First, as the implementation of vertical integration, we can control critical resources or inputs control the sales channels, but new entrants into the industry to establish a barrier to prevent competitors from entering the field of bathroom business operations. Then sanitary enterprises not only to protect their own original business scope to expand their business, and restrict competition where the bathroom business sector, so that companies can develop sanitary prices at a higher price, the larger the profit, However, this vertical integration is not easy to form an effective competition in the market, but if a competitor enters, can lead to the bathroom immediately fell competitive advantage, increased costs, benefits decline.
Second, the private assets are used for the production of specific assets and business activities of sanitary enterprises, either sanitary enterprises required special equipment, can also be a sanitary enterprises have the expertise or technology. Sanitary enterprises use a large number of dedicated resources can reduce manufacturing costs and create differentiated better than the competition, raise prices, and therefore, could be the basis of a dedicated business unit sanitary achieve competitive advantage. When the sanitary enterprises to private assets entrusted to independent suppliers to prevent, they lose their own bargaining advantage, the need for vertical integration of adjacent stages of the value chain.
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