolution from separate components to monobloc engine blocks has gradually progressed since

352-490: A factor in determining whether vertical integration is successful. There are many problems and benefits that vertical integration brings to an economic system . Problems that can stem from vertical integration can include large capital investments needed to set up and buy factories and maintain efficient profits. Rapid technology development can increase integration difficulties and further increase costs. The requirement of different business skills venturing into new portions of

440-565: A few days previously that were kept in ice remained in perfect condition. In 1924, Clarence Birdseye patented the "Birdseye Plate Froster" and established the General Seafood Corporation. In 1929, Birdseye's company and the patent were bought by Postum Cereals and Goldman Sachs Trading Corporation . It was later known as General Foods . They kept the Birdseye name, which was split into two words (Birds eye) for use as

528-403: A large share of farm receipts, formerly assumed to go to the operator's family". Under production contracts, growers raise animals owned by integrators. Farm contracts contain detailed conditions for growers, who are paid based on how efficiently they use feed, provided by the integrator, to raise the animals. The contract dictates how to construct the facilities, how to feed, house, and medicate

616-458: A location in Flint, on Hamilton between Industrial and St. John, producing 16 cars in 1903 and 37 in 1904. The plant originated with Buick before the formation of General Motors. Other elements were built by early manufacturers and suppliers like Fisher Body . General Motors was founded in 1908, including Buick, which produced 30,000 cars in Flint for 1910. After General Motors assumed operations,

704-452: A major retailer, and Essendant , a dominant wholesaler. Before a wave of deregulation at the end of 20th century, most electric utilities were vertically integrated and provided electric generation , transmission , distribution , and sales. These were not just conglomerates with a common accounting department: there was just one profit center in sales, and costs of transmission and distribution were not separated. Partial deregulation in

792-652: A monobloc design where the cylinder head, block, and half of the crankcase share the same casting. Apart from cost, one reason for this is to produce an overall lower engine height. The primary disadvantage can be that repairs become more time-consuming and impractical. An example of engines with integrated cylinder heads are the Honda GC -series and GXV-series engines, which are sometimes called "Uniblock" by Honda. Several cars with transverse engines have used an engine block consisting of an integrated transmission and crankcase. Cars that have used this arrangement include

880-631: A monobloc design with one block for all cylinders plus an integrated crankcase. In such cases, the skirts of the cylinder banks form a crankcase area of sorts, which is still often called a crankcase despite no longer being a discrete part. Using steel cylinder liners and bearing shells minimizes the effect of the relative softness of aluminium. Some engine designs use plasma transferred wire arc thermal spraying , instead of cylinder sleeves, to further reduce weight. These types of engines can also be made of compacted graphite iron , such as in some diesel engines. Some modern consumer-grade small engines use

968-452: A new 200,000 square foot manufacturing plant on the former Buick City complex. The plant's acreage became an EPA cleanup site. In August 2018, a 156,000-square-foot Lear Corporation seat manufacturing facility opened, built on 33 acres of the former Buick City site in Flint. The Buick City site occupies 412.947 acres (167.114 ha), bounded approximately by E Pierson Rd (to the north), Saginaw, North, Industrial, and Andrew/Horton (to

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1056-585: A newer facility that was scheduled to open in 1985. In response, a senior administrator wrote the Buick City business plan, which was adopted in 1982. After several updates and a US$ 350 million investment, it was christened "Buick City" in September 1985, GM's answer to Toyota City , adopting the latter's high technology, just-in-time manufacturing methods, labor-management cooperation, and inventory control. Production of Buick and Oldsmobile H-body cars

1144-473: A portion of the syndication revenues in order for a show to gain a spot on the schedule if it was produced by a studio without common ownership. In response, the studios fundamentally changed the way they made movies and did business. Lacking the financial resources and contract talent they once controlled, the studios now relied on independent producers supplying some portion of the budget in exchange for distribution rights. Certain media conglomerates may, in

