{"id":47402,"date":"2023-10-20T15:53:34","date_gmt":"2023-10-20T15:53:34","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/the-dark-side-of-vertical-integration-startupsmart\/"},"modified":"2023-10-20T15:53:34","modified_gmt":"2023-10-20T15:53:34","slug":"the-dark-side-of-vertical-integration-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/the-dark-side-of-vertical-integration-startupsmart\/","title":{"rendered":"The dark side of vertical integration – StartupSmart"},"content":{"rendered":"
Recently, your humble correspondent looked at vertically integrated companies<\/a>.<\/p>\n <\/p>\n But if you\u2019re just starting a business, the chances are you will \u2013 at least initially \u2013 be focused on a single stage of production, dealing with companies that are far more vertically integrated than you are.<\/p>\n <\/p>\n Well, as Old Taskmaster says, business is war. The dark side of vertical integration comes when someone else tries to take your businesses out of the supply chain.<\/p>\n <\/p>\n It happens. Just think about all the small businesses that supplied specialty foods to Coles and Woolies, only to find their lines deleted and a generic product taking their shelf space at $1 per litre.<\/p>\n <\/p>\n Or, for that matter, the local servo owners who used their local supermarket as a supplier of their convenience store, only to find a shiny new Coles Express or Woolworths Plus Petrol opening down the road.<\/p>\n <\/p>\n In theory, the ACCC should do something about it when it happens. In practice, Australia\u2019s competition watchdog is more of a chihuahua.<\/p>\n <\/p>\n On the other hand, Apple seems to be doing just fine, despite the fact its vertically integrated arch-rival (Samsung) also supplies a number of key iPhone components, including the processor and display<\/a>.<\/p>\n <\/p>\n And it\u2019s not the first time Apple has found itself in such a predicament. Way back when Steve Jobs and Steve Wozniak were in their parent\u2019s garage, guess who the supplier was for the main processor in the original Apple I and Apple II computers?<\/p>\n <\/p>\n It wasn\u2019t Intel. Nor was it Motorola. And ARM didn\u2019t exist yet.<\/p>\n <\/p>\n