In an earlier chapter we looked at strategic choices of outsourcing, vertical integration and strategic alliances, where the key issues of cost, quality and control were highlighted.
These are still relevant for online businesses as much as for conventional ‘bricks and mortar’ organisations. All organisations must decide between:
- vertical integration – manufacturing in-house
- virtual integration – the majority of supply chain activities are undertaken by third parties
- virtual disintegration (disaggregation) – in between these two extremes.
However, internet technology allows more efficient and cheaper communications within the chosen structure and may make virtual integration preferable to vertical integration.
