JAMB - Economics (2014 - No. 34)
Firms embark on vertical integration in other to
take over markets formally controlled by other firms
prevent other firms from entering the market
reduce advertisement and management cost
enjoy economies of large-scale production
توضیح
Vertical integration is a strategy whereby a company owns or controls its suppliers, distributors, or retail locations to control its value or supply. The following are some of the reasons for vertical integration
- Reduce transportation costs if common ownership results in closer geographic proximity.
- Improve supply chain coordination.
- Provide more opportunities to differentiate by means of increased control over inputs.
- Capture upstream or downstream profit margins.