Vertical Integration and Outsourcing

Vertical Integration and Outsourcing 5/14/18, 12:28 PM…0MTE2OTdjMDdfNl8wLnhmb3Jt.enc?course=crs12076&id=body&mode=main Page 1 of 3
Dangers of Outsourcing
While outsourcing has its advantages, it also has its dangers. There are two major dangers of outsourcing: a loss
of capabilities (particularly the capability to innovate) and a lack of control over critical assets or activities.
Dell’s experience of outsourcing the majority of components, supply chain management, and final assembly of
its computers is instructive. Although Dell’s outsourcing strategy lowered its asset base and increased its profits
in the short run, it also resulted in Dell having fewer capabilities to innovate and create competitive advantage
in the future. Dell’s market value soared to a high of $103 billion in 2005, but at the beginning of 2012, Dell’s
market value had dropped to $26 billion. One reason for Dell’s fall is the emergence of new, low-cost PC
makers such as ASUS—a competitor that Dell helped create (see Strategy in Practice: How to Prevent a
Subcontractor from Becoming a Competitor). However, and perhaps more importantly, Dell has had a difficult
time designing and building differentiated PCs, laptops, and tablets to compete effectively with Apple. More
vertically integrated than Dell, Apple makes much of the software that runs its products as well as some of the
key components. By having a larger portfolio of capabilities, Apple is better able to innovate and create new
products. Outsourcing can also be dangerous because it can lead to a loss of capabilities to do new things.
In addition to leading to a loss of innovation capabilities, outsourcing can lead to a loss of control as suppliers
that provide key inputs gain bargaining power. To illustrate, when IBM first launched a micro-computer—the
PC—it decided to outsource two of the key components of the computer: the microprocessor (to Intel) and the
operating system (to Microsoft). The microprocessor was the single most expensive component of the PC, and
the DOS operating system was the software that users had to learn in order to navigate the computer. IBM
believed that if the PC turned out to be successful, it would eventually make its own microprocessors and create
its own operating system.
Strategy in Practice How to Prevent a Subcontractor from Becoming a
Companies that outsource face a substantial challenge. They must make sure that they don’t end up creating a
competitor—which was essentially what Dell did by outsourcing so much to ASUS. What steps can companies
take to prevent this from happening?
Build barriers to imitation. One of the most important things a company can do to prevent a supplier from
becoming a competitor is to build barriers to imitation. As described in Chapter 2, a barrier to entry prevents
new entrants from easily entering a particular industry. A barrier to imitation is something that prevents
other companies from imitating what a particular company can do.
To illustrate, Nike outsources the manufacturing of its athletic shoes to subcontractors—so they know how
to make Nike-quality shoes. Why don’t these suppliers enter the athletic footwear business and compete
with Nike? The answer is that Nike has built a number of barriers to imitation that make reproduction of
their footwear difficult. The first barrier is brand. Nike’s brand is so well known that a no-name brand would
have a hard time competing, even if it is good quality. But beyond that, Nike’s shoes go through annual
design changes. This means suppliers would soon be developing shoes using “old” design technology. Of
Vertical Integration and Outsourcing 5/14/18, 12:28 PM…MTE2OTdjMDdfNl8wLnhmb3Jt.enc?course=crs12076&id=body&mode=main Page 2 of 3
course, Nike also writes contracts with suppliers that prohibit them from making shoes based on Nike’s
designs or intellectual property. These practices all make it difficult for suppliers to become a competitor to
2.Limit knowledge of the full product. Another way to stop a supplier from becoming a competitor is by
preventing the supplier from knowing everything about making a product. Some companies will outsource
some of the components of a product to suppliers but will manufacture one or more key components
internally and manage final assembly of the product internally. That way, no one supplier has all of the
knowledge necessary to easily produce a competing product.
3.Take an equity stake in the supplier. A final way to prevent a supplier from becoming a competitor—or
from becoming too powerful—is by taking an equity stake in the supplier. For example, when IBM
launched its PC, back in the early 1980s, it could have looked at its key suppliers—for example, Intel and
Microsoft—and decided to take an equity stake in those suppliers. If IBM had taken an equity stake in Intel
and Microsoft it would have given itself more control over their activities. Moreover, IBM would have at
least been rewarded for helping Intel and Microsoft grow and become powerful suppliers in the industry.
Imagine how much more successful IBM would be today if it had only thought to take a 40 percent equity
stake in Intel and Microsoft—something it could have easily done when it launched the first IBM PC.
As it turned out, IBM PCs were very successful, and so the company decided to make its own microprocessors
and operating systems. However, Intel launched the “Intel Inside” campaign, telling customers that the
microprocessor was the “heart” of the computer and alerting customers to look for “Intel Inside.” As a result,
IBM was not successful at getting customers to buy IBM PCs that didn’t have Intel chips in them. In fact, in the
halls of IBM’s headquarters, some of the executives were heard asking the question: “Who let Intel Inside?”
Many believed that IBM should have purchased Intel early on or should have launched the first PC with an
IBM-built microprocessor because it was a key input that the company should have controlled. IBM had traded
speed to market (flexibility) for control of a critical input.
In similar fashion, IBM decided that it no longer wanted to rely on Microsoft for the operating system, so it
launched its own OS/2 operating system and tried to get customers to switch. Microsoft responded with its
Windows 3 operating system. IBM’s customers were so well acquainted with Microsoft’s operating system that
they didn’t want to switch to OS/2. IBM eventually abandoned OS/2 in 2004. At the end, IBM had outsourced
the two key components that it later realized it wanted to control. Without making its own operating system or
microprocessor, IBM had few options for differentiating its PCs. IBM eventually sold off its PC division to
Chinese firm Lenovo in 2004. IBM and Dell’s experiences provide a cautionary tale for companies that choose
to outsource.
Concept Check 7.5
Vertical Integration and Outsourcing 5/14/18, 12:28 PM…MTE2OTdjMDdfNl8wLnhmb3Jt.enc?course=crs12076&id=body&mode=main Page 3 of 3
Copyright © 2018, 2016 John Wiley & Sons, Inc. All rights reserved.
Concept Check 7.5 ! ”

