Th3.1: Forward and Backward Vertical Integration Advantages Flashcards

1
Q

What are the four advantages of forward and backward vertical integration?

A

increased potential for profit
less risks
costs low
retail outlets

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2
Q

Increased potential for profit

A

there is increased potential for profit as the firms takes the potential profit from a larger part of the chain of production

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3
Q

Less risks

A

there will be less risks as suppliers do not have to worry about buyers not buying their goods and buyers do not have to worry about suppliers not supplying the good

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4
Q

Costs low

A

with backward integration, businesses can control the quality of suppliers and ensure delivery is reliable - don’t have to worry about being charged high prices for supplies, keeping costs low, increasing competitiveness and sales

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5
Q

Retail outlets

A

forward integration secures retail outlets and can restrict access to these outlets for competitors

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