1232-412: A separate crankcase. As casting techniques improved, an entire cylinder block of 4, 6, or 8 cylinders could be produced in one piece. This monobloc construction was more straightforward and more cost-effective to produce. All the cylinders and crankcase could be made in a single component for straight engine cylinder layouts. One of the early engines produced using this method is the 4-cylinder engine in

1320-809: A similar manner, own television broadcasters (either over-the-air or on cable), production companies that produce content for their networks, and also own the services that distribute their content to viewers (such as television and internet service providers). AT&T , Bell Canada , Comcast , Sky plc , and Rogers Communications are vertically integrated in such a manner—operating media subsidiaries (such as WarnerMedia , Bell Media , NBCUniversal , and Rogers Media ), and provide " triple play " services of television, internet, and phone service in some markets (such as Bell Satellite TV / Bell Internet , Rogers Cable , Xfinity , and Sky's satellite TV and internet services). Additionally, Bell and Rogers own wireless providers, Bell Mobility and Rogers Wireless , while Comcast

1408-497: A slower information processing rate, with the side effect of making the company so slow that it could not react quickly. Birds Eye did not take advantage of the growth of supermarkets until ten years after the competition did. The already-developed infrastructure did not allow Birdseye to quickly react to market changes. In order to increase profits and gain more market share, Alibaba , a China-based company, has implemented vertical integration deepening its company holdings to more than

1496-505: A supply chain. Operational routines also become more consistent and certain as the management of these firms gradually merge. Vertically integrated firms rarely need to worry about the sufficiency in their supply of materials because they generally control the facilities that provide them. A vertically integrated company also creates high barriers of entry into their respective economy, eliminating most potential competition. Implementing vertical integration can be beneficial in that it reduces

1584-451: A system in which mass production was most efficient. The model called for the manufacture of additional devices, all of which had carefully-curated designs by Ford engineers. Instead of passing these instructions and duties off to external manufacture firms, vertical integration was exercised within the corporation. This allowed for manageable division of labor, decreased costs in delay and exchange of goods, and organized updates of each firm in

1672-416: A trademark. Birdseye was paid $ 20 million for the patents and $ 2 million for the assets. Birds Eye was one of the pioneers in the frozen food industry. During these times, there was not a well-developed infrastructure to produce and sell frozen foods. Hence Birds Eye developed its own system by using vertical integration. Members of the supply chain, such as farmers and small food retailers, could not afford

1760-468: A vertically integrated strategy has helped Apple become a leading platform company; integrating their software (through APIs for third-party application developers) with their own hardware, across all the devices and services they offer. Vertical integration allows Apple to control production from beginning to end. Other companies may follow the Apple model, but may not see success for some time, both due to

1848-533: Is a form of vertical integration when purchasing departments take over the former role of wholesalers to source products. For vertical integration to succeed, managers must be able to adapt their managerial approach to compliment the changes in functional activities that their vertical shift accompanies. Managers should make sure that their firm can take advantage of existing functional knowledge through organisation, and simultaneously allow new functional knowledge to develop. However, environmental possibilities can be

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1936-458: Is a more efficient business with lower costs and more profits. On the undesirable side, when vertical expansion leads toward monopolistic control of a product or service then regulative action may be required to rectify anti-competitive behavior. Related to vertical expansion is lateral expansion , which is the growth of a business enterprise through the acquisition of similar firms, in the hope of achieving economies of scale . Vertical expansion

2024-422: Is also known as Factory 31. Building 11 was the first built under General Motors, completed in 1909 for US$ 1 million. Engine component manufacturing was moved to Factory 36 in 2004. Factory 86 encompasses Buildings 03, 04, 08, 10, 12, 16, 23, 29, 40, 44, and 94, collectively with 1,800,000 sq ft (170,000 m) of space, used for vehicle assembly, testing, and storage. Building 04, completed in 1947,

2112-432: Is also known as a vertical acquisition. Vertical expansion or acquisitions can also be used to increase sales and to gain market power. The acquisition of DirecTV by News Corporation is an example of forwarding vertical expansion or acquisition. DirecTV is a satellite TV company through which News Corporation can distribute more of its media content: news, movies, and television shows. The acquisition of NBC by Comcast

