Achieve Competitive Advantages of Vertical Mergers and Diversification

Achieving competitive advantage is a primary goal for the most companies. The logic of the market has been changed and has caused that the most important sources of competitive advantage (even at the level of a country) must be actively and permanently seek and use as opposed to “playing the card of” low-cost on the basis of cheap labor or raw materials. Creating and maintaining a competitive advantage means that the company achieves favorable operating results in relation to other participants in the economic operations. If a company wants to grow, it must inevitably seek new opportunities for growth. Diversification, however, on the other hand, as an alternative strategy aimed at expanding production program and, as the “entry” of the company into new industry and new market, represents the subject of attention in the economic theory and practice.