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Management and the Organization - Essay Example

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Management and the Organization

This paper also involves the discussion about the advantages that vertical integration brings for the business.In order to understand the concept of vertical integration, let us first examine the contrary concept of horizontal integration. The term horizontal integration implies an organization which is consolidated or merged with another (or other) businesses with similar activities and operations. An example of horizontal integration is the merger of two small schools. Both the organization has almost similar operations, aims, and methods. The merger of such organizations may bring economies of scale, reduced overhead expenses and so on. On the other hand, vertical integration is the concept which describes “the coordination or linkage of different units or stages of the production process” (Heshmat 2001, p.101). An example of such integration may be the consolidation or coordination of suppliers, manufacturers, and distributors in order to avoid the time overlap. This kind of coordination helps in maintaining the overall lifecycle and production process of a product. It helps in identifying the true worth, life, and cost of a product. Such coordination skillfully manages the production process without any delays in getting raw material from the supplier, unnecessary delays in production or unavailability of the product when the distributor or seller needs it. Hence, companies integrate vertically in order to make their business more accurate in terms of availability, quality, and costs. Vertically integrated organizations are more reliable in terms of quality as, for instance in production businesses, the integration of suppliers, manufacturers, and distributors help in maintaining the quality standards using the same quality of material every time in the production process.In conclusion, we can say that the organization may choose between the structures of the organization depending on a number of factors. These factors include but are not limited to the size, resources, and nature of the business. Some businesses adopt vertical integration approach owing to the benefits this approach may bring. However, the decision of opting for vertical, horizontal or some other approach depends on the advantages it brings and the ability to stand the disadvantages associated with it. Managers must think critically and weigh between the positive and negative outcomes of choosing any approach before applying it practically. The short term and long term benefits and loses must be accounted for before adopting any approach. A vertical integration approach is helpful in reducing costs but is difficult to manage. Hence, there is a need to carefully consider each aspect of business’s operations which are affected by vertical integration approach before adopting it. ...Show more


This essay discusses different structures, concepts and principles to stay operating in the business world. Also, the strategic decisions made by the management involve the segregation of duties, decisions about control and overall operational decision making…
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