gave us a real independence vis-a-vis the multinationals. It also permits us to have our own brands that are comparable to national brands. It's a fabulous tool; we don't want to break it, but rather to put it at the service of stores. We want to move from a situation where the points of sale are outlets for the factories to a situation where they are really at our service. Who cares if we are the#1 European fish producer? What we want to be is the#1 European fish market.
As of this writing, Intermarché continues to suffer steady declines in share and profits Vertical integration backward continues to consume management attention at a time when the core business-retailing-clamors for a return to the basics.47
Both sides of the debate have valid arguments. How to incorporate them into one approach? A useful frame to resolve this issue is to complicate it slightly (see Figure 9.3). One begins by asking whether the distribution involves (or will involve) substantial company specific capabilities. If not, the firm can easily change third par ties. This flexibility is of great value in volatile environments. Absent significant specificity, uncertainty favors outsourcing.
But if specificities are substantial, flexibility is already lost. The firm will become locked into its third parties, and there can be no changing one's bet. Then the manufacturer faces the worst of all worlds: small-numbers bargaining in an environment that requires constant adaptation. The result will be endless bargaining, high levels of opportunism, and high transaction costs. In the presence of significant specificity uncertainty favors vertical integration forward.