If a firm has capabilities that are valuable and rare, then vertically integrating into businesses that exploit these capabilities can enable the firm to gain at least a temporary competitive advantage.

Question

Quizplus · Accepted Answer

Vertical integration can provide a firm with greater control over its supply chain and enable the firm to leverage its valuable and rare capabilities in new ways that can help it achieve a competitive advantage. This can be especially effective in the short run, as competitors may not be able to quickly replicate the firm's vertical integration strategy. However, over time, competitors may be able to develop similar capabilities or find new ways to compete effectively, so a firm must continually evaluate the effectiveness of its vertical integration strategy to ensure that it remains a source of competitive advantage.

If a Firm Has Capabilities That Are Valuable and Rare