Strategic Management: Formulation and Implementation

Degree Of Internal Transfers

The degree of integration is the proportion of the resources transferred internally, and fully integrated firms transfer almost 100 percent of particular services or material in-house. In Figure 8-2 firms A and B are "fully integrated"; firm C is "taper integrated".

Form Of Ownership Arrangement

Figure 8-2 does not illustrate different forms of ownership. But the form of integrated ownership indicates the proportion of a firm's equity invested in a vertically linked venture, and in some environments contracts, franchises, joint ventures, or other forms of quasi-integration can be good alternatives to wholly-owned ventures.