Monday, November 30, 2009

Why are so many companies buying suppliers or distributors?

From Wall St. Journal:

3 comments:

  1. Quite a bit of distribution purchased by major manufacturers in the copier/printer industry recently.

    2006, three dominate manufacturers (Ricoh/Canon/Xerox) sold through a combination of company-owned branches, independent dealers, and national independent chains IKON, Danka and Global.

    2007, Xerox purchased Global. Ricoh/Canon lost approximately $1B distribution as Xerox stopped selling their products.
    2008, Konica-Minolta (a second tier manufacturer) purchased Danka. Canon lost roughly $400M distribution.
    2008, Ricoh purchased IKON. Canon lost roughly $400M distribution.

    There are no more national independents.

    FYI.

    Sam Shallenberger @TheMacCFO

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  2. Does anyone need to be reminded that Delphi used to be a part of GM, and was spun off in order to control GM's costs?

    What are the likely effects of reintegrating Delphi into GM on GM's costs? Any thoughts?

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  3. Several possible explanations:
    - transaction costs (particularly emanating from uncertainty regarding supply and prices)
    - concerns about buildups of valuable capabilities outside the firm's value chain
    - cheap acquisition opportunities (i.e. distressed assets)

    See more here:
    http://internationalbs.wordpress.com/2009/12/07/is-vertical-integration-sexy-again/

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