2200-459: Is an arrangement in which the supply chain of a company is integrated and owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It contrasts with horizontal integration , wherein a company produces several items that are related to one another. Vertical integration has also described management styles that bring large portions of

2288-449: Is an example of an industry in which without vertical integration, would not be able to develop efficiently. In order to implement a telecommunications system that connected cities across a nation reliably, vertical integration was called upon. This strategic move ensured that the wiring, manufacture, and management of the system was consistent and functional across a state. Apple has used the vertical integration strategy for 35 years and

2376-839: Is an example of backward vertical integration. For example, in the United States, protecting the public from communications monopolies that can be built in this way is one of the missions of the Federal Communications Commission . Scholars' findings suggest that a reduction in inefficiencies caused by the market vertical value chains, including downstream prices or double mark-up, can be negated with vertical integration. Application in more complex environments can help firms overcome market failures (markets with high transaction costs or assets specificities) Scholars also identified potential risks and boundaries which may occur under vertical integration. This includes

2464-473: Is one method of avoiding the hold-up problem . A monopoly produced through vertical integration is called a vertical monopoly : vertical in a supply chain measures a firm's distance from the final consumers; for example, a firm that sells directly to the consumers has a vertical position of 0, a firm that supplies to this firm has a vertical position of 1, and so on. Vertical integration is often closely associated with vertical expansion which, in economics ,

2552-587: Is one of the most successful companies in the technology industry. Apple centered its business strategy on its own development of integrated hardware, software, and latterly services. They design most of their products in-house, and do not allow their hardware and operating system to be licensed out, which allows the company to apply its company vision to its products. Large companies such as Apple are more likely than smaller companies to employ vertical integration, as they have more resources to manage each stage of production (e.g. major expansion and funding). Implementing

2640-402: Is partnered with Verizon Wireless for an Xfinity-branded MVNO . Similarly, Sony has media holdings through its Sony Pictures division, including film and television content, as well as television channels, but is also a manufacturer of consumer electronics that can be used to play content from itself and others, including televisions, phones, and PlayStation video game consoles. AT&T

2728-402: Is removed and a corporation has the power to control all firms in its supply chain. One benefit is that the implementation of vertical integration can yield increased profit margins or eliminate the leverage that other firms or buyers may have over the firm. It allows improved coordination between production and distribution firms and decreases the cost of exchange of goods between firms within

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2816-481: Is the first ever vertical integration where a mobile phone company and a film studio company are under same umbrella. Vertical integration through production and marketing contracts have also become the dominant model for livestock production. Currently, 90% of poultry, 69% of hogs, and 29% of cattle are contractually produced through vertical integration. The USDA supports vertical integration because it has increased food productivity. However, "... contractors receive

2904-491: Is the growth of a business enterprise through the acquisition of companies that produce the intermediate goods needed by the business or help market and distribute its product. A firm may desire such expansion to secure the supplies needed by the firm to produce its product and the market needed to sell the product. Such expansion can become undesirable from a system-wide perspective when it becomes anti-competitive and impede free competition in an open marketplace. The result

2992-468: The Bell System , Apple , the U.S. entertainment studios, the U.S. meat industry, Ford Motor Company , CVS , and Amazon demonstrate vertical merging. Other examples like Alibaba and EssilorLuxottica cover vertical integration in other nations. During a hunting trip American explorer and scientist Clarence Birdseye discovered the beneficial effects of " quick-freezing ". For example, fish caught

3080-467: The Ford Model T , introduced in 1908. The technique spread to straight-six engines and was commonly used by the mid-1920s. Up until the 1930s, most V engines retained a separate block casting for each cylinder bank, with both bolted onto a common crankcase (itself a separate casting). For economy, some engines were designed to use identical castings for each bank, left and right. A rare exception

3168-610: The Liberty L-12 engine in Flint, supporting manufacturing for military aircraft and vehicles used in World War I . By 1923, Buick had produced one million cars. Car production stopped from 1942 to 1946 as GM plants switched over to producing trucks, tanks, and aircraft; Buick specialized in making the M18 Hellcat , the fastest tank destroyer of the entire war. After World War II , when vehicle production resumed, Buick City

