If a firm engages in vertical integration into a business activity where it does not possess any of the valuable, rare, or costly-to-imitate resources it needs to gain a competitive advantage, it may find itself at a competitive disadvantage to the extent that some firms already have competitive advantages in these business activities.

Question

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Vertical integration involves a firm expanding into activities previously performed by suppliers or distributors in the same industry. However, if the firm does not possess the necessary resources for these activities, such as valuable, rare, or costly-to-imitate resources, it may not be able to gain a competitive advantage and may be at a disadvantage compared to firms that already have such advantages in these areas.

If a Firm Engages in Vertical Integration into a Business