Vertical integration measn that Omega has the maximum control over the supply ch

Question

Vertical integration measn that Omega has the maximum control over the supply chain of the products from sourcing to delivering.

In vertical Integration strategy, Omega would like to have their suppliers to be themselves only so that they can control the raw material while they might look for opening the stores or tree structure for selling their product to the customers. In the vertical integration strategy they will have to look for following steps:

1. Look for Backward integration for the supply of the raw material.

2. FInd the supplier who is following the given standards for some products and deploye a Quality checking person at their premises to constantly look out for it.

3. Develope the distribution Channes through distributors

4. Select the distributors for the particular regions who will be then looking after the business

5. Develop team for handling customer complaints as we are not interacting directly when selling the products.

6. Constantly work upon the feedback from Supply chain management for the improvements and demands

Now in the Vertical integration, it is not possible to do all the things by yourself so Omega will have to ally strategicallly or partner with some branded company for the same.

In strategic alliance and partnership, following steps should be taken:

1. Identify the potential alliances for partnerships

2. See the supplier and distribution network for the strategic alliance

3. Work on the business model and profit sharing

4. Define the products that will be promoted and target segments

5. Marketing for the product

6. Customer reviews

7. Improvments on the continuous feedback for better service and product.

Explanation / Answer

INTERNATIONAL JOURNAL OF CASE STUDIES IN MANAGEMENT HEC Volume Issu June 20 Market Expansion at ems electronics Case prepared by Professor Dietmar STERNAD Michael Velmeden, managing director of ems electronics gmbh,2 headquartered in Klagenfurt, Austria, was just returning from a visit to China with a German customer in the automotive supplier industry. The customer's company had built a new facility in China for which it required the same engineering and manufacturing services for electronic components as cms electronics had previously supplied for its main production site in Europe. The Austrian electronics company had no facility in Asia, however. Velmeden therefore recommended that cms electronics manage the entire project for the customer, including the engineering, but outsource manufacturing to a local service provider. The proposed model had functioned well with another customer. Velmeden and his customer visited two factories owned by the proposed subcontractor, one in Shenzhen and the other north of Shanghai. The customer seemed impressed by the production facilities but somewhat skeptical about the idea of having his electronic manufacturing services (EMS) provider subcontract to a different service provider

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