3256-492: The Mountain West , Great Plains , and Southeast . An economic theory is a framework that defines how a particular economic system functions. Economists develop principles in which an economy adheres to, which provides insight onto the relationships between economic events, markets, companies, and the government. In economic theory, vertical integration has been studied in the literature on incomplete contracts that

3344-722: The Pontiac Bonneville and the Buick LeSabre . Full-size sedan manufacturing was consolidated at Orion Assembly . Vehicle engines and components continued to be manufactured in the northern part of the site, renamed General Motors Powertrain Flint North , for approximately another decade; however, the remainder of Buick City was vacated by GM employees and site responsibilities were transferred to Motors Liquidation Company as of December 6, 2010. In 2013, American Cast Iron Pipe Company announced plans to construct

3432-429: The crankshaft . As with cylinder blocks, this is primarily an integrated component in modern engines. Engine blocks are typically cast from either cast iron or an aluminium alloy . Aluminium blocks are much lighter and transfer heat more effectively to coolant, but iron blocks retain some advantages, such as durability and reduced thermal expansion . Weight reductions through material selection . Presently, most of

3520-633: The engine block and cylinder heads were cast at Defiance Foundry in Defiance, Ohio and earlier at Saginaw Metal Casting Operations in Saginaw, Michigan . At the end of 1986, General Motors announced that 11 manufacturing plants would be closed by 1989; this put 35,000 of the 150,000 Flint residents out of work, and the subsequent economic toll on the community was chronicled in Michael Moore 's 1989 documentary film , Roger & Me , although

3608-474: The "Little Three", Universal Studios , Columbia Pictures , and United Artists , produced and distributed feature films but did not own theaters. The issue of vertical integration (also known as common ownership) has been the main focus of policy makers because of the possibility of anti-competitive behaviors affiliated with market influence. For example, in United States v. Paramount Pictures, Inc. ,

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3696-577: The 1940s and beyond. Elements of the 235-acre (950,000 m) complex dated from before 1904, when it was known as Flint Wagon Works ; the first manufacturing operations at the site started in 1898 after Billy Durant and Josiah Dallas Dort purchased the Imperial Wheel Company and moved its factory to the intersection of Hamilton Avenue and St. John Street (now James P. Cole Blvd). After Flint Wagon Works purchased Buick Motor Company in September 1903, Buick's operations were relocated to

3784-539: The 1966-1973 Lamborghini Miura and cars using the BMC A-series and E-series engines. This design often results in the engine and transmission sharing the same oil. Motorcycles such as the Honda CB750 use a similar layout, with the cylinder block and crankcase integrated with part of the transmission. Many farm tractor designs integrate the cylinder block, crankcase, transmission, and rear axle into

3872-487: The Supreme Court ordered the five vertically integrated studios to sell off their theater chains and all trade practices were prohibited ( United States v. Paramount Pictures , Inc., 1948). The prevalence of vertical integration wholly predetermined the relationships between both studios and networks and modified criteria in financing. Networks began arranging content initiated by commonly owned studios and stipulated

3960-473: The U.S. The vertical merge allowed CVS-Aetna to regulate more of the healthcare and delivery chain and gave them the ability to provide higher quality care to consumers. One of the most significant advantages to this integration is the reduction in costs for healthcare. Amazon.com has been criticized for being anti-competitive as both an owner and participant of its dominant online marketplace. In office products, Sycamore Partners owns both Staples, Inc. ,

4048-493: The US in 1978 ( PURPA ) forced the utilities to buy electricity outside if the rates were competitive; this gave rise to independent power producers . The other deviation from the vertical integration model were local distribution companies in some towns and regions. In the US 250 vertically integrated companies provided 85% of electrical generation. As of 2022, this "public utility" model was still utilized in some US states, mostly in

