If i produce bottled water i buy water bottles and fill them with water. Why do i not buy plastic and make my own bottles? Why does it not actually save on costs from paying another company and taxes from buying/selling, and also possibly transportation?
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>If i produce bottled water i buy water bottles and fill them with water. Why do i not buy plastic and make my own bottles? Why does it not actually save on costs from paying another company and taxes from buying/selling, and also possibly transportation?
You can do it if you have enough capital. It’s called vertical integration.
But as I said it comes at an enormous upfront cost because in order to own and control 10 different parts of a supply chain instead of just 1 you will need ten times the resources, ten times the business contacts, ten times the specialized equipment, ten times the specialized personnel.
Instead of one business you’re now managing ten. You’ll also have to deal with antitrust concerns.
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