What is the vertical integration logic behind each of the following moves that Iowa Beef made?

• Even though they were economically distinct activities and had different desirable efficient sizes, IBP ran both slaughterhouses and boxing plants, and they located them next to each other when they could. If these were distinct activities, why did IBP locate them physically adjacent to each other?

• The boxing plants had larger ideal-efficiency capacity than the slaughterhouses, so IPB had to bring in beef carcasses to supplement those produced at an adjacent slaughterhouse they owned. Some of the shipped-in carcasses came from IBP slaughterhouses and some came from other firms’ slaughterhouses.

Why did IBP mix their sourcing for the boxing plants?

• IBP used its own refrigerated trucks to move carcasses from distant slaughterhouses to boxing plants in the Great Plains states.

Why did they not hire trucking firms that specialized in trucking when they needed this service or rent trucks as needed?

• When IPB sourced cattle from feedlots in the Great Plains states, the firm bought on the spot market using their cost advantage to ensure that they could bid whatever was needed to get the cattle to keep the plants running at ideal capacity. When they went into the state of Idaho, however, they changed their approach to sourcing cattle. In this area, there were fewer cattle in general; as a result, IBP purchased a minority interest in a feedlot.Why did the firm acquire this upstream interest in Idaho and not in other states in the Great Plains?