What is Vertical Integration?
Vertical Integration is a strategy where firms take control of multiple stages within their supply chain. Instead of relying on external contractors, they bring these operations in-house, giving them greater control over production. This can be achieved by building their production lines or acquiring existing businesses that handle upstream or downstream parts of the supply chain.
Key Takeaways:
- Vertical Integration involves companies controlling various stages within their supply chain to enhance efficiency and gain control over production, distribution, and sales.
- Internal divisions help manage different aspects of production and distribution, enabling effective coordination.
- The types of vertical integration include backward, forward, balanced, and disintermediation.
- Successful vertical integration can improve competitiveness, lead to cost savings, and enhance customer satisfaction.
Table of Content
- How Vertical Integration Works?
- Types of Vertical Integration
- 1. Backward Integration
- 2. Forward Integration
- 3. Balanced Integration
- 4. Disintermediation
- Advantages of Vertical Integration
- Disadvantages of Vertical Integration
- Examples of Vertical Integration
- Conclusion
- FAQs – Vertical Integration