What is Forward Vertical Integration?
Forward vertical integration is a business strategy that involves a company expanding its operations by taking control of the activities of its suppliers. This type of integration allows for increased control over the materials and services used by the company, as well as a greater ability to control costs and quality. It can also provide additional opportunities for growth and diversification.
Benefits of Forward Vertical Integration
Forward vertical integration can provide a variety of benefits to a company, including:
- Improved control over costs and quality of supplies.
- Greater control over pricing and profitability.
- The ability to diversify operations.
- The ability to control the supply chain.
- Increased market share and brand recognition.
- The ability to better control the supply chain.
Examples of Forward Vertical Integration
Forward vertical integration is commonly seen in the manufacturing industry, where a company may acquire its suppliers or distributors. For example, a car manufacturer may purchase its parts supplier, or a clothing company may acquire its fabric supplier. It is also common in the retail sector. For example, Amazon has acquired numerous companies in order to expand its operations, including Whole Foods, Zappos, and PillPack.
Conclusion
Forward vertical integration is a business strategy that can provide a variety of benefits to a company. It allows for increased control over the materials and services used by the company, as well as a greater ability to control costs and quality. Additionally, it can provide additional opportunities for growth and diversification. For more information on forward vertical integration, please visit: