Vertical integration disadvantages

Question

What are the Vertical integration disadvantages?

Answer 1

Vertical integration has some substantial disadvantages are as follows:

a. It increases a firm’s assets investment in the industry.

b. Increasing business risk.

c. Perhaps rejecting financial resources to more worthwhile pursuits.

d. Locks a firm into relying on its personal in-house activities and sources of supply.

e. Poses capacity-matching difficulties.

f. Calls for radical alter in business and skills capabilities.