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72-606: TNK-BP ( Tyumenskaya Neftyanaya Kompaniya , lit.   ' Tyumen Oil Company ' ) was a major vertically integrated Russian oil company headquartered in Moscow . It was Russia's third-largest oil producer and among the ten largest private oil companies in the world. In 2013 it was acquired by Russian oil company Rosneft . DeGolyer and MacNaughton confirmed that as of 31 December 2009 TNK-BP's total proved reserves amounted to 11.667 billion barrels (1.8549 × 10 ^  m) of oil equivalent . On 1 September 2003, BP and

144-459: A $ 99 million loan and Nippon Export and Investment Insurance provided additional political risk coverage. A $ 170 million loan was provided by the syndicate of Bank of Tokyo-Mitsubishi , Crédit Agricole Indosuez , Crédit Lyonnais , Fortis Bank , and Mizuho Corporate Bank . In 2010, BP sold the plant together with its other assets in Vietnam to TNK-BP. The Phú Mỹ 4 is power plant

216-490: 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

288-565: 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

360-1284: A group of Russian businessmen represented by the AAR Consortium ( Alfa - Access - Renova ) announced the creation of TNK-BP, a strategic partnership to jointly hold their oil assets in Russia and Ukraine . AAR contributed its holdings in TNK International, ONAKO, Sidanko , Rusia Petroleum (which held licenses for the Kovykta field and the Verkhnechonsk field ), and the Rospan field in West Siberia (the New Urengoy and East Urengoy deposits). BP contributed its holdings in Sidanko, Rusia Petroleum, and its BP Moscow retail network. In January 2004, BP and AAR further agreed to incorporate AAR's 50% stake in Slavneft into TNK-BP. Slavneft, which has operations in Russia and Belarus,

432-403: 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

504-452: 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

576-522: A partial credit guarantee through IDA. The Phú Mỹ 3 is power plant is a 715 MW combined-cycle power plant with two 250 MW gas turbines and one 250 MW steam turbine. Generators were supplied and installed by Siemens . The build–operate–transfer licence was provided to BP Amoco in May 2001. The plant was fully commissioned in March 2004. The plant was operated by BP Global Power and currently

648-473: 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

720-944: A retail network of approximately 1,400 filling stations in Russia and Ukraine working under the BP and TNK brands. The company is one of the key suppliers to the Moscow retail market and is a market leader in Ukraine. One of TNK-BP's strategic goals is to expand its natural gas business. Its main gas asset in Rospan International, owned 100% by TNK-BP. Rospan is located in the Yamal-Nenets autonomous area with significant gas potential of 1.4 million barrels per day (220 × 10 ^  m/d) of oil equivalent of natural gas 3P reserves and an ability to produce 15 billion cubic meters per year. One of TNK-BP's stated long-term aims

792-809: 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

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864-497: 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

936-572: A strategic partnership on Arctic development. In March 2011 the Stockholm International Arbitration court blocked the BP-Rosneft deal as breaching TNK–BP earlier contractual arrangements. BP had previously signed a shareholding agreement with AAR, which stipulated that TNK–BP would be the primary corporate vehicle for BP's oil and gas operations in Russia. AAR's legal action and minority shareholder's claims led to

1008-505: 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

1080-451: 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

1152-416: 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

1224-468: 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

1296-533: 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

1368-458: 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

1440-432: 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

1512-459: 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

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1584-449: 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

1656-839: 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

1728-475: Is equipped by three gas turbines with output capacity of 240 MW each and with a steam turbine with output capacity of 360 MW. Its full capacity is 1,090 MW. Natural gas for the plant is supplied by Vietsovpetro . Construction of Phú Mỹ 1 started in September 1998 and the plant was commissioned in May 2000. It was built by Mitsubishi Heavy Industries and cost US$ 530 million. 85% of costs

