Question

Explain why vertical integration can increase the competitiveness of firms in performing international business?

please write a detailed explanation

Answer 1

Vertical integration is a technique whereby a company claims or controls its suppliers, wholesalers, or retail stores to control its value or supply chain. Vertical integration benefits organisations by permitting them to control the process, reduce costs, and improve efficiencies. Be that as it may, vertical integration has its inconveniences, including the huge amounts of capital investment required. Vertical integration happens when a company assumes authority more than a few of the production steps associated with the formation of its product or service in a specific market. Otherwise, vertical integration includes buying a piece of the production or sales process that was recently outsourced to have it done in-house. Regularly, an organisation's supply chain or sales process starts with the acquisition of raw materials from a supplier and finishes with offering the final product to the consumer.

The firm uses the vertical integration strategy for their internationalisation, it reduces the cost and increases efficiency in the market. It increased the competitiveness of the firm.