What is an important advantage of vertical integration for a company?

An important advantage of vertical integration for a company is greater control over the supply chain. When a company engages in vertical integration, it takes ownership of various stages of production or distribution within its industry. This means that the company can manage its resources, processes, and logistics more effectively, leading to improved coordination and efficiency.

Control over the supply chain enables a company to reduce reliance on external suppliers, which can help mitigate risks associated with supply shortages or fluctuations in price. Additionally, it allows for better quality control, as the company can oversee the production processes directly. By having greater control, companies can also streamline operations, reduce lead times, and enhance their ability to respond to market demands quickly.

While other aspects like lower production costs or limited product diversification may seem advantageous, they don’t capture the comprehensive strategic benefit that a company gains in managing and optimizing its supply chain through vertical integration.