A firm may be able to gain an advantage from vertically integrating when it resolves some uncertainty it faces sooner than its competition.

Question

Quizplus · Accepted Answer

Vertical integration can enable a firm to control its supply chain and reduce uncertainty in the production process. By integrating forward or backward, the firm can gain insight into the activities of its suppliers or customers, respectively, and respond to changing market conditions more quickly than its competitors who rely on outside partners. Therefore, vertical integration can be a source of competitive advantage if it helps the firm to resolve uncertainty sooner.

A Firm May Be Able to Gain an Advantage from Vertically