Problem:
Samsung Electronics and LG Electronics - two South Korean digital product makers - recently announced plans to vertically integrate. According to industry sources, each firm is making the investments required to produce products such as cell phones and digital TV's in a self-sufficient manner. LG Electronics plans to invest 30 trillion won by 2010 to make this happen, hoping that the cost savings and reduction in risks associated with vertical integration justify the investment.
If you were a decision maker at LG Electronics, would you have recommended vertical integration?