Impact of Vertical Integration

Vertical integration is a powerful, and complex business strategy that when used under the rightconditions can positively impact an organization. A company’s strategists need to understand whatdimensions of integration to use, and the best time to use it. De Beers is a company with a controversialhistory of being an anti-competitive monopoly. By strategizing into a vertical integrated company Debeers has added value to its company by not only targeting the retail, and industrial market, but also theI.T. industry. Forward and backward integration has helped organizations like De Beers maintain controlover its inputs and outputs. Rather than just buying all diamond mines, and stock piling the material inorder to control the prices, De Beers has embraced change by focusing on new emerging industries.Through vertical strategy and new ownership De Beers is turning its company around in a verycompetitive luxury industry. Organizations should be aware of the costs of vertical integration whenexploring its potential. Bureaucratic costs, and companies becoming too large and inflexible under certainenvironments can become a problem. Vertical integration is a powerful strategy, but it must always beunder scrutiny, and redesigned when the external and internal environment deems change necessary.