| 单词 | vertical integration | |||
| 释义 | vertical integrationvertical integration- The merging of companies that are within the chain of companies that handle a single item from raw material production to retail sale.
Vertical IntegrationVertical Integrationthe unification in a single technological process of all or the principal links in production and handling, from growing the agricultural products through the realization of the finished products, under control of a single center—an industrial, banking, or trade monopoly. In vertical integration all stages of production and merchandising are controlled. Vertical integration is one of the widespread phenomena of the agricultural economy of highly developed capitalist countries; it is a manifestation of the amalgamation of agriculture and industry and the subordination of farm production to large industrial and trading firms. Integrated agricultural enterprises make wide use of scientific and technical achievements in the fields of mechanization, electrification, and the application of chemistry, land reclamation, agronomy, and genetics. Vertical integration increases the subsequent growth of the concentration and centralization of production and capital in agriculture and leads to monopolization of the production and merchandising of a number of agricultural commodities; it brings monopolies huge excess profits and leads to a strengthening of their domination in agriculture. By this very effect, vertical integration sharpens social contradictions in the rural community. The most widespread form of vertical integration is the system of contracts between monopolies and large and small farmers, on the basis of which producers supply the company with a certain product. The integrating firm provides the farmer with the necessary labor and raw-material resources, consultation, and so on. By means of vertical integration monopolies completely control production and establish not only a supply quota and the prices for agricultural production but also the size of that production and its technological level. Vertical integration has developed greatly in the countries of North America, especially in the field of poultry raising, which has led to the creation of large-scale enterprises, equipped with modern technology, for the production of broiler chickens and eggs. By 1969 in the USA and Canada, over 90 percent of the poultry was produced in integrated enterprises; in the Netherlands, 90 percent; in Belgium, 70 percent; and in the Federal Republic of Germany and in France, 60 percent. Chick production in the USA is virtually completely integrated. In other branches of livestock raising, vertical integration is less developed. In 1967-68 vertical integration began to develop in the field of pork production. (In Belgium, 50 percent of pork production is integrated.) Integration is also widespread in sheep raising and in the production of canned fruits and a number of industrial crops (flax, cotton, and sugar beets). In the USA, for example, about 90 percent of the canned and frozen vegetables are obtained by plants because of vertical integration. The development of vertical integration leads to changes in the process of regeneration of capital in agriculture. The processing of agricultural production becomes the exclusive business of industry. Thus, all or almost all that is produced by agriculture assumes a commodity character and enters industry as raw material. The immediate producer—the peasant or farmer—is gradually transformed into a supplier of the respective monopolies. At first he suspends commercial activity (breaks away from the market); then he also loses his productive independence. Bourgeois economists regard vertical integration as a mutually profitable form of collaboration between the monopolies and the toiling masses of the countryside on a basis of supposedly complete equality and as a special form of the capitalist planning principle. They see in it a universal means of resolving the principal contradictions that rend agriculture in capitalist countries. In fact, however, the small farmer is caught in complete economic dependence on the monopolistic firm that integrates him. Large farms that establish associations with monopolistic firms find themselves in a different situation. They are highly productive and profitable, but the interests of the large farmers clash with the interests of the monopolistic groups in dividing the surplus value produced by their enterprises. The experience of the USA and the countries of Western Europe shows that the system of vertical integration has not led to the formation of an “organized market” and has not rid the economy of crisis phenomena. Vertical integration denotes a new step in the socialization of production while maintaining private ownership of the means of production, which sharpens the basic contradiction of capitalism. Cooperative integration (in the USA, the Netherlands, and the Scandinavian countries) is also developing. Farmers and peasants are struggling against the monopolistic character of vertical integration and for creation of a system of vertical integration on a cooperative basis. REFERENCESMartynov, V. A. Agrarnyi vopros v razvitykh kapitalisticheskikh stranakh. Moscow, 1966.Razvitye kapitalisticheskie strany: problemy sel’skogo khoziaistva. Editor in chief, Iu. P. Lisovskii. Moscow, 1969. B. P. KUZNETSOV vertical integrationintegration[in″tĕ-gra´shun]ver·ti·cal in·teg·ra·tion(vĕr'ti-kăl in'tĕ-grā'shŭn)vertical integrationVertical Integrationvertical integrationthe combining in one firm of two or more vertically related activities, as opposed to these activities being performed separately in different firms and then being synchronized through arms-length market transactions. For example, a firm engaged in assembly operations may integrate backwards (‘upstream’) to produce its own components, or forwards (‘downstream’) to distribute its products. Vertical integration may involve ORGANIC GROWTH on the part of the firm, or firms may choose to expand by MERGER with, or TAKEOVER of, established suppliers and distributors.Vertical integration may be advantageous to firms if it permits them to lower their operating costs by production savings arising from the linking of technically related processes (for example the linking together of casting and rolling operations in steel mills, and continuous motorcar assembly operations), and reduce STOCKHOLDING COSTS by a closer matching of inventory and production requirements. Vertical integration also enables firms to avoid various TRANSACTION COSTS in dealing with outside suppliers/distributors, including the costs of finding suppliers/ dealers, agreeing contract terms and conditions, and ensuring that there is strict adherence to these undertakings. Additionally, vertical