Question

How can economies of scale be achieved through vertical integration?

Answer 1

vertical integration when its suppliers have a lot of market power and can dictate terms. ... Third, vertical integration gives a company economies of scale. That's when the size of the business allows it to cut costs. For example, it can lower the per unit cost by buying in bulk.

Answer 2

Thanks to the quantity manage during the production process.

Step-by-step explanation:

The vertical integration is the process where a company decides to integrate another company under their management. Usually the enterprise that takes the purchase towards tends to be more powerfull than the other in financial terms and also in the market. This method let the buyer use all of the resources that the company bought has. Also, it is very common that this last company is in the same bussiness that the first one, so that they manage in the same areas. Therefore that additionating more equipment, workers and another resources may help the buyer to increase the number of quantity in the production process making possible to have economies of scale. All this at the same time that it takes more clients to increase their sales.