Question

10. What is vertical integration?

Answer 1

Answer: Vertical integration is firm taking control of and producing its inputs and outputs rather than using the market.

Example: A vertically integrated produce company, for example, might hold a farm, a produce distribution business, and a green grocery.

Answer 2

Answer:

Vertical integration is a strategy where a company controls its suppliers and distributors to control its value.

Explanation:

Vertical integration allows companies to control the process, reduce costs, and improve efficiencies. However, this strategy also has disadvantages, including the significant amounts of capital investment that it requires.

A very good example of vertical integration is Netflix because this company started as a DVD rental company supplying film and TV content, but the company's executive management realized they were able to generate more revenue by changing to original content creation.