Bridgestone Tire Company Limited is the producer of tire and rubber that was established in 1931 by Shojiro Ishibashi with the aim of making it a global enterprise and establishing Bridgestone as the most superior brand in both name and substance (Bridgestone , 2018). As of now, the company has about 180 production and development bases across 26 countries to ensure business presence in more than 150 countries (Bridgestone, 2018). The total sales of the company in 2017 was 3,031.9 billion yen out of which about 80% was from sales of tires for while remaining 20% was from its diversified products (Bridgestone, 2018).
Vertical integration involves expanding the firm’s range of value chain activities backward into sources of supply of forward towards end users (Gamble, Petaraf, & Thompson, 2015). If we look at Bridgestone’s website, we can see that the company’s operation includes production of tires and tubes for passenger cars, trucks and buses, construction and mining, vehicles, industrial machinery, agricultural machinery, aircrafts, motorcycles and scooters and other manufacturing parts, retreading materials and services, automotive repair and maintenance services and acquisition of materials for tires and other products. This shows that the company is involved in development, manufacturing, marketing and distribution of tires (Bridgestone, 2018). Thus, the company is vertically integrated.
The acquisition of The Firestone Tire and Rubber Company, establishment of progressive system in research and development and establishment of technical centers for chemical and industrial products show that it has chosen to enter in multiple segments of vertical chain. The company is building a business that looks from sourcing of raw materials to sale of final products by deploying its extensive resources globally. The company is dedicated on creating systems that will be capable of supplying customers with high quality products and services as efficiently as possible. The company is working on strengthening the supply chain by making sure that the every step from product planning and business development to acquisition of raw materials to procurement of equipment are done following the company policies. So, the company is paying detail attention on each aspect of value chain.
The 180 bases located in 26 countries has helped it reduce the transportation cost and taxes associated with transportation of raw materials and finished goods. The in house production of raw materials has helped in better supply of those materials at competitive price resulting in enhanced production. These serves as the benefits of vertical integration for Bridgestone. The vertical integration also has some liabilities to the organization as well that includes maintaining the quality of raw materials used in production, maintaining safety in the production process and ensuring the quality of finished goods are as per the set standard.
Vertical integration can be crucial to survival and growth of business while extensive integration may sometimes lead to business failure (Buzzell, 1983). Bridgestone’s vertical integration is working well for the organization but it needs to pay attention to ensuring quality, meet the set standards and adapting sustainable practices.
References
Bridgestone . (2018). A Global Dream . Retrieved from Corporate History.
Bridgestone. (2018). About Bridgestone . Retrieved from bridgestone.com/
Gamble, J. E., Petaraf, M. A., & Thompson, A. A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage (Fourth ed.). New York: McGraw Hill Education.
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Bridgestone Tire Company Limited is the producer of tire and rubber that was established in 1931 by Shojiro Ishibashi with the aim of making it a global enterprise and establishing Bridgestone as the most superior brand in both name and substance (Bridgestone , 2018). As of now, the company has about 180 production and development bases across 26 countries to ensure business presence in more than 150 countries (Bridgestone, 2018). The total sales of the company in 2017 was 3,031.9 billion yen out of which about 80% was from sales of tires for while remaining 20% was from its diversified products (Bridgestone, 2018).
Vertical integration involves expanding the firm’s range of value chain activities backward into sources of supply of forward towards end users (Gamble, Petaraf, & Thompson, 2015). If we look at Bridgestone’s website, we can see that the company’s operation includes production of tires and tubes for passenger cars, trucks and buses, construction and mining, vehicles, industrial machinery, agricultural machinery, aircrafts, motorcycles and scooters and other manufacturing parts, retreading materials and services, automotive repair and maintenance services and acquisition of materials for tires and other products. This shows that the company is involved in development, manufacturing, marketing and distribution of tires (Bridgestone, 2018). Thus, the company is vertically integrated.
The acquisition of The Firestone Tire and Rubber Company, establishment of progressive system in research and development and establishment of technical centers for chemical and industrial products show that it has chosen to enter in multiple segments of vertical chain. The company is building a business that looks from sourcing of raw materials to sale of final products by deploying its extensive resources globally. The company is dedicated on creating systems that will be capable of supplying customers with high quality products and services as efficiently as possible. The company is working on strengthening the supply chain by making sure that the every step from product planning and business development to acquisition of raw materials to procurement of equipment are done following the company policies. So, the company is paying detail attention on each aspect of value chain.
The 180 bases located in 26 countries has helped it reduce the transportation cost and taxes associated with transportation of raw materials and finished goods. The in house production of raw materials has helped in better supply of those materials at competitive price resulting in enhanced production. These serves as the benefits of vertical integration for Bridgestone. The vertical integration also has some liabilities to the organization as well that includes maintaining the quality of raw materials used in production, maintaining safety in the production process and ensuring the quality of finished goods are as per the set standard.
Vertical integration can be crucial to survival and growth of business while extensive integration may sometimes lead to business failure (Buzzell, 1983). Bridgestone’s vertical integration is working well for the organization but it needs to pay attention to ensuring quality, meet the set standards and adapting sustainable practices.
References
Bridgestone . (2018). A Global Dream . Retrieved from Corporate History.
Bridgestone. (2018). About Bridgestone . Retrieved from bridgestone.com/
Bridgestone. (2018). We do much more than tyres . Retrieved from Products: bridgestone.com/products/index.html
Buzzell, R. D. (1983, January). Is Vertical Integration Profitable? Harvard Business Review . Retrieved from hbr.org/1983/01/is-vertical-integr...
Gamble, J. E., Petaraf, M. A., & Thompson, A. A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage (Fourth ed.). New York: McGraw Hill Education.