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.