Vertical Integration

 Vertical Integration





Vertical integration is the combination of two or more stages of stages of production. This means that companies can pay less for their materials they need instead of outsourcing. This is used in plenty of corporations to get rid of competition and spend less money on items. While this method can help improve cutting costs and streamline the process of making supply’s it also has it’s negative effects. Having to merge two companies together is a big deal, and that gets even harder when the management team within the company has to take on more work, since the merger. 




    Vertical Integration is what bigger corporations use to better understand the market since they control the buying of materials to produce their product to be more streamlined. This cuts out other parts and cuts down on expenses for buying the products from the manufacturer. Vertical Integration is a scary form of a business model if you are trying to compete as a not as big company, you will most likely get beat out as they have a better sense of the market. However it does cost a lot to maintain Vertical Integration. You also are losing the ability to be flexible as a company, since you are already locked into a set way of operating compared to non Vertical Integration since they have to buy from manufacturers and can still change business tactics.

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