1800-473: 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 ,

1872-587: 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

1944-410: Is operated by Sembcorp . The plant cost $ 412 million, consisting of a $ 309 million syndicated loan and $ 103 million of equity. The Asian Development Bank provided a $ 40 million loan and $ 32 million of political risk guarantees, Multilateral Investment Guarantee Agency provided $ 138 million of political risk guarantees, Japan Bank for International Cooperation provided

2016-402: 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

2088-402: 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

2160-481: 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

2232-491: 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

TNK-BP - Misplaced Pages Continue

2304-617: Is to enter into the international market. On 18 October 2010, TNK-BP and BP reached an agreement for TNK-BP to acquire BP's upstream and pipeline assets in Vietnam and Venezuela for an overall price of $ US1.8 billion. According to the terms of the agreements, in Venezuela TNK-BP will acquire from BP a 16.7% equity stake in the PetroMonagas SA extra heavy oil producer, a 40% stake in Petroperija SA which operates

2376-468: 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

2448-492: 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

2520-474: 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. ,

2592-948: The DZO field, and a 26.7% stake in Boqueron SA. In Vietnam, TNK-BP will acquire from BP a 35% stake in an upstream offshore gas production block containing the Lan Tay and Lan Do gas condensate fields, a 32.7% stake in the Nam Con Son Pipeline and Terminal, and a 33.3% stake in the Phu My 3 power plant . The company also acquired several other entities in Brazil. Thus, its oil production from international subsidiaries increased to 10% of TNK-BP's total oil production. Over 2009, despite an average decline in crude oil price of 36% year-on-year, TNK-BP generated profit of $ 5 billion. Since

2664-487: 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

2736-473: 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. ,

2808-493: 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

2880-411: 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

2952-630: The collapse of the BP-Rosneft deal in August 2011, when BP was replaced with ExxonMobil as Rosneft's strategic foreign partner in the Arctic. TNK-BP has been criticized for its Siberian oil spills. In 2012 Russia's Natural Resources Minister Yuri Trutnev announced that regulators plan to seek damages from TNK-BP as one of the biggest polluters of the Ob and Yenisei river basins in Siberia. He also recommended

TNK-BP - Misplaced Pages Continue

3024-628: The company prepare a plan for replacing its pipelines. Each year, 300,000 to 500,000 tonnes of oil and oil products are leaked into the Ob and Yenisei river basins, with TNK-BP the biggest offender. In 2011 TNK-BP reported a total 1,186 pipeline ruptures. According to TNK-BP, the company has paid $ 2.1 billion for clean-up since 2003 and has established a $ 500 million fund "to resolve the inherited environmental problems, accumulated since 1962." Vertically integrated In microeconomics , management and international political economy , vertical integration , also referred to as vertical consolidation,

3096-624: The company's corporate governance structure and future strategy. During the dispute, it was rumoured that some Western BP executives experienced visa problems, and the American CEO Robert Dudley was accused by AAR of having violated Russian laws. On 4 September 2008, the parties to the dispute signed a five-page memorandum of understanding, thus signaling the end of the disagreements. Robert Dudley stepped down from his role as CEO of TNK-BP and AAR achieved to have their President Mikhail Fridman installed as interim CEO. After

3168-417: The company's emergence in 2003, TNK-BP's profits have risen from $ 2.7 billion to $ 5.3 billion in 2009. In 2009, TNK-BP produced 12.5 billion cubic meters of associated petroleum gas with a utilization rate of 84.4%. In 2011, the company's capitalization amounted to $ 60 billion. In 2008, a corporate dispute between the major shareholders arose as BP and AAR seemed to have differing visions for

3240-399: 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

3312-738: The dispute was settled, the general consensus was that although AAR had increased its influence, BP would be happy to keep its 50% stake as TNK BP represented 24% of BP's production and 19% of total reserves in 2007. Some investors had feared BP might lose its interest in TNK-BP with only minimal compensation. Tony Hayward , BP's chief executive at the time, described the five-page memorandum as "a very sensible and pragmatic way of looking forward". In January 2010, BP and its Russian co-shareholders held their first joint media briefing to pronounce their tensions gone and TNK-BP.'s prospects bright. In January 2011, BP and Russia's state oil company, Rosneft , formed

