Management Theory and Studies for Rural Business and Infrastructure Development, Volume 36, Number 3

The expediency of vertical integration: synergy approach arguments

Vasyl Shukalovych

Abstract

Deciding on vertical integration is caused by the need to increase the company's competitiveness in the market. At the same time, under conditions of intense transformation processes in the market environment, the choice of organizational strategy is very complicated. This requires the development of recommendations on its feasibility taking into account the stage of market evolution. Accordingly, the aim of the work is the definition of expediency of vertical integration by use methodological
instruments of synergetic approach. Results of the study were obtained using a methodology that includes theoretical synchronization of synergy tools and economic phenomena at the macro and micro level; simulative modeling stages of development of the market system which includes parameters of the value added, value of enterprises, number of enterprises; forming conclusions based on a comparison of probability estimates. As a result, it is determined that vertical integration is more doomed to success in conditions close to the stability of the market, rather than in terms of active transformations on it.

JEL Code – D23.

Keyword(s): attractor, chaos, market system, synergy, vertical integration


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DOI: http://dx.doi.org/10.15544/mts.2014.059

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Management Theory and Studies for Rural Business and Infrastructure Development eISSN 2345-0355

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