Research On The Vertical Integration Strategy Of JF Trading Company

Driven by the trend of world economic integration and globalization,the flow scope of resources is becoming more and more international.As an important strategic resource in China,natural rubber is widely used in all trades and professions.As of 2019,China has become the largest natural rubber consumer and importer in the world for 17 consecutive years.As the world’s largest rubber purchaser,China still has no pricing power and voice in the rubber market.As a high-quality service provider of rubber resources at home and abroad for more than 10 years,JF trading company has a business scope covering all aspects of the middle reaches of the rubber industry chain including natural rubber marketing,transportation and warehousing,futures-cash arbitrage,financing and value-added services.However,in recent years,the market of traditional rubber trade fluctuates greatly and the competition is disordered.At the same time,JF trading company is faced with problems of shortness of rubber industry chain,insecurity of supply and narrowing of profit margin.Therefore,from the perspective of external competitive environment and its own development planning,it is urgent for JF rubber trading company to formulate a good business strategy suitable for its own development.Firstly,based on the relevant theories of strategic management process and vertical integration strategy,this paper objectively analyzes the macro environment and intermediate environment of JF trading company through PESTEN analysis method and Porter’s five forces model,and summarizes six opportunities and six threats that the enterprise is currently facing.Among them,the opportunities mainly include natural rubber strategic resource positioning policy,rigid growth of rubber manufacturing and consumption,regional advantages of Qingdao port,etc.The main threats are Sino-US trade friction and the outbreak of COVID-19 restricting the export of rubber products,as well as homogenization competition of rubber enterprises intensifies,etc.At the same time,the resources and capabilities of JF company are analyzed in detail,and five advantages and five disadvantages are found out.The main advantages are high education level of employees,higher popularity and recognition of company,etc,while the main disadvantages are the lack of compound talents in rubber industry chain and the constraints of state-owned system and mechanism.Secondly,this paper uses QSPM quantitative analysis matrix to compare and analyze the attractiveness of the key factors of opportunities and threats,strengths and weaknesses of JF company in three strategic options(forward integration strategy,backward integration strategy and vertical integration strategy based on forward and backward integration).Finally,it concludes that JF trading company is suitable for adopting vertical integration strategy,and puts forward three implementation plans: backward integration strategy through participation in stock investment holding,forward integration strategy through strategic alliance and expansion of supply chain operation,as well as five safeguard measures in organizational structure adjustment,operation risk control,management and control mode establishment,information platform construction and corporate culture creation.It is hoped that this study can have a certain reference significance for JF rubber business and similar rubber trading enterprises in the future development process.