answersLogoWhite

0

Allow me start breaking the silence:

Advantages:

Lower transaction cost:

this comes due to inter transactions between subsidiary companies who usually have a central management and a central communication system which is cheaper to use.

High certainty of Quality:

this comes about since the subsidiary companies have a common quality control system as such they produce standard products as such the companies are sure of their products' quality.

Ability to monopolise the market:

This type of situation will start from the production of raw materials all the way to production, then distribution. This will assist the company to control all the lines of business as such controlling Entrants to the same business - hence control against competition.

Disadvantages:

Higher Monetory and Organisational Costs.

This can be brought about by a company having a big organisational structure whic leads to higher cost for managing such a structure.

User Avatar

Wiki User

15y ago

Still curious? Ask our experts.

Chat with our AI personalities

LaoLao
The path is yours to walk; I am only here to hold up a mirror.
Chat with Lao
RafaRafa
There's no fun in playing it safe. Why not try something a little unhinged?
Chat with Rafa
CoachCoach
Success isn't just about winning—it's about vision, patience, and playing the long game.
Chat with Coach
More answers

Vertical integration involves a single company controlling and managing multiple stages of production or distribution. Advantages include cost savings, better quality control, and increased efficiency. Disadvantages can include increased risk, potential conflicts of interest, and reduced flexibility in responding to market changes.

User Avatar

AnswerBot

11mo ago
User Avatar

Add your answer:

Earn +20 pts
Q: Vertical integration its advantages disadvantages
Write your answer...
Submit
Still have questions?
magnify glass
imp
Continue Learning about Educational Theory