Keeping it under your hat (Economist)

APPLE and Tesla are two of the world’s most talked-about companies. They are also two of the most vertically integrated. But the renewed fashion for vertical integration will not sweep all before it. For the most mundane products the logic of contracting out still reigns supreme and today’s bundling is less ambitious. Apple, for instance, contracts out a lot of production to contract manufacturers such as Foxconn (though it keeps them on a tight leash). Integration is also hard to pull off: Tesla lost some of its shine on April 11th when it recalled 2,700 of its sport-utility vehicles because of a glitch. Striking the right balance between doing things in-house and contracting things out is clearly complicated.

Read the Story