Vertical Integration on the Example of Agrokor

This study will provide the explanation of the vertical integration, benefits and show the application of the vertical integration in the real business on the example of the Croatian company Agrokor. There are always important transactions between a multinational`s operations in different countries. The output of one subsidiary is often an input into the production of another. Or technology developed in one country may be used in others. Or management may usefully coordinate the activities of plants in several countries. Multinationals exist because it turns out to be more profitable to carry out these transactions within a firm rather than between firms. This means that multinationals engaged in internalization. If you want something done right, do it yourself. Many transactions are more profitably conducted within a firm rather than between firms. Also many activities in different countries may be usefully integrated in a single firm. One of example of vertical integrated firm in Balkan is Agrokor, Croatian company. In 1989 the joint-stock company Agrokor was registered. The Agrokor Group is the largest private company in Croatia and one of the leading regional companies Apart from the Croatian companies, the Agrokor Group today also comprises companies from all over the region acquired during the last few years: Ledo Citluk, Sarajevski kiseljak, Velpro Sarajevo, Frikom, Dijamant, Idea, Ledo Hungary and Fonyodi. From this example it is seen that vertical integrated firms benefits to all participants in the process of production and performing business. Keywords: Vertical Integration, Multinational Company, Production, Subsidiary, Profitability.