Management knowledge and business information structure will be critical in executing vertically coordinated or integrated chains. Currently, integrated chains have the advantage because in the rapidly changing environment of swine production they are most able to respond quickly and decisively. Technology and Information Technology has enabled firms to respond to consumer preferences which fosters the continuing incentives for firms to integrate. Biotechnology, specifically molecular biology and genome mapping, will only enhance the ability to adapt biological products to user demands. Biotechnology will also require greater information sharing as the number of modified attributes increases and must be passed up the chain to capture value.
Information is critical in determining the structure of vertical alliances.
An inability to transfer information across firm boundaries provides great incentives to integrate to internalize the information. Summary Increased refinement of consumer preferences and the ability to meet those preferences virtually assures that the swine industry will be a vertically integrated or coordinated system. Whether ownership or coordination prevails depends on the abilities of coordinated systems to improve information sharing and develop management processes which are not duplicative or simply unwieldy. Integrated systems run the risks of being inflexible, high cost, and diluting capital intensity in various segments of the chain.