Firms embark on vertical integration in other to

Firms may embark on vertical integration in order to enjoy economies of large-scale production. Vertical integration occurs when a company acquires or merges with other companies that are part of its supply chain, such as suppliers or distributors. By doing so, the firm can better control the costs and quality of inputs, and ensure a more efficient production process. Additionally, vertical integration can help firms reduce transaction costs, improve coordination and communication, and enable better risk management. However, vertical integration can also lead to higher administrative and coordination costs, and may limit the firm's flexibility and innovation.