see the attachment

Article: Franck T. Rothaermal, Michela A. Hitt, (2006), Balancing Vertical integration and
Strategic outsourcing: Effects on product portfolio, product success and firm performance,
Strategic Management Journal Strat. Mgmt. J., 27: 1033–1056 (2006)
Summary:
According to the author, the taper integration occurs when the firm integrates backward or
forward and relies on outsiders for a portion of their supplies and distribution. Successful
organizations often abandon their concentration strategies due to market saturation, excess
resources that they need to find a use for, or some other reason. Through internal ventures,
mergers and acquisitions, or joint ventures, they pursue businesses outside their core business
areas. Corporate strategy typically evolves from concentration to some form of vertical
integration or diversification of products, functions served, markets, or technologies. Vertical
integration is important for the company so as to improve of the supply chain management
aspect of the company.
Discussion:
It is often useful to analyze changes in industry structure in terms of the movement from a
primarily vertical to a more horizontal structure, or vice versa; changes in the degree of industry
concentration; and increases or decreases in the degree of product differentiation. Vertical
integration is likely to become an important business strategy once again when economics of
scale and scope become more critical to competitive success and a principal driver behind
another round of industry consolidation.
Recommendations:
Concept 1: Value chain:
Recommendation 1: Incorporation of vertical scope
Vertical scope decisions focuses on how a company links its value chain activities vertically.
This is an important aspect in the value chain which needs to be taken care of.
Support:
Vertical scope helps in attaining competitive edge and managing its value chain.
Implementation:
To capitalize on the advantages that scale and scope can bring, companies must make related
investments to create global marketing and...