The Nature of the Firm in the Oil Industry: International Oil Companies in Global Business

Firm-to-firm relationships, along with the overall structure of industry, have changed markedly over the past decades. Replacing the model of vertical integration with one of global business, firms have started to outsource more by using a wider global network. At the same time, they have begun to increase their control and coordination along the value chain to remain competitive, blurring the boundaries between companies. Understanding the nature of the firm and its role in coordinating the supply chain will help firms to better define global competitive strategies.. The challenges that lie ahead for global business render obsolete the traditional model of procuring each service without long-term supply chain management. Current trends suggest that in the future there will be even deeper supply chain integration in most industries.