What is Backward Vertical Integration?
Backward vertical integration is a business strategy used by companies to control their supply chain. It involves the company acquiring or merging with suppliers or distributors that are further down the supply chain. Through this, the company aims to have more control over the production and distribution of its products.
Benefits of Backward Vertical Integration
Backward vertical integration offers a number of benefits for companies. These include:
- Increased control over production and distribution processes
- Increased efficiency in the production process
- Decreased costs associated with outsourcing or contracting services
- Reduced risk of supply chain disruption
- Increased flexibility to meet market demands
Examples of Backward Vertical Integration
Backward vertical integration is used by a number of companies in different industries. Some examples of companies that have used backward vertical integration are:
- Walmart: Walmart has used backward vertical integration to acquire suppliers and distributors. This has enabled them to have more control over their supply chain, resulting in cost savings and increased efficiency.
- Apple: Apple has used backward vertical integration to acquire chip manufacturers and other suppliers. This has allowed them to have more control over the production of their products, resulting in improved product quality and faster turnaround times.
- Amazon: Amazon has used backward vertical integration to acquire warehouses, delivery companies, and other distributors. This has allowed them to have more control over their supply chain, resulting in faster delivery times and better customer service.
Conclusion
Backward vertical integration is a powerful business strategy that can provide a number of benefits for companies. It can help companies have more control over their production and distribution processes, resulting in cost savings and improved efficiency. Companies such as Walmart, Apple, and Amazon have all successfully used backward vertical integration to acquire suppliers and distributors, allowing them to gain a competitive advantage in their respective industries. For more information on backward vertical integration, please see the following links: