Assignment for 2.
02 Honors:
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For this assignment, you are going to research and explore the concept of vertical integration and
its effects on companies old and new.
21st Century Corporations:
● McDonalds
● Walt Disney World Corporation
● Apple
Look through your notes from
this lesson and research
Carnegie's U.S. Steel Company.
Create a chart or write one
detailed paragraph explaining
how Carnegie used vertical
integration to reduce
competition and make his
business more profitable.
Choose a current American
corporation from the list and
conduct research. Create a
chart or write one detailed
paragraph explaining how the
company uses vertical
integration to reduce
competition and make the
business more profitable.
Write one paragraph
explaining how vertical
integration affects society.
Include at least one positive
and one negative impact of
vertical integration on society.
Citations:
Andrew Carnegie owned his own steel company in which he
called the Carnegie Steel Company. His company used a system
that was called vertical integration. It reduced competition and
made his business more profitable. In order to do this, he had to
control where he was getting the raw materials as well as the
services he was using. He was then able to see where he was
getting the coal, iron, and heat to make steel by using the Bessemer
process, and make sure they were the right things. Since he was
the one controlling where he got all of his materials, he didn't have
to rely on others, which would ultimately increase the profit
margins.
Due to vertical integration, Mc Donald’s is able to have very low
prices. One way they use vertical integration is by manufacturing
foods on their own. They do not have to deal with other food
suppliers in order to get cheap prices when they just do it
themselves. They also own the land on which they place their
restaurants, which ultimately prevents them from needing to seal
with rent costs, landlords, and leasing.
Vertical integration is becoming more and more important as it
grows in building and business products. Some pros are that more
products are being produced for a low price instead of charging
high prices on just a few, and businesses ultimately have way more
control over their processes and reduce the risk of costs being
hiked up by suppliers and that they can make sure the quality of
products are up to standard. Some cons are that Companies don't
always find ways to work with each other and must come up with a
good plan as to what they want to accomplish, though it can be
difficult. Also, the maintenance and upkeep costs can be pretty
high. If one business is managing too many things at once, it can
easily become far too expensive to update buildings and
technology, which ultimately leads to labor and safety problems,
therefore making vertical integration not as profitable.
Vertical Integration - Understanding How Vertical Integration
Works (corporatefinanceinstitute.com)
Advantages and Disadvantages of Vertical Integration - My Own
Business Institute - Learn How To Start a Business (scu.edu)

McDonald’s Supply Chain Management is The Secret to Their

Success (boxaroundtheworld.com)

Carnegie and the steel industry: vertical integration -

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