4136-411: The animals, and how to handle manure and dispose of carcasses. Generally, the contract also shields the integrator from liability. Jim Hightower , in his book, Eat Your Heart Out , discusses this liability role enacted by large food companies. He finds that in many cases of agricultural vertical integration, the integrator ( food company ) denies the farmer the right of entrepreneurship. This means that

4224-400: The backbone of the cylinder wall. Additional sleeves are inserted within, which remain "dry" outside, surrounded by the block's material. For either wet or dry liner designs, the liners (or sleeves) can be replaced, potentially allowing an engine overhaul or rebuild without replacing the block itself. However, there are more practical repair options. The crankcase is the structure that houses

4312-447: The closure of Buick City would not start until a decade after the film was released. Citing declining sedan sales, General Motors announced in 1997 the Buick City plant would close; the last day of vehicle assembly plant operations was June 29, 1999. That same year, Buick City won J. D. Power's Platinum Award for assembly plant quality. As of 2016, it is the only General Motors plant to win the award. The final cars built at Buick City were

4400-399: The cost of entering the market and taking on the currently successful incumbent, but also by innovating their products to make them more appealing in the marketplace than the current incumbent. Vertical integration requires a company to focus not only on its core business, but also on several difficult areas such as sourcing materials and manufacturing partners, distribution, and finally selling

4488-405: The distance that separates the suppliers and customers from the resources or information, which can then boost profits and efficiency. There are internal and external society-wide gains and losses stemming from vertical integration, which vary according to the state of technology in the industries involved, roughly corresponding to the stages of the industry lifecycle. Static technology represents

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4576-464: The e-commerce platform. Alibaba has built its leadership in the market by gradually acquiring complementary companies in a variety of industries including delivery and payments. One of the earliest, largest and most famous examples of vertical integration was the Carnegie Steel company. The company controlled not only the mills where the steel was made, but also the mines where the iron ore

4664-461: The earliest decades of internal combustion engine development, cylinders were usually cast individually, so cylinder blocks were usually produced separately for each cylinder. Following that, engines began to combine two or three cylinders into a single-cylinder block, with an engine combining several of these cylinder blocks. In early engines with multiple cylinder banks – such as V6 , V8 , or flat-6 engines – each bank

4752-442: The early 20th century. The integration of elements has relied on the development of foundry and machining techniques. For example, a practical, low-cost V8 engine was not feasible until Ford developed the methods used to build its flathead V8 engine . Other manufacturers then applied those techniques to their engines. A cylinder block is a structure that contains the cylinder , plus any cylinder sleeves and coolant passages. In

4840-676: The engine block, taking into account the particular needs of the material. An engine where all the cylinders share a common block is called a monobloc engine . Most modern engines use a monobloc design, and few have a separate block for each cylinder. This has led to the term "engine block," which usually implies a monobloc design, with "monobloc" rarely used. In the early years of the internal combustion engine, casting technology couldn't produce large castings with complex internal cores (for water jackets etc). Most early engines, particularly those with more than four cylinders, had their cylinders cast as pairs or triplets of cylinders, then bolted to

4928-438: The engine blocks in mass production are gray castings. Reducing weight has resulted in using aluminum-silicon alloys more frequently for the engine block in small-displacement engines. Engine blocks of comparable design, but using Al-Si alloys, are not lighter than cast iron engine blocks in the same ratio as that for the specific weights of the materials. In engine blocks made of gray cast iron, weight can be reduced by optimizing

5016-416: The engine's coolant. In other words, the liner is the entire cylinder wall, rather than merely a sleeve. The advantages of wet liners are a lower mass, reduced space requirements, and coolant being heated faster from a cold start, reducing start-up fuel consumption and heating the car cabin sooner. Dry liner cylinder blocks use either the block's material or a discrete liner inserted into the block to form

5104-670: The entire value chain, but do not do everything in-house (e.g. assembly of iPhones by manufacturing partner Foxconn ). From the early 1920s through the early 1950s, the American motion picture had evolved into an industry controlled by a few companies, a condition known as a "mature oligopoly ", as it was led by eight major film studios , the most powerful of which were the "Big Five" studios: MGM , Warner Brothers , 20th Century Fox , Paramount Pictures , and RKO . These studios were fully integrated, not only producing and distributing films, but also operating their own movie theaters ;

