Question:
What are the limits / dangers of vertical integration?
Author: Hjalmer PedersenAnswer:
There are some limits and dangers to vertical integration: 1. Investment risk. New activities may be less profitable than the original core business. Also financing strain 2. Lack of synergies, including cultural fit 3. Lack of resources and capabilities. e.g. car manufacturers forward-integrating into car servicing find managing networks of small service outlets very different to managing large manufacturing plants.
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