from cfa text, vertical mergers only exist in mature growth, and deceleration of growth and decline stage, but not in stablization and market maturity stage. why is that?
The motivation to vertically integrate is to create synergies with a supplier or a downstream entity. The most important time of the industry life cycle to do this is when the company has to find new ways to keep ROE up which happens when a company’s growth starts to slow, or sales stay flat or decline. They are looking for ways to reduce costs
then how come vertical mergers are also present in mature growth stage?
see aliman’s explantion above your post…
because there are still growing, i think yuu should focus on stabilization & mature, once you are stable and mature you don’t want to start experimenting by going up or down the value chain. with decline you ready to try anything that can help you to bounce back to stabilisation.