I have been through the "nationalised industry is privatised and disaggregated only to re-aggregate at a later stage" cycle so I was interested to see that Bain & Co have recently published a short piece on how utilities should evaluate the benefits of vertical integration.
Sadly I was rather disappointed. Admittedly it was advertised as a "Bain Brief", and brief it was. Bain consider just three motivating factors: avoiding transaction costs, hedging against volatility, tapping different profit pools. Not surprisingly they show that under many circumstances integration does not add significant value through these drivers in an piece of analysis that any half decent MBA student could have produced.
I rather expected more from a top strategic consultancy.
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