Backward Integration?

1. SUMITRO DUTTA EPGDBM-04 MANAGE OR BUY

2. OVERVIEW SCOPE OF AN ORGANIZATION BACKWARD INTEGRATION BENEFITS & DRAWBACKS TOYOTA

3. SCOPE OF AN ORGANIZATION Breadth of an organization’s production line & range of activities it performs. In 1899 none of the American car makers made their own components. As business grew companies had to extend their scope of activities backward to the manufacture of components. Ford went onto buy vast plantation on the Amazon jungle to produce rubber tires(Vertical Integration).

4. BACKWARD INTEGRATION As car market developed ,value addition increased and so did manufacturing cost. Auto-makers struggled to keep up with demand and , at the same time cut additional costs. GM’s asked its major supplier, Fisher Body, to build a plant adjacent to a new GM assembly . Hold-up problem GM brought fisher outright.

5. BACKWARD INTEGRATION BENEFITS Better coordination-lowered costs Ownership guaranteed a source of critical raw materials DRAWBACKS Dampen motivation

6. TOYOTA EMPOWERMENT Empowering its suppliers. Freeing workers to take corrective action Cross functional participation JUST IN TIME TOTAL QUALITY MANAGEMENT

7. THANK YOU