vertical integration

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The integrating of successive stages in the production and marketing process under the ownership or control of a single management organization
(Ekonomi) In microeconomics and managing management, the term vertical integration describes a style of ownership and control. The degree to which a firm owns its upstream suppliers and its downstream buyers determines how vertically integrated it is. Vertically integrated companies are united through a hierarchy and share a common owner. Usually each member of the hierarchy produces a different product or service, and the products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly, although it might be more appropriate to speak of this as some form of cartel
Form of business organization in which all stages of production of a good, from the acquisition of raw materials to the retailing of the final product, are controlled by one company. A current example is the oil industry, in which a single firm commonly owns the oil wells, refines the oil, and sells gasoline at roadside stations. In horizontal integration, by contrast, a company attempts to control a single stage of production or a single industry completely, which lets it take advantage of economies of scale but results in reduced competition
merger of companies that have a similar range of activity in marketing and production in order to gain more control in that range
absorption into a single firm of several firms involved in all aspects of a product's manufacture from raw materials to distribution
vertical integration
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