Companies pursue vertical integration for several reasons:
- Cost Reduction: By controlling multiple stages of production, companies can reduce overall costs by cutting out intermediaries and benefiting from economies of scale. - Quality Control: Owning the supply chain allows companies to maintain higher quality standards throughout the production process. - Market Control: Vertical integration can give companies greater control over the market, reducing competition and increasing barriers to entry for new players. - Supply Chain Security: Companies can ensure a stable supply of key inputs, reducing risks associated with supplier disruptions.