I’m Lovin’ It Virtually Integrated

McDonald’s acts as a virtually integrated company, but it is not an integrated company (from the point of ownership). The company does not own the materials, supplies, equipment, or restaurants that are integral to their success. From an organizational perspective though, McDonald’s is virtually integrated because they have the power to control every component within their supply chain down to the smallest of details like the seeds used to raise the potatoes used for their fries. The company is so closely tied with its suppliers and franchisees, that the whole system must be considered together because it acts together. This is the essence of McDonald’s- its system. They have established a web of close relationships that form a system geared toward providing products/services in a coordinated manner, or a strategic network. They control all the activities that end up in/involved with a product, but avoid the downfalls of operating as purely vertically integrated. More and more companies are imitating McDonald’s virtual integration in order to be more efficient, keep up with current technology, practices, and competition, and reduce costs.