Consortiums: Strength Through Union

©image: Gaetan Lee

Some of the forms of horizontal integration that business partnerships assume are to reduce costs by purchasing a pool of supplies, market exports as a whole and consolidate to lower freight charges. Vertical integration is usually more complex, requiring each of the partners to specialize in specific business sectors to achieve productive linkage. The common denominator is the desire to overcome weaknesses and generate strengths through a partnership perhaps with the company that up until yesterday was your competition.

Melissa Novoa analyzed the subject and collected several experiences from successful partnerships between businesses in an article published in Martes Financiero.

One example is the Mister Agro and Producción Agrícola Consortium: "When Mister Agro and Producción Agrícola got together under the partnership scheme in the middle of last year, it was for second time. They had formed a consortium with other export companies five years ago to buy supplies in large volumes, allowing them to save in costs, perform better and increase their competitiveness. ‘We all benefited from the best price we could find by buying in volume. The same thing happened when we negotiated freight rates with shipping companies since it is not the same thing to negotiate for 100 containers as it is to negotiate for 2,000 containers. You find better conditions and the companies become more competitive,’ said Mister Agro representative, Manuel Fernández.”

Source: martesfinanciero.com