The Vertical Integration Strategies Approach for Organizational Risk Reduction

Abstract

The vertical integration decision poses strategic
challenges for a firm’s marketing channels’
decision prerogatives which drive its business
strategy. This paper explicates those putative
benefits of vertical integration as organizational
strategy adopted by firms for alleviating
respective transaction costs and optimizing
functional governances of the business system in
the enterprise. The discourse concentrates on the
dynamics of the varied vertical integration
mechanisms like joint ventures, mergers, and
contracting agreements practiced by firms to
serve as risk reduction strategies in the business
exchange process.