LEARNING OBJECTIVES:

• Understand vertical integration as a continuum from make to buy rather than as a binary choice.
• Explain why channel players (manufacturers, wholesalers, retailers) often integrate forward or backward with great expectations, only to divest themselves within a few years.
• Frame vertical integration decisions according to whether owning the channel, or some of its functions, improves long-term returns on investment.
• Recognize why outsourcing should be the base case for a market channel, rather than vertical integration.
• Define six categories of company-specific capabilities.