Reasons and effects of vertical combination

Reasons of vertical combination : Main reasons of vertical combination are mentioned below:

  • To ensure adequate supplies of raw materials of good quality.
  • To ensure adequate control over markets.
  • To reduce cost through elimination of middle men.
  • To eliminate the wasteful expense involved in conducting inter connected processes seperately.
  • To obtain economics in management marketing and transportation etc.
Effects of vertical combination : Effects of this combination can be summarized as follows :
  • This combination reduces the problem of marketing for the combining units.
  • It ensures the supply of raw materials.
  • Of course, this combination does not provide too much flexibility in operation.
  • It can not bring about the quick techniques of production.


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