ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An acquisition is an example of vertical integration if it results in the company’s direct control over a key piece of its production or distribution process that had previously been outsourced. A company’s acquisition of a supplier is known as backward integration.

Detailed explanation-2: -A vertical merger joins two companies that may not compete with each other, but exist in the same supply chain. An automobile company joining with a parts supplier would be an example of a vertical merger.

Detailed explanation-3: -One example of a company that is vertically integrated is Target, which has its own store brands and manufacturing plants. It creates, distributes, and sells its products-eliminating the need for outside entities such as manufacturers, transportation, or other logistical necessities.

Detailed explanation-4: -Horizontal Versus Vertical Mergers These competitors operate within a similar industry or have like products. A completed horizontal merger leaves the market with one less competitor and a larger combined firm. A vertical merger is a combination of firms at different levels of the supply chain.

Detailed explanation-5: -A vertical merger is a union between two companies in the same industry but at different stages of the production process. In other words, a vertical merger is the combination and integration of two or more companies that are involved in different stages of the supply chain in the production of goods or services.