What are the advantages and disadvantages of market integration?
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Answer:
ᴛʜᴇ ᴀᴅᴠᴀɴᴛᴀɢᴇs ɪɴᴄʟᴜᴅᴇ ɪɴᴄʀᴇᴀsɪɴɢ ᴍᴀʀᴋᴇᴛ sʜᴀʀᴇ, ʀᴇᴅᴜᴄɪɴɢ ᴄᴏᴍᴘᴇᴛɪᴛɪᴏɴ, ᴀɴᴅ ᴄʀᴇᴀᴛɪɴɢ ᴇᴄᴏɴᴏᴍɪᴇs ᴏғ sᴄᴀʟᴇ. ᴅɪsᴀᴅᴠᴀɴᴛᴀɢᴇs ɪɴᴄʟᴜᴅᴇ ʀᴇɢᴜʟᴀᴛᴏʀʏ sᴄʀᴜᴛɪɴʏ, ʟᴇss ғʟᴇxɪʙɪʟɪᴛʏ, ᴀɴᴅ ᴛʜᴇ ᴘᴏᴛᴇɴᴛɪᴀʟ ᴛᴏ ᴅᴇsᴛʀᴏʏ ᴠᴀʟᴜᴇ ʀᴀᴛʜᴇʀ ᴛʜᴀɴ ᴄʀᴇᴀᴛᴇ ɪᴛ.
⫷ᕼᗴᖇᗴ'Տ YOᑌᖇ ᗩᑎՏᗯᗴᖇ⫸
✪Types of Market Integration There are three basic kinds of market integration:
1.Horizontal integration.
2.vertical integration.
3.Conglomeration.
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✪ Advantages of Horizontal integration
(1)Lower costs.
(2)Higher efficiency.
(3)Increased differentiation.
(4)Increased market power.
(5)Reduced competition.
(6)Access to new markets.
(7)Economics of scale.
(8)Economics of scope.
(9)International trade.
✪ Disadvantages of the Horizontal integration
(1)Destroyed value.
(2)Legal repercussions.
(3)Reduced flexibility.
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✪ Advantages of Vertical Integration
1. It allows you to invest in assets that are highly specialized.
2. It gives you more control over your business.
3. It allows for positive differentiation.
4. It requires lower costs of transaction.
5. It offers more cost control.
6. It ensures a high level of certainty when it comes to quality.
7. It provides more competitive advantages.
✪ Disadvantages of Vertical Integration
1. It can have capacity-balancing problems.
2. It can bring about more difficulties.
3. It can result in decreased flexibility.
4. It can create some barriers to market entry.
5. It can cause confusion within the business.
6. It requires a huge amount of money.
7. It makes things more difficult.
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