Vertical Integration: Titanium Products for the Aircraft Industry

Abstract

This article concerns the importance of vertical integrated structures, employing the VSMPO-AVISMA Corporation as an example of a vertically integrated company that also forms part of a vertically integrated structure in the aircraft industry, to which it supplies semi-finished titanium products. In order to gain basic insight into the meaning of a vertically integrated company, value chain concept, which underpins the principles on which vertical integration is fundamentally based, must be appreciated. The value chain concept defines the links between the various parts of a manufacturer’s operations in a systematic way, which enables it to identify how to improve overall efficiency, and hence to create value for the customer. If the value it creates is greater than the cost of conducting its activities, the business is profitable.