The Impact of Vertical Integration and Horizontal Diversification on the Value of Energy Firms

Pozzi, Carlo; Vassilopoulos, Philippe

doi:10.1057/9780230626317_11

Cited by 3 publications

(3 citation statements)

References 33 publications

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“…In their study, Pozzi and Vassilopoulos (2007) analyze the long-run return performance of 27 value-weighted equity portfolios based on a classification of the US energy sector that follows traditional industrial organization categories. When adjusted to market and fuel risks, portfolio returns show that both backward vertical integration and horizontal diversification failed to produce shareholder value during the 1990-2003 period.…”

Section: Empirical Reviewmentioning

confidence: 99%

Backward Vertical Integration Strategies and Competitiveness of Firms in EPZ Kenya

Njuguna,

Kwasira,

Kariuki

2024

IJSM

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Purpose: The main purpose of the study was to determine the influence of backward vertical integration strategies on the competitiveness of firms in the Export Processing Zones (EPZ), Kenya. Methodology: Both quantitative and qualitative approaches were used in this study, meaning that both descriptive statistics and inferential statistics were employed. Descriptive technique, specifically survey was used in the research design. The target population was all the 137 EPZ firms within Kenya and the sample was drawn from this population. The stratified random sampling technique was used. The EPZ firms are situated within the 74 gazetted zones, out of which 69 are privately owned and operated while 5 are public zones. The quantitative data that was collected was analyzed using the Statistical Package for Social Scientists. Further, the significance level of each independent variable was tested against the dependent variable at 95% level of confidence using ANOVA, regression and correlation techniques. Findings: The findings showed that backward vertical integration strategies had a positive and significant influence on the competitiveness of firms in EPZ, Kenya, at 0.151, p<0.05 and 0.432, p<0.05 when the moderating variable firm size is included. Unique Contribution to Theory, Practice and Policy: This study contributes to both the resource-based view and the theory of dynamic capabilities. It lays emphasis on the importance of resources in attaining competitiveness as suggested in these theories. Besides, the study emphasizes the need for firms to have policies aimed at ensuring raw materials supply stability, lower transaction costs and enhanced economies of scale. The findings of this study are significant because the Government of Kenya envisages that the EPZ program is expected to play a critical role in the manufacturing sector contributing 20% to Gross Domestic Product (GDP) by 2030. This will subsequently lead to an increase in employment opportunities, real-value added growth, and foreign direct investment (KNBS, 2022). The study recommends a review by the EPZ Authority in Kenya , of the underlying aim of using backward vertical integration strategies as means of gaining competitive advantage competitiveness and the inclusion of this strategy in the various EPZ firm’s policies and procedures.

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Section: Empirical Reviewmentioning

confidence: 99%

Backward Vertical Integration Strategies and Competitiveness of Firms in EPZ Kenya

Njuguna,

Kwasira,

Kariuki

2024

IJSM

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“…The choice of a mean-variance criterion is often chosen for its tractability at the expense of its realism. Presently, the scientific literature already has several works on the application of Markowitz's optimum portfolio theory to energy mix [42,24,25], as well as studies on the relationship between the corporate structure of the electricity sector and their stock market valuation [40] or economies of scale obtained by vertical integration from an econometric point of view [26] or from a partial equilibrium point of view [1].…”

Section: Quantitative Models To Assess Utilities Business Model Boundsmentioning

confidence: 99%

Long-Term Risk Management for Utility Companies: The Next Challenges

Aïd

2010

Int. J. Theor. Appl. Finan.

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Since the energy markets liberalisation at the beginning of the 1990s in Europe, electricity monopolies have gone through a profound evolution process. From an industrial organisation point of view, they lost their monopoly on their historical business, but gained the capacity to develop in any sector. Companies went public and had to upgrade their financial risk management process to international standards and implement modern risk management concepts and reporting processes (VaR, EaR...). Even though important evolutions have been accomplished, we argue here that the long-term risk management process of utility companies has not yet reached its full maturity and is still facing two main challenges. The first one concerns the time consistency of long-term and mid-term risk management processes. We show that consistencies issues are coming from the different classical financial parameters carrying information on firms' risk aversion (cost of capital and short-term risk limits) and the concepts inherited from the monopoly period, like the loss of load value, that are still involved in the utility company decision-making process. The second challenge concerns the need for quantitative models to assess their business model. With the deregulation, utilities have to address the question of their boundaries. Although intuition can provide insights on the benefits of some firm structures like vertical integration, only sound and tractable quantitative models can bring answers to the optimality of different possible firm structures.

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“…For example, in newspaper and television media industries, firms tend to be almost fully integrated and they currently shifted outside the stages of production along with the emergence of strong intermediate markets (Gambaro, 2005). However, in the energy sector in the United States, the effects of integration produced little return performance for all energy firms, particularly natural gas industry (Pozzi and Vassilopoulos, 2007). For the food and agricultural sectors, it has been observed that large processing firms have a premium associated with integration due to lower fixed costs, lower variable costs, and better abilities for negotiation (Dorsey and Boland, 2009).…”

Section: Introductionmentioning

confidence: 99%

Assessment of the Integration between Travel Agencies and Hotels: A Case Study on Sharm El Sheikh

Soliman

Fouad

2019

Egyptian Journal of Tourism and Hospitality

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Economic integration with various distribution channels has been a major element in marketing strategies, particularly in the tourism and hospitality industries. The current trends of disintermediation and/or the introduction of new intermediaries were investigated in five-star hotels in Sharm El-Sheikh, Egypt through a retrospective analysis of room booking records referred by different distribution channels. In a total of 233 channels, the mean referred bookings were highest by other hotels (n=6) during the non-peak period in March (87.67 [62.02]) and by online referrals and tour operators during the peak season in August (168.56 [120.55] and 124.6 [98.11], respectively). Travel agencies reported the lowest mean of referred bookings across the whole study period, indicating their gradual disintermediation. No difference was noted in the referral patterns between horizontally-or vertically-integrated channels. Despite the current tendency towards increased bookings from tour operators and online channels, the integration with online booking services should be primarily emphasized in the hospitality settings.

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The Impact of Vertical Integration and Horizontal Diversification on the Value of Energy Firms

Cited by 3 publications

References 33 publications

Backward Vertical Integration Strategies and Competitiveness of Firms in EPZ Kenya

Backward Vertical Integration Strategies and Competitiveness of Firms in EPZ Kenya

Long-Term Risk Management for Utility Companies: The Next Challenges

Assessment of the Integration between Travel Agencies and Hotels: A Case Study on Sharm El Sheikh

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