Ch. 10 Vertical Integration

Many observers claim that adequate vertical integration is crucial to continued growth and sustaining a competitive advantage.  It is a strategy adopted by many of the world’s largest firms and DuPont is no different.  In 1981 DuPont acquired Conoco Inc. in a $7.3 billion deal.  The chairman for DuPont at the time stated that the merger provided DuPont with a captive hydrocarbon feedstock source.  The goal was to reduce exposure of the combined firms to fluctuations in the price of energy and hydrocarbons.  This is a common strategy to unite the intensions of both firms and eliminate any additional costs of doing business in a 3^rd party structure.