A disadvantage of vertical integration is that by pooling demand for parts from a number of companies, a supplier may be able to enjoy economies of scale that result in higher quality and lower cost than if every company makes its own parts.

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neena gautam · Accepted Answer

Final Answer : True, Explanation :  Vertical integration involves a company owning and controlling different stages of the production process, including the supply of raw materials and the manufacturing of parts. By doing so, it eliminates the need for external suppliers. However, this strategy may not always be cost-effective as external suppliers may have access to economies of scale that a single company may not be able to achieve. This can result in higher costs and lower quality if every company makes its own parts instead of pooling demand for parts from a number of companies.

A disadvantage of vertical integration is that by pooling demand for parts from a number of companies, a supplier may be able to enjoy economies of scale that result in higher quality and lower cost than if every company makes its own parts.

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