Why Do Companies Engage in Vertical Direct Investment?
Companies engage in VDI for several reasons. Primarily, it allows them to gain access to resources that are crucial for their operations, such as raw materials, specialized labor, or advanced technology. Additionally, VDI helps companies mitigate risks associated with supply chain disruptions by exercising greater control over upstream or downstream activities. By investing in different stages of the supply chain, companies can also reduce transaction costs and improve profit margins.