integration gives firms greater security of supplies and access to customers, as well as the potential for applying competitive pressure on non-integrated rivals by depriving them of supplies/outlets (FORECLOSURE) or PRIZE SQUEEZING. On the other hand the firm may experience increasing costs because ‘captive’ transfers of inputs within the firm puts little pressure on divisions to hold costs in check while such transfers may make the firm myopic to ‘outside'buying and selling opportunities (see VERTICAL DISINTEGRATION). Moreover, there are limits to vertical integration as a growth strategy for the firm. Vertical integration ‘converts’ a variable cost (buying in the market) into a fixed investment cost (self-supply) thus increasing the firms exposure (risk) to cyclical and secular downturns in demands. The former causes profits to vary and leads to ‘ripple-on’ effects down the vertical chain thus exacerbating cash-flow problems while the latter threatens the very survival of the firm (see PRODUCT LIFE CYCLE). Vertical disintegration can help but in many cases DIVERSIFICATION may be necessary to sustain the expansion of the firm. In addition, firms' ability to expand vertically, particularly by merger and takeover, may be restricted by the OFFICE OF FAIR TRADING, because of anticompetitive effects. See MAKE OR BUY DECISION, COMPETITIVE ADVANTAGE, BUSINESS STRATEGY, TRANSFER PRICE, VALUE ADDED, VALUE ADDED CHAIN, VALUE ADDED ANALYSIS, DISTRIBUTION CHANNEL, VERTICAL MARKETING SYSTEM, INTERNALIZATION, OUTSOURCING, INTERNAL CUSTOMER, INTERNAL MARKET, COMPETITION POLICY (UK), AGENCY COSTS. vertical integrationan element of MARKET STRUCTURE in which a firm undertakes a number of successive stages in the supply of a product, as opposed to operating at only one stage (HORIZONTAL INTEGRATION). BACKWARD INTEGRATION (‘upstream’) occurs when a firm begins producing raw materials that were previously supplied to it by other firms (for example, a camera producer making glass lenses); FORWARD INTEGRATION (‘downstream’) occurs when a firm undertakes further finishing of a product, final assembly or distribution (for example, an oil company that sells petrol through its own petrol stations).From the firm's point of view, vertical integration may be advantageous because it enables the firm to reduce its production and distribution costs by linking together successive activities or because it is vital for it to secure reliable supplies of inputs or distribution outlets in order to remain competitive (see below). On the other hand, the firm may experience increasing costs because ‘captive’ transfers of inputs within the firm put little pressure on divisions to hold costs in check while such transfers may make the firm myopic to ‘outside’ buying and selling opportunities (see VERTICAL DISINTEGRATION). Moreover, there are limits to vertical integration as a growth strategy for the firm. Vertical integration ‘converts’ a variable cost (buying in the market) into a fixed investment cost (self-supply), thus increasing the firm's exposure (risk) to cyclical and secular downturns in demands. The former causes profits to vary and leads to ‘ripple-on’ effects down the vertical chain, thus exacerbating cash-flow problems, while the latter threatens the very survival of the firm (see PRODUCT LIFE CYCLE). Vertical disintegration can help, but in many cases DIVERSIFICATION may be necessary to sustain the expansion of the firm. In terms of its wider impact on the operation of market processes, vertical integration may, on the one hand, promote greater efficiency in resource use, or, on the other hand, by limiting competition, lead to a less efficient allocation of resources. Various efficiency gains may accrue through vertical integration. These include technical economies from combining together successive production processes, for example, the savings made in reheating costs by combining steel furnace operations. Stockholding economies can also arise from the reduction in intermediate contingency and buffer stocks. Vertically integrated firms can eliminate some purchasing and selling expenses in negotiating outside supply and advertising/selling contracts by internalizing these transactions within the firm (see INTERNALIZATION, ASSET SPECIFICITY, MAKE OR BUY, OUTSOURCING). Managerial economies may accrue by having a single administrative system to handle several production activities, and financial economies may accrue through more advantageous bulk-buying discounts and by lowering the cost of raising capital. Where firms achieve such efficiency gains through vertical integration, their average costs will tend to fall, thus facilitating a lowering of market prices and an increase in output. However, vertical integration can lead to higher TRANSACTION COSTS associated with larger internal organizations (e.g. higher administration costs) as well as ‘agency’ problems (see AGENCY COST). See TRANSACTION for further discussion. Where a firm already dominates one or more vertical stages, vertical integration may lead to various anti-competitive effects. Forward integration can secure a market, but it can also foreclose it to competitors; similarly, backward integration can guarantee supply sources, but it can also be used to prevent rivals gaining access to those sources. Moreover, if a firm acquires the supplier of a scarce raw material that is used by both itself and by its competitors, then it may be in a position to operate a PRICE SQUEEZE, that is, to squeeze the profit margins of its competitors by raising their costs by charging them a higher price for the raw material than the price charged for its own use, while setting a relatively low final product price. Such tactics serve not only to discipline existing competitors but also act as BARRIERS TO ENTRY to potential new competitors. Denied access to markets or materials or offered access only on disadvantageous terms, potential competitors would need to set up with the same degree of integration as existing firms, and the large initial capital requirements of such large-scale entry can be prohibitive. Thus, vertical integration may produce, simultaneously, both beneficial or detrimental effects. Under the FAIR TRADING ACT 1993, vertical integration by an established monopoly firm or a proposed MERGER between two vertically related firms (or a TAKEOVER of one by the other), involving assets in excess of £70 million, can be referred to the COMPETITION COMMISSION to determine whether or not it operates against the public interest. See also VALUE-ADDED CHAIN, VALUE-CREATED MODEL, VALUE CHAIN ANALYSIS, TRANSFER PRICE, FORECLOSURE, COMPETITION POLICY (UK), COMPETITION POLICY (EU). vertical integration
Synonyms for vertical integration
|
|||
| 随便看 |
|
英语词典包含2567994条英英释义在线翻译词条，基本涵盖了全部常用单词的英英翻译及用法，是英语学习的有利工具。