Call us 24/7:
Calculate your essay price
(550 words)

Approximate price: $22

23 k happy customers
9.7 out of 10 satisfaction rate
833 writers active

Real Reviews from our Customers

Academic Writing Service of a Professional Level

Any academic writer who wishes to join our team of professional writers must possess all the following qualities:


To write an exemplary academic paper, you must have good critical thinking skills, possess the proper knowledge of the discipline, and be knowledgeable about applying an academic writing style.

As such we have a rigorous recruitment process. We only collaborate with professional academic writers. We believe in offering the highest quality academic writing services. Our writers pass various grammar and academic writing tests. They have to provide documents about their personal information and credentials to prove their level of expertise.

As a result, our clients receive papers that are thoroughly-researched, properly cited, and written within academic standards. We are proud that any academic writer from our writer's team can complete the paper at a high standard.

We work with the student’s budget because we know that students are usually on a budget majority of the time. We do not compromise on quality because of low prices. On the contrary, we love to foster a good relationship with our clients. That is why we charge our clients reasonable prices, and we are willing to negotiate and work with their budget.

It may be quite disturbing to decide whether to hire an academic writing company. We care about our client’s privacy and confidentiality. We never disclose your information to third parties. We never publish your paper online. You can use our academic writing service without any fear or anxiety.

Many students struggle with writing academic papers. Some barely have time to do their assignments because of their job and family responsibilities. Others have difficulty applying critical thinking skills or meeting time or assignment requirements. Whatever the reason is, you can always have time to do the things you love and other important things. All you need is a reliable and quality academic writing service. Unfortunately, even if you strongly desire to write the paper yourself, you sometimes face unexpected challenges. As we all know, life is unpredictable! Your teacher may be unconcerned about helping students and may not answer your questions. The good news is that there is a way out! You can hire an online academic writer to help you with your assignments. All you need to do is stipulate your paper requirements in the order form, and you can spend your time as you like.

