...local bakeries. Mcdonalds builts its own bakeries. When Mcdonald decided to operate in Russia, it found that local suppliers lacked thecapability to produce ingredients of the quality it demanded. The firm was forced to vertically integrate through the local food industry on a heroic scale,importing tomatoe seeds and bull semen and indirectly managing dairy farms,cattle ranches and vegetable plots. I t also had to construct the world largest food processing plant at a huge cost.,in South America. Mcdonalds also bought huge ranches in Argentina to raise its own cattle. As a result today, Mcdonald’s is able to use vertical integration to protect product quality and reduce its global cost structure. Review: Madonald is a global food chain. The firm experience decrease in sales. So they determine the problem and solve it with strategic planning by Vertical Integration. Vertical integration is a company is entering new industries to support the business model of its “core” industry,the one that primary source of its competitive advantage and profitability. The model that justifies the pursuit of vertical integration is based on a company entering industries that add value to its core products because this increases product differentiation and/or lower its cost structure,thus increasing its profitability. Article II: Toyotas Goal: A...
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