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Ziwo Agricultural Service Co. Ltd.: Vertical Integration
內容大綱
Ziwo Agricultural Service Co. Ltd. (Ziwo), located in the city of Shenyang in Liaoning Province in northeastern China, was a market leader in sales of agricultural materials. In 2006, China began changing how cropland was distributed and used. Over the next few years, decentralized, small farm households gave way to larger, more centralized, family farms. The change undermined Ziwo’s business, driving it into a sharp decline in market share and income from 2008 to 2011.<br><br>In December 2011, the company considered integrating the supply chain vertically to survive the decline. Was this move necessary, and if so, which direction should the vertical integration strategy take—forward or backward? How could Ziwo even achieve vertical integration under its current circumstances? Finally, would vertical integration help Ziwo deal with an emerging threat from Chinese Internet retailers that were entering the agricultural supply chain?
學習目標
This case is intended for graduate or postgraduate courses in supply chain management. It deals with vertical integration in an agricultural supply chain in China. The case gives students an opportunity to apply vertical integration theory and understand the following:<ul><li>The forces that drive vertical integration: external pressures and potential benefits.</li><li>The types of vertical integration—forward and backward integration—and conditions for their use.</li><li>Two approaches to vertical integration—vertical financial ownership and vertical contract—and factors that influence their use.</li></ul>