Define Vertical Integration Strategies (Forward, Backward & Horizontal Integration)

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Expert Solution

Vertical integration is a strategy used by the firm to gain control over other competitors in the market to increase the power of the firm. Some forms of vertical integration strategy are as follows:

a. Forward Integration: Forward integration happens when a seller gains control of the direct distribution of the selling of the product. For example, a wholesaler of a product selling directly to the customers rather than retailers of the product.

b. Backward Integration: This type of integration happens when a company starts producing an important raw material on its own or purchase some segments of its supply chain. For example, when a car company merges or acquires with the suppliers of iron and steel.

The other form of integration is Horizontal Integration. When a company merges or acquires its competitors it is known as Horizontal Integration. for example, merger of Idea Cellular and Vodafone Limited.

Rahul Sunny answered 7 months ago

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