who loses from vertical integration?

Question

I just need an answer to the above question because I need to write an essay on the topic. Thanx

Answer 1

It is very complicated question. You should look into "transfer pricing".

Mean while here is a simplest explanation:

Vertical integration is when there are "upstream firms" that produce parts that "downstream firms" use to finalize their product.

There are many cases:

1. There is no outside market for upstream firm:
In this case they only have downstream firm to sell their parts. This can be disadvantageous when there are other competitors. Downstream firm may believe that they would maximize their profit by buying portions of parts from others. This will hurt the upstream firm.

2. If there is outside market for upstream firm, then downstream firm may face higher prices. This case downstream firm loses.

There are more scenarios, I would suggest you read transfer pricing. This is all I know for now.

Answer 2

In terms of human resources, it is always the working force, one company takes over another because it wants the product that the first company manufactures, but it rarely needs all if any of the first companies staff, so they lose their jobs. Even in the case of say a car manufacturer, where the car is made on the conveyor belt system. If they get to the stage where they run out of wheel nuts and have to wait for them to be supplied to them from another source; then the conveyor belt stops and the workers are laid off until new supplies arrive. It is a side effect of having to rely on someone else, and not doing everything your-self.

Answer 3

admin staff. dont need two sets of admin staff after integration

Answer 4

those who benefit from things staying horizontal.

Good Luck!!!

Answer 5

Those at the bottom. do your own research, lazy