5192-639: The factory was expanded to accommodate the manufacturing and assembly of Buick vehicles and components. For more than 80 years, it was Buick's "home plant" and built the majority of models in the lineup. By 1915, the Durant/Dort Carriage Company had ceased operations, including the Imperial Wheel Works division; its buildings, near the northeast corner of Industrial and Hamilton, were incorporated into Buick, which started expanding north. In 1918, Buick switched production to

5280-556: The farmer can only sell under and to the integrator. These restrictions on specified growth, Hightower argues, strips the selling and producing power of the farmer. The producer is ultimately limited by the established standards of the integrator. Yet, at the same time, the integrator still keeps the responsibility connected to the farmer. Hightower sees this as ownership without reliability. Under marketing contracts, growers agree in advance to sell their animals to integrators under an agreed price system. Generally, these contracts shield

5368-493: The fuel to company-owned retail stations, for sale to consumers. Standard Oil is a famous example of both horizontal and vertical integration, combining extraction, transport, refinement, wholesale distribution, and retail sales at company-owned gas stations. Telephone companies in most of the 20th century, especially the largest (the Bell System ) were integrated, making their own telephones , telephone cables , telephone exchange equipment and other supplies. The Bell System

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5456-411: The high cost of equipment, so Birdseye provided it to them. Until now, Birds Eye has faded slowly because they have fixed costs associated with vertical integration, such as property, plants, and equipment that cannot be reduced significantly when production needs decrease. The Birds Eye company used vertical integration to create a larger organization structure with more levels of command. This produced

5544-402: The incomplete contracting setup. In these extended models, vertical integration can sometimes be optimal even if only the seller has to make an investment decision. Engine block The term "cylinder block" is often used interchangeably with "engine block". However, technically, the block of a modern engine (i.e., multiple cylinders integrated with another component) would be classified as

5632-401: The integrator from liability for the grower's actions and the only negotiable item is a price. In the United States new automobiles can not be sold at dealerships owned by the same company that produced them but are protected by state franchise laws. Ford Motor Company vertically integrated due to high demand for their Model T automobile. With the development of Model T, the company required

5720-618: The majority of Buick automobiles were produced at Buick City. The original factory at one time was the largest in the world, consisting of 24 separate buildings contributing to the manufacturing process, until 1928 when the Ford River Rouge Complex was completed and began operations. In the beginning, all components were manufactured in one location, to include wheel bearings , nuts, bolts, and screws, to transmissions , suspension components, wheels and interior components. Operations were carried out in this fashion well into

5808-434: The now merged company. Within healthcare systems, horizontal integration is generally much more prominent. However, in the United States, major vertical mergers have included CVS Health 's purchase of Aetna , and Cigna 's purchase of Express Scripts . The integration of CVS Health and Aetna resulted in the combination of one of the nation's largest health insurance companies with a pharmaceutical company seen all across

5896-406: The potential competitor, the enhancements to horizontal collusion, and development of barriers to entry. However, it is still debated over if vertical integration expected efficiencies can lead to competitive harm to the market. Some conclude that in many cases that the efficiencies outweigh the potential risks. Contrary to horizontal integration , which is a consolidation of many firms that handle

5984-442: The product. Another major success of Apple's, is the forward integration with their retail stores, allowing them to sell their products directly to customers (helping customers to buy and use Apple's products and services), additionally helping them to control the prices of their products, and thus to maintain high-profit margins when they do. Apple is also known as one of the world's leading "orchestrators" as they exert control over

6072-631: The same part of the production process, vertical integration is typified by one firm engaged in different parts of production (e.g., growing raw materials, manufacturing, transporting, marketing, and/or retailing ). Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers. The differences depend on where the firm is placed in the order of the supply chain. There are three varieties of vertical integration: backward (upstream) vertical integration, forward (downstream) vertical integration, and balanced (both upstream and downstream) vertical integration. Disintermediation

