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How can vertical integration allow a business to reduce cost?

Vertical integration of a business structure can reduce costs, depending on how quickly ideas that produce products develop. Let it be said that vertical business structures, can within themselves look different. Here is an example of one such structure that can be successful. Corporation A produces shoes, in order to do this it needs leather and factories. It owns it's own source of leather, rather than paying another company to buy the leather from. Corporation A also needs shoe designers. It has its own designer company for this purpose and thus saves money in buying designs. All shoe manufacturing is done in its own factories. It thus saves money by having another company do the manufacturing. The company must distribute the shoes in the wholesale market, and then its shoes are later in the retail marketplace. By owning and operating the shoe product from bottom to top, it saves funds by not having to pay other companies. This reduces overall costs significantly. The question does not ask the risks involved in vertical structures, so that can be addressed in another question.


What are the economic and political arguments for regional economic integration Given these arguments why don't we see more integration in the world economy?

The economic case for regional integration is straightforward. Economic theories of international trade predict that unrestricted free trade will allow countries to specialize in the production of goods and services that they can produce most efficiently.


What innovation in production would allow manufacturers to reduce prices?

assembly line


How was stratification related to economic specializaton?

Stratification allows certain levels of business to concentrate a certain task/job/production, making it more focused and usually contributing to improved quality. This process relates because this means tasks get specialized on a small level to provide better production and organization in economic matters. Stratification can also relate to horizontal and vertical integration, because those process specialize all levels of the business process under a single company to allow control of all parts.


What are the companies underlying regiocentric orientation?

regional orientation is defined as a functional rationalization on a more-than-one country basis. Subsidiaries get grouped into larger regional entities. Regions are consistent with some natural boundaries, such as the Europe, America and Asia-Pacific. Both polycentric and regiocentric approaches allow for more local responsiveness, with less corporate integration.

Related Questions

How did vertical integration allow business to reduce cost?

By controlling the business at each phase of a product's development, vertical integration allowed a business to reduce costs.


How did vertical intergration allow a business to reduce cost?

By controlling the business at each phase of a product'sdevelopment, vertical integration allowed abusiness to reducecosts


How did vertical intergration allow business to reduce costs?

By controlling the business at each phase of a product'sdevelopment, vertical integration allowed abusiness to reducecosts


How did vertical integration allow a business to reduce costs?

by controlling the businesses at each phrase of a product development


Does a holding company allow vertical integration?

The holding company allows a corporation, through its subsidiaries, to integrate both horizontally and vertically


What car CD/MP3 players allow full integration, including controls, with the iPod?

Panasonic mp3 players allow integration with iPods.


What companies allow you to have an at home job?

If you are interested in having an at home job, you should look in the fuild of buisness management, because you can make your own buisness and be your own boss.


Where can I get a small business loan to start my own company?

You can get a small buisness loan from certain banks such as fidelity or bank of america, and they can hand out enough moneyt that will allow you to make your own buisness.


How can vertical integration allow a business to reduce cost?

Vertical integration of a business structure can reduce costs, depending on how quickly ideas that produce products develop. Let it be said that vertical business structures, can within themselves look different. Here is an example of one such structure that can be successful. Corporation A produces shoes, in order to do this it needs leather and factories. It owns it's own source of leather, rather than paying another company to buy the leather from. Corporation A also needs shoe designers. It has its own designer company for this purpose and thus saves money in buying designs. All shoe manufacturing is done in its own factories. It thus saves money by having another company do the manufacturing. The company must distribute the shoes in the wholesale market, and then its shoes are later in the retail marketplace. By owning and operating the shoe product from bottom to top, it saves funds by not having to pay other companies. This reduces overall costs significantly. The question does not ask the risks involved in vertical structures, so that can be addressed in another question.


What properties of water allow it to stick to the sides of a vertical glass?

Cohesion


What case extended integration and the use of busses?

The case of Rosa Parks extended integration and the use of buses by both races. It led to many protests which would eventually allow for full integration among all races across the country.


What is the purpose of B2B integration?

The purpose of B2B integration is to allow businesses to buy, sell and trade among themselves more quickly and efficiently. Software is available from IBM and other companies to facilitate these processes.