22-7 Sensible reasons for Mergers Economies of Vertical Integration ) Control over suppliers" may"reduce costs )Over integration can cause the opposite effect Pre-integration Post-integration (ess efficient more efficient) Company C ompany S S S S LS Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 22- 7 Irwin/McGraw-Hill Sensible Reasons for Mergers Economies of Vertical Integration ➔Control over suppliers “may” reduce costs. ➔Over integration can cause the opposite effect. Pre-integration (less efficient) Company S S S S S S S Post-integration (more efficient) Company S