Paths to Advantage no.7

Effective vertical integration. With outsourcing and offshoring so common, and the heyday of soup-to-nuts global manufacturing entities decades in the past, it may seem strange to insist that vertical integration can be a source of difficult-to-copy advantage. But for some companies, it is. Think of Swarovski AG, which has maintained its position as the world’s finest crystal manufacturer by keeping a tight rein on its methods and processes. Over a century of innovations, the company has perfected a unique method for transforming sand and lead into some of the most beautiful objects in the world. Fearing a loss of its advantage and closely guarded trade and technology secrets, the Wattens, Austria–based firm refuses to move its core technical operations out of the country, despite high labor costs there.