ABSTRACT
This chapter uses the subjective judgement, taking into consideration the quasi-vertical integration. It examines the adjusted ratio of value added as one measurement of the level of vertical integration. Vertical integration is the practice whereby the market mechanism is replaced by internal transactions. Vertical integration is a situation where the stages of production and distribution are included in one hierarchical system. The following classification is concerned with the method of integration: Consolidated integration, and Quasi-integration, or grouping. The adjusted value added has several alternatives: adjusted ratio of value added of the company, unconsolidated, adjusted ratio of value added of the company, by consolidated financial statement, and adjusted ratio of value added of the company, including the quasi-vertical integration. Williamson lists many objectives of vertical integration, and consolidating his and other authors' views, one can state four important objectives of vertical integration. Multinational management to ensure the procurement of raw materials is world-wide vertical integration.
