According to a North American dictionary, vertical integration is defined as “merger of companies in the supply chain: the merger of companies that are part of the chain of companies that handle a single item from the production of raw materials to retail sales” (“Vertical integration”, 2009). Although the definition of vertical integration is quite simple, the concept is much more complicated than you might think. There are four strategic factors that must be established by business leaders before the implementation of vertical integration can take place and which must be well thought out to achieve any level of success. The factors that influence vertical integration are economic, market, operational and strategic. Economic Factors Among the strategies used to implement vertical integration, authors Meyer and Wang expressed their feelings regarding the influential economic factors in the following quote: "the most important pro-competitive effect of vertical integration" a vertical integration is the elimination of pre-merger double marginalization that occurs when both the upstream and downstream markets exhibit some degree of economic market power, and thus firms at each level raise their prices above marginal cost ” (Meyer and Wang, 2011) In addition to the pro-competitive economic effect, some companies also experience what is known as post-merger, which is basically an incentive for a company to increase the costs of downstream competitors by raising costs of the upstream market. Hence the increase in price pressure, previously established downstream prices causing conflicts. Market Factors Some argue that it is imperative for a company to conduct research and understand industry dynamics and market factors before any type of vertical integration can be established. half of the document ......questions correctly and provides colleagues with a good detailed background of vertical integration. Works Cited Haupt, Lynne. (2005). Vertical integration and strategic sourcing in the biopharmaceutical industry. Manuscript submitted for publication, Sloan School of Management and Department of Mechanical Engineering, Massachusetts Institute of Technology, Cambridge, Massachusetts. Retrieved from dspace.mit.edu/bitstream/handle/1721.1/34827/61670866.pdf?sequence=1. Meyer, C. S., & Wang, Y. I. (2011). Determining the competitive effects of vertical integration in mergers. Newsletter of the Economic Committee, 11(1), Retrieved from www.nera.com/nera-files/PUB_Vertical_Integration_0511.pdf.Vertical Integration. (2009). Encarta World English Dictionary. Retrieved July 6, 2011, from http://www.bing.com/Dictionary/search?q=define+vertical+integration&FORM=DTPDIA.