Blue Star is a Portuguese packaging company, which was founded in 1965 as a metallic packaging manufacturer. Blue Star gradually widened its product and activity portfolio through vertical integration of the packagingvalue chain. Founded as a decorative-cans-producer for industrial products, Blue Star integrated lithography (in 1970), the production of aerosol containers (1972), the manufacturing of plastic components (1973), contract filling of aerosol cans (1975), production of plastic containers (1982), contract filling of liquids (1983), and, in 1984, the production of metallic containers for food products. Thus, vertical integration allows Blue Star to offer a full service that corresponds to the outsourcing needs of selected products and activities of client firms.

In 1975, Blue Star established a partnership with the multinational Johnson Wax (JW), and, in 1993, acquired Johnson Wax's Spanish contractfilling subsidiary in Valdemoro. More recently, Blue Star advanced its internationalization strategy with a greenfield operation in Poland.

The metal packaging industry is very heterogeneous, with significant variations in the final product, and where standardization in some segments coexists with differentiation in others. Blue Star's distinctiveness is built on a high level of vertical integration. Although there are numerous manufacturers of metal packaging and plastic components, and contract fillers, there is no other firm (at least in the EU) that carries such a wide array of activities of the packaging value chain in house: from lithography to distribution.

Answer the questions

1. What is Blue Star's vertical integration strategy

2. What are the risks associated with Blue Star's vertical integration strategies?

3. Define transaction-specific investments. What of the integrated activities along Blue Star's value chain would require a transaction-specific investment?