The classic justification of vertical integration relies on the conviction that:
A)The co-location of plants enables each owner to avoid being bound to the other partner for its strategic decisions
B)The physical integration of two processes, for example linking the two stages of production in a single location, results in cost savings
C)The physical location of two processes on the same site does not explain why there is not just one owner
D)Each process owner realizes savings by exploiting its assets in an alliance framework

Question

Quizplus · Accepted Answer

The classic justification for vertical integration is that physical integration of two processes, such as linking the two stages of production in a single location, results in cost savings. This is because the co-location reduces transportation costs and improves coordination between the two stages of production.

The Classic Justification of Vertical Integration Relies on the Conviction