Objectives and fetures of vertical combination
Objectives of vertical combination: Vertical business combination is based on the following objectives :
- To increase the coordination amongst production processes.
- To remove the middle men.
- To eliminate or reduce unnecessary wastages.
- To minimize transportation expenditure.
- To minimize internal operation operation expenditure.
- To maintain control over the quality of production.
- To control the supply of raw materials.
Features of vertical combination : Following are the salient features of vertical combination
- Where the finished object of one constitutes the raw material of another form.
- Where one process is complementary to the others.
- Where balanced production is important as in the case of spinning and weaving of cloth.
- Where the control over the supply of raw material is necessary to maintain certain standard of quality for the finished product as in case of sugar Industry.