One huge problem with vertical integration of activities with only one major sellable output is

Question

Quizplus · Accepted Answer

When there is only one major sellable output, and a company vertically integrates all activities involved in producing that output, the entire value-chain is subject to the same market risk. This means that if there is a downturn in the market demand for the product, the entire integrated value-chain will suffer, resulting in significant losses for the company. This lack of diversification is a huge problem for vertical integration with a single major sellable output, making it risky and financially unsustainable in the long run.

One Huge Problem with Vertical Integration of Activities with Only