Part1-Consolidated or Fragmented
There are few reasons why Consolidated is more competitive such as-
1-Consolidation offers you a relative price advantage. When there are a few suppliers definitely they have a price advantage. They can’t overprice a commodity but still the chances of losses are quite less because there aren’t too many players in the field. Basically they enjoy an autonomy in setting the commodity prices ,on the other hand fragmented industry has lot of constraints. It enjoys a lower price advantage and the profits are always dependent on the consumer choice and behaviour because he has the options to choose from a range of products.
2-Besides expenses will be reduced as multiple services will be eliminated such as transport cost.
3-They will be able to deal with labourers in a better manner during wage negotiations.
4-As large purchasers they can secure raw materials at a cheaper rate through bulk purchases fram sellers.
5-As units join together their capital base will be widened and business can improve as mutual cost is reduced such as advertisement expenses.
5-A large enterprise can secure better experts to supervise its business.
Thus consolidation has a lot of advantages over similar industries which are scattered.
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