Vertical Integration Strategy and Competitive Effects:

• Main Authors: CHEN, YA-LING, 陳雅玲
• Other Authors: LEE, JI-REN
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/06450906390938949132

碩士 === 國立臺灣大學 === 國際企業學研究所 === 91 === Beverage is one of the key and essential consumer products industries. During recent years, retail channel development has achieved substantial economic success and international collaboration. With the engagement of international collaborations, which bring in abundant capital and modern retailing and distribution technologies, a significant transformation in the business channels in Taiwan has being ignited, which sequentially results in the channel revolution. Of great interest and importance is an increasing degree of forward vertical integration undertaken by major beverage manufacturers, a development which seems to render unequal competitive effects on various manufacturers. From viewpoint of resource relatedness, there shall be little economic gain due to integration between manufacturing and channel activities. Even worse scenario occurs when such forward integration induces interest conflicts with other channels and manufacturers. However, manufacturers’ forward integration may generate foreclosure effects over other manufacturers. To investigate this issue, the present thesis undertook a case-based research based on four major beverage manufacturers in Taiwan. Our research found that product line width and business dependence on channel are two prerequisites for engaging in forward vertical integration. With fully controlled, competitive channels, a manufacturer could speed up its new product launch and gain superior shelf spaces. It will create more chance to implement trade marketing campaigns to arouse consumers’ to purchase firm’s product. Hence, uplift market share and build consumers loyalty accordingly. However, channel investments did not guarantee positive financial payoff if the channel fail to achieve operational efficiencies. For those manufacturers who fail to establish competitive channels, they shall focus on managing brand effectively and creating value differentiation. To cope with its deficiencies in channel, a manufacturer could take advantage of vertical specialization and division of labor through inter-firm alliances and subcontracting. Strategic implications and suggestions to future research are discussed. Key words: Vertical Integration, Beverage Channel, Competitive Advantage