6160-506: The simplest case, where the gains and losses have been studied extensively. A vertically integrated company usually fails when transactions within the market are too risky or the contracts to support these risks are too costly to administer, such as frequent transactions and a small number of buyers and sellers. The following are several case studies of vertical integration in play. Many examples center around American industries, where major companies like General Foods, Carnegie Steel Company ,

6248-455: The steel processes to the next generation. Oil companies , both multinational (such as ExxonMobil , Shell , ConocoPhillips or BP ) and national (e.g., Petronas ) often adopt a vertically integrated structure, meaning that they are active along the entire supply chain from locating deposits , drilling and extracting crude oil , transporting it around the world, refining it into petroleum products such as petrol/gasoline , to distributing

6336-463: The structure and thin-wall casting. With this casting technique, a wall thickness of as little as about 3 mm is generally possible. In comparison, the walls of cast iron engine blocks are usually from 4.0 to 5.5 mm thick. Using vermicular graphite cast iron (GGV), a casting material with great strength, enables weight reductions by about 30% compared to conventional casting materials such as GG 25. Weight reduction, to this extent, requires engineering for

6424-434: The supply chain can be challenging for the firm. Another problem that may stem from vertical integration is the collapse of goals among the various firms in a supply chain. With each firm operating under different systems, integration may cause initial problems in management and production. Vertical integration also proves to be dangerous when monopolistic problems arise in a capitalistic economy. When this happens, competition

6512-511: The supply chain not only under a common ownership but also into one corporation (as in the 1920s when the Ford River Rouge Complex began making much of its own steel rather than buying it from suppliers). Vertical integration can be desirable because it secures supplies needed by the firm to produce its product and the market needed to sell the product, but it can become undesirable when a firm's actions become anti-competitive and impede free competition in an open marketplace. Vertical integration

6600-598: The supply chain. Vertical integration enabled Ford Motor Company to be self-regulating and self-sufficient. EssilorLuxottica , the company that merged with Essilor and Luxottica , occupies up to 30% of the global market share as well as representing billions of pairs of lenses and frames sold annually. Before the merger, Luxottica also owned 80% of the market share of companies that produce corrective and protective eyewear as well as owning many retailers, optical departments at Target and Sears , and key eye insurance groups, such as EyeMed , many of which are already part of

6688-491: The two parties will negotiate tomorrow about how to divide the returns of the investments. Since the owner is in a better bargaining position, he will have stronger incentives to invest. Hence, whether vertical integration is desirable or not depends on whose investments are more important. Hart's theory has been extended by several authors. For instance, DeMeza and Lockwood (1998) have studied different bargaining games, while Schmitz (2006) has introduced asymmetric information into

6776-560: The west), E Hamilton Ave (to the south), and CSX Railroad and James P Cole Blvd (to the east). It is divided into the Northend (north of Leith) and Southend (south of Leith). Automobile manufacturing activities in the Southend ceased in 1999 and the buildings were demolished by 2002; the Northend continued manufacturing automotive parts and components until 2010, and most buildings there were demolished by 2012. Building 01, built in 1968,

6864-982: Was a three-story building with approximately 300,000 sq ft (28,000 m) of floor space, used solely as an administration building with no manufacturing operations. Factory 03 encompassed Building 30 and its annexes (30A, 30B, 30C, 30D, 30E, and 30F), approximately 205,000 sq ft (19,000 m) in total, used to manufacture coil springs. Factory 05 was Building 43, with approximately 650,000 sq ft (60,000 m) of floor space used for manufacturing transmission components. Building 07 housed three fossil-fired boilers (coal or natural gas) to generate process steam and compressed air for site operations. Each boiler produced up to 400,000 lb/h (180,000 kg/h) of steam at 200 psi (1,400 kPa) [gage]. It had approximately 170,000 sq ft (16,000 m) of floor area. Factory 10 encompasses Buildings 20, 22, and 24; Building 20 had approximately 700,000 sq ft (65,000 m) of floor area and

