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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