Also before reading the article, I believed that if a company went to a vertical or horizontal structure, they stayed there. With using an IBM example again, the company was challenged by Apple Computer. IBM quickly moved from a vertical to a horizontal structure. Now the IBM computer wasn’t the most dominant, the IBM compatible computer was. I learned that a company may switch from horizontal to vertical and back to horizontal, and so on. Modular industry and supply chain structures tend to create fierce, commodity like competition within individual niches. This is a reason they could be short-lived.
Forces that typically weaken a vertical structure and move toward a horizontal structure are as follows: relentless entry of niche competitors hoping to pick off discrete industry segments; the challenge of keeping ahead of the competition across the many dimensions of technology and markets required by an integral system; the bureaucratic and organizational rigidities that often settle upon large, established companies. There are also forces that push toward more vertical integration after being horizontal, and they include: technical advances in one subsystem can make that... [continues]
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