6952-504: Was developed by Oliver Hart and his coauthors. Consider a seller of an intermediate product that is used by a buyer to produce a final product. The intermediate product can only be produced with the help of specific physical assets (e.g., machines, buildings). Should the buyer own the assets (vertical integration) or should the seller own the assets (non-integration)? Suppose that today the parties have to make relationship-specific investments. Since today complete contracts cannot be written,

7040-403: Was extracted, the coal mines that supplied the coal , the ships that transported the iron ore and the railroads that transported the coal to the factory, the coke ovens where the coal was coked, etc. The company focused heavily on developing talent internally from the bottom up, rather than importing it from other companies. Later, Carnegie established an institute of higher learning to teach

7128-432: Was scheduled to commence at Buick City for the 1986 model year. The Buick City concept represented a successful attempt by General Motors to compete with Japanese manufacturers; the 1989 Buick LeSabre built in Buick City was the top-ranked car in the J.D. Power and Associates customer satisfaction survey for that year; it was the first American built car to appear on the list. For the engine assembly plant (Factory 36),

7216-765: Was the Lancia 22½° narrow-angle V12 of 1919, which used a single block casting combining both banks. The Ford flathead V8  – introduced in 1932 – represented a significant development in the production of affordable V engines. It was the first V8 engine with a single-engine block casting, putting a V8 into an affordable car for the first time. The communal water jacket of monobloc designs permitted closer spacing between cylinders. The monobloc design approach also improved engines' torsional rigidity as cylinder numbers, engine lengths, and power ratings increased. Most engine blocks today, except some unusual V or radial engines and large marine engines, use

7304-838: Was the body shop, where underbody assembly and body panel manufacturing was carried out. Factory 94 encompasses 650,000 sq ft (60,000 m) of total area in Buildings 17, 28, and 84; it was used for engine and drivetrain development and testing. Buildings 28 and 84 were used for GM Powertrain V-6 Engineering. The Old 97s 2001 album Satellite Rides features the track "Buick City Complex". 43°2′52.81″N 83°41′5.41″W  /  43.0480028°N 83.6848361°W  / 43.0480028; -83.6848361 Vertically-integrated In microeconomics , management and international political economy , vertical integration , also referred to as vertical consolidation,

7392-401: Was the primary location where all components were created, with knock-down kits distributed to assembly plants in major metropolitan US cities, where the vehicles were locally assembled and distributed in their respective regions. Buick built rear-wheel drive A-body Regals , B-body LeSabres , and C-body Electras at the Flint campus; however, GM considered moving vehicle production to

7480-405: Was typically made of one or multiple separate cylinder blocks. Since the 1930s, mass production methods have developed to allow both banks of cylinders to be integrated into the same cylinder block. Wet liner cylinder blocks use cylinder walls that are entirely removable and fit into the block using special gaskets. They are called "wet liners" because their outer sides come in direct contact with

7568-466: Was used as an aluminum foundry during World War II, then as the Dynaflow transmission assembly plant. These buildings collectively had approximately 225,000 sq ft (20,900 m) of space and were used for site facilities engineering, maintenance and construction, and Powertrain laboratories. Factory (Building) 36 had approximately 1,100,000 sq ft (100,000 m) of floor area and

7656-461: Was used for final assembly, with 435,000 sq ft (40,400 m) of space; Building 16 also was used for final assembly, with 194,000 sq ft (18,000 m) of space. Building 44 was the paint shop, with 113,000 sq ft (10,500 m) of space, completed in 1977. Building 08 was completed in 1972 and used for final car preparation. Building 40 was used for wheel and tire assembly and storage for blemished body parts. Building 12

7744-444: Was used for machining, assembly, and testing of vehicle engines and engine components. Building 38 had slightly more than 200,000 sq ft (19,000 m) of floor area and was used as a warehouse for vehicle engines and engine parts, Product Evaluation Program car cleaning, and light vehicle repair. Factory 81 encompassed Buildings 69, 70, 71, 72, 73, and 74 along with their respective annexes. Prior to 1981, these were used as

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