A. take over markets formally controlled by other firms
B. prevent other firms from entering the market
C. reduce advertisement and management cost
D. enjoy economies of large-scale production
Correct Answer:
Option D – enjoy economies of large-scale production
Explanation
Vertical integration is a strategy whereby a company owns or controls its suppliers, distributors, or retail locations to control its value or supply. The following are some of the reasons for vertical integration
- Reduce transportation costs if common ownership results in closer geographic proximity.
- Improve supply chain coordination.
- Provide more opportunities to differentiate by means of increased control over inputs.
- Capture upstream or downstream profit margins.