Our Mission

Our company commits towards delivering high-quality custom papers to our clients. We seek to offer reliable essay writing services to our customers in various subject areas. Our customers are very valuable to us. As such, we commit to ensuring that they derive the utmost satisfaction from the essays we deliver. We have a mission to promote our clients' educational and professional lives by providing high-quality essays for their use. We also have a mission to offer a convenient essay writing system where our customers can easily order and pay for the services. We value quality and professionalism in our company.

Get professional help from our brilliant, skilled, and experienced essay writers

We write papers on any subject area, and we also write various types of papers for various purposes. We have a team of able writers who are eager to help our customers with writing services of exceptional quality. We offer custom writing services for customers across the globe and charge affordable prices for our services. We are the best essay writing company offering personalized services to all our customers. We ensure our customers receive maximum satisfaction from the essays we deliver. Our website is the place to be if you are seeking high-quality essays.

By using our academic writing service, we match your paper subject with a writer with a degree in the subject. The writer is able to apply their skills, knowledge, and expertise to the paper. You receive an original, unique, well-research paper, properly cited and formatted. As such, you are assured of a high-quality paper.

Academic Writing Help From Professionals

Truth be told, writing assignments can be stressful and difficult for any student. There is no shame in getting academic writing help. When you search the term “get academic writing help” there are numerous sites that pop up on the results and our website is among them. So, why is it a great idea to choose us?

During your course, your instructor will assign various types of homework. Our academic writers can prepare essays, presentations, speeches, case studies, research papers, dissertations, thesis papers, and more. Our writer’s department is capable of tackling any assignment of any complexity easily. All you need is to give us detailed instructions to help our experts understand the task.After doing so, you can rest assured that everything is in control, and we will deliver a paper of unmatchable quality.

Expert Assignment Help for College/University Students

Are you a college or university student pursuing your Bachelor’s , Masters, PhD, or Doctorate degree? Sometimes juggling schoolwork with work, family and hobbies can seem like a daunting task. You have to sacrifice one or the other. The sole purpose of our website is to alleviate your academic burdens. We ensure that you do not fail in your classes and you get good grades consistently. We understand that there is a need for academic help.

We acknowledge that our clients are not dumb or lazy but only need academic life need help in order to live a balanced life and make ends meet. We make it our core priority to ensure that all assignments are done and submitted before the stipulated deadlines. All our writers are graduates. They are competent in handling the clients’ assignments. We step in to help you with any and all of your assignments. Our assignment help service ensures that you never miss a grade or deadline.

Proceed to order page

Online Academic Help With Different Subjects


Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.


Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.

Computer science

Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!


While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.


Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.


In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.


Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.


We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!


We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.


Writing a law essay may prove to be an insurmountable obstacle especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.

Affordable prices


$10 page


$13 page


$14 page

Our prices depend on the urgency of your assignment, your academic level, the course subject, and the length of the assignment. Basically, more complex assignments will cost more than simpler ones. The level of expertise is also a major determinant of the price of your assignment.

Calculate price

Cheap essay writing service

If you need professional help with completing any kind of homework, is the right place to get it. Whether you are looking for essay, coursework, research, or term paper help, or with any other assignments, it is no problem for us. At our cheap essay writing service, you can be sure to get credible academic aid for a reasonable price, as the name of our website suggests. For years, we have been providing online custom writing assistance to students from countries all over the world, including the US, the UK, Australia, Canada, Italy, New Zealand, China, and Japan.

Our cheap essay writing service has already gained a positive reputation in this business field. Understandably so, since all custom papers produced by our academic writers are individually crafted from scratch and written according to all your instructions and requirements. We offer APA, MLA, or a Chicago style paper in almost 70 disciplines. Here, you can get quality custom essays, as well as a dissertation, a research paper, or term papers for sale. Any paper will be written on time for a cheap price.

