STRATEGIC DISADVANTAGES OF VERTICAL INTEGRATION
STRATEGIC DISADVANTAGES OF VERTICAL INTEGRATION
- Boosts capital requirements
- Results in fixed sources of supply & less flexibility in accommodating buyer demands for product variety
- Extends firm’s scope of activity, locking it deeper into industry
- Poses problems of balancing capacity at each stage of value chain
- Requires radically different skills & capabilities
- Can reduce firm’s manufacturing flexibility, lengthening design time & ability to introduce new products