The Priorities of Development of Vertically Integrated Structures

Abstract

Ways of attainment of the competitiveness are different for each enterprise, but, at the same time, they have a mutual feature, i.e. anenterprise cannot become a competitive one without the implementation of strategic plans of its development. Despite the diversity ofstrategies enterprises frequently choose the strategy of external increase, which includes a type such as the vertical integration strategy.A purpose of the research is the determination of the main priorities of development of vertically integrated structures and theexamination of the main directions of enhancement of their efficiency.The vertically integrated structures creating the complete technological cycle “production — processing — realization” is the mosteffective and adjusted to modern conditions of the market economy.The application of vertical integration enables to overcome the apartness of producers of raw materials and processing companies,trade and other companies, to eliminate the competition between producers and distributors of products of the same type. All of thisis very important for the formation of the single price policy. Moreover, the application of vertical integration allows the optimizationof prices and conditions of production and distribution of products, taking into consideration the application of damping policyregarding the foreign competitors. Due to the creation of vertically integrated structures a system of taxation of final products maybe put in order. Simultaneously, the practice of double or triple taxation in the process of movement of products from suppliers ofraw materials to processing and distribution companies is eliminated.The incentive reason of the vertical integration is, firstly, the savings in transactional costs related to, in particular, the preparationand drawing up a treaty. The decrease of transactional costs also occurs in the process of usage of highly specialized resources,since the market of these assets is factually monopolized, and a company-producer deals with the uncertainty regarding the timelydelivery of such resources.The vertically integrated structures is an important element of the company development, which enables to significantly decreasecosts for additional legal aspects of a commercial activity, to save resources, to enhance the quality of a finished product due to thedeeper specialization of some treads of a structure, and to completely detect the economic potential of a state. The advantages ofthese integrations together with the incentive reasons of vertical integration create a synergic interconnection, which prevent disproportionsof production and provide a maximally possible income under the high quality of products.