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.