As a consequence of an ongoing globalization, the change from a’ sellers market’ to a ‘buyers market’ and accelerated technological developments, today’s business is, as mentioned in Chapter 1, governed stronger by competitiveness than ever before. Enterprises are forced to reorganize their business processes, to be able to react quickly and cost effectively on fast changing market demands [103]. Amongst others, competitiveness that can be achieved due to the economies of scope and economies of scale becomes a more and more important efficiency factor. It can even decide about ‘to be or not to be’ of small and medium-size companies or other autonomously operating business units like profit centers. Large business units are more competitive, particularly due to their wider portfolio of disposable resources and a higher ranking in the market power structure. The remedy for smaller enterprises, which are not able to grow as quickly as their powerful competitors, is to establish different forms of vertical, horizontal or diagonal relationships instead of competing, so that they can generate additional profit. In this case, additional profit is defined as the difference between the total yield of interacting business units and the sum of the yields of these units operating as competitors. In general, there are two possible types of relationships among business units [109] : fusion, aiming only at the maximization of the total yield of the actors involved, and collaboration (i.e., a long-term horizontal cooperation), which aims, beyond the maximization of overall profit, at the maximization of the individual yield of each party. A merger of business entities to a structure with one centrally disposing entity allows squeezing economies of scope and economies of scale to a maximum extend, thus generating the maximal obtainable additional profit. However, such a merger is not always of practical relevance in the business environment, because it demands the abandonment of the participants’ independency and their full subordination.


Business Unit Collaboration Process Partner Company Horizontal Cooperation Freight Forwarder 
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© Betriebswirtschaftlicher Verlag Dr. Th. Gabler | GWV Fachverlage GmbH, Wiesbaden 2008

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