Using our cheap essay writing help is beneficial not only because of its easy access and low cost, but because of how helpful it can be to your studies. Buy custom written papers online from our academic company and we won't disappoint you with our high quality of university, college, and high school papers. Although our writing service is one of the cheapest you can find, we have been in the business long enough to learn how to maintain a balance between quality, wages, and profit. Whenever you need help with your assignment, we will be happy to assist you.

Proceed to order page

Cheap paper writing service provides high-quality essays for affordable prices

It might seem impossible to you that all custom-written essays, research papers, speeches, book reviews, and other custom task completed by our writers are both of high quality and cheap. It is surprising, but we do have some tricks to lower prices without hindering quality.

To start using our services, it’s enough to place a request like “I need a writer to do my assignment” or “Please, write an essay for me.” We have a convenient order form, which you can complete within minutes and pay for the order via a secure payment system. The support team will view it after the order form and payment is complete and then they will find an academic writer who matches your order description perfectly. Once you submit your instructions, while your order is in progress and even after its completion, our support team will monitor it to provide you with timely assistance.

Affordable essay writing service: get custom papers created by academic experts

Hiring good writers is one of the key points in providing high-quality services. That’s why we have entry tests for all applicants who want to work for us. We try to make sure all writers working for us are professionals, so when you purchase custom-written papers, they are of high quality and non-plagiarized.

Our cheap essay writing service employs only writers who have outstanding writing skills. The quality of all custom papers written by our team is important to us; that is why we are so attentive to the application process and employ only those writers who can produce great essays and other kinds of written assignments. All our writers are graduates. They are competent in handling the clients’ assignments. We step in to help you with any and all of your assignments. Our assignment help service ensures that you never miss a grade or deadline.

Plagiarism-free affordable papers

All our cheap essays are customized to meet your requirements and written from scratch. Our writers have a lot of experience with academic papers and know how to write them without plagiarism. Moreover, at our academic service, we have our own plagiarism-detection software which is designed to find similarities between completed papers and online sources. You can be sure that our custom-written papers are original and properly cited.

Our essay writing service has a 0% plagiarism tolerance. We are well aware of the dangers of plagiarism. Plagiarism is academic suicide. Our essay writing service ensures that all papers are original. We do not sell pre-written papers. All papers are written from scratch as per the instructions. We pass our papers through powerful anti-plagiarism software such as SafeAssign and TurnItIn.

Money-back guarantee

Our cheap essay writing service tries to always be at its best performance level, so each customer who pays money for paper writing can be sure that he or she will get what is wanted. On the off chance that you don’t like your order, you can request a refund and we will return the money according to our money-back guarantee.

There can be a number of reasons why you might not like your order. If we honestly don’t meet your expectations, we will issue a refund. You can also request a free revision, if there are only slight inconsistencies in your order. Your writer will make the necessary amendments free of charge. You can find out more information by visiting our revision policy and money-back guarantee pages, or by contacting our support team via online chat or phone.

On-time Delivery

We know how important any deadline is to you; that’s why everyone in our company has their tasks and perform them promptly to provide you with the required assistance on time. We even have an urgent delivery option for short essays, term papers, or research papers needed within 8 to 24 hours.

We appreciate that you have chosen our cheap essay service, and will provide you with high-quality and low-cost custom essays, research papers, term papers, speeches, book reports, and other academic assignments for sale. We beat all deadlines. We can also handle urgent orders with deadlines as short as 1 hour. Our urgent paper writing service does not compromise on quality due to the short deadline. On the contrary, our essay writers have a lot of experience which comes in handy in such situations.

24/7 support

We provide affordable writing services for students around the world. That’s why we work without a break to help you at any time, wherever you are located. Contact us for cheap writing assistance. Our impeccable customer support team will answer all your questions and help you out with any issues.

Proceed to order page
Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
error: Content is protected !!
Open chat
Need assignment help? You can contact our live agent via WhatsApp using +1 718 717 2861

Feel free to ask questions, clarifications, or discounts available when placing an order.

Order your essay today and save 30% with the discount code HACK