3384-405: 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

3456-464: 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

3528-670: 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 ;

3600-556: 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

3672-493: 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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3744-411: 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

3816-455: 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. Phu My 3 power plant All power plants are fuelled by natural gas while standby fuel is distilled oil. Gas is supplied from Bạch Hổ oil field and Nam Con Son Basin 's gas fields. The Phú Mỹ 1 power plant is a combined cycle plant operated by Vietnam Electricity . It

3888-401: 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

3960-434: 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

4032-933: The other 5% floating freely on public markets. According to Rosneft's CEO Igor Sechin , no discussion had been held on a buyout of minority shareholders in TNK-BP Holding. TNK-BP is a vertically integrated oil company with a diversified upstream and downstream portfolio in Russia and Ukraine. Its upstream operations are located primarily in Siberia and Volga-Urals region. In 2009 the company (excluding its 50% share in Slavneft ) produced on average 1.69 million barrels per day (269 × 10 ^  m/d) of oil equivalent. In downstream, TNK-BP controls 675 thousand barrels per day (107.3 × 10 ^  m/d) in installed refining capacity, with principal refining assets such as Ryazan Refinery , Saratov Refinery , Nizhnevartovsk Refinery , and Lysychansk Oil Refinery . The company operates

4104-648: The past five years amounted to 139%. On 18 October 2010, TNK-BP and BP reached an agreement for TNK-BP to acquire BP's upstream and pipeline assets in Vietnam and Venezuela for an overall price of $ US1.8 billion. In October 2011, the TNK-BP agreed to acquire a 45% stake in Amazon oil exploration blocks from Brazil's HRT Participaoes  [ pt ] for $ 1 billion. On 21 March 2013, Rosneft completed acquisition of TNK-BP. Rosneft owns TNK-BP International Limited, which in turn owns 95% of TNK-BP Holding, with

4176-532: The plant is supplied by Petrovietnam . Produced electricity is sold to Vietnam Electricity. Phú Mỹ 2–2 is implemented as a 20-year build–operate–transfer project. The tender was launched in October 1997 and the agreements were signed in September 2001. First electricity was produced in February 2005 and the plant was fully commissioned in October 2005. It cost $ 400 million. The World Bank provided

4248-406: 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

4320-442: 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

4392-631: 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

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4464-506: 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 ,

4536-455: 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

4608-434: 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

4680-587: 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

4752-598: 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

4824-491: 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

4896-481: Was commissioned at the end of 2002 by Siemens. The World Bank financed extension through an IDA credit The Phú Mỹ 2–2 power plant is a 715 MW combined cycle power plant with two gas-fired turbines and an add-on steam turbine. The plant is operated by Mekong Energy Limited, a consortium of Électricité de France , Sumitomo and the Tokyo Electric Power Company . Natural gas for

4968-504: 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,

5040-403: 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

5112-487: Was financed by Japan through Overseas Economic Co-operation Fund and 15% was financed by the Vietnamese government. Phú Mỹ 2–1 power plant is a 900 MW combined cycle power plant with six units. It is operated by Vietnam Electricity. Construction of the plant started in 1995 and it was commissioned in 1997. This time it was equipped with two 144 MW gas turbines and a 160 MW steam turbine. The extension

5184-636: Was previously owned jointly by AAR and Sibneft (now Gazprom Neft ). The joint-venture was initially a 50-50 split, where both partners needed to agree on the course of future action. In 2009, TNK-BP increased production to 1.69 million barrels per day (269 × 10 ^  m/d) of oil equivalent (excluding TNK-BP's share in Slavneft production) compared to 1.642 million barrels per day (261.1 × 10 ^  m/d) of oil equivalent produced in 2008. In 2009, TNK-BP's total proved reserves replacement ratio reached 329% according to PRMS methodology (formerly known as SPE). The average SEC LOF reserve replacement ratio over

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