

- Trending Categories
Data Structure
Networking
RDBMS
Operating System
Java
iOS
HTML
CSS
Android
Python
C Programming
C++
C#
MongoDB
MySQL
Javascript
PHP
- Selected Reading
- UPSC IAS Exams Notes
- Developer's Best Practices
- Questions and Answers
- Effective Resume Writing
- HR Interview Questions
- Computer Glossary
- Who is Who
Explain vertical integration in strategic management
Vertical integration means one company takes control over another company or companies who are in the same product (either in distribution or in production) to gain control over the total chain of product.
Companies prefer this type of integration because the supplier is unreliable, high prices may be charged, to earn more margins and for a significant growth of industry.
Types of vertical integration
The types of vertical integration are as follows −
Backward integration − When a company gains control over the raw material supply company.
Forward integration − When a company gains control over a distribution/logistic company.
Balance integration − Mixture of both forward and backward integration.
Advantages
The advantages of vertical integration are as follows −
- Smooth supply chain.
- Make distribution more efficient.
- To increase the profits.
- Cost reduction.
- Increase in investments.
- Core competencies are developed.
Disadvantages
The disadvantages of vertical integration are as follows −
- Quality may decrease.
- Maintaining a certain level of production.
- Mismanagement.
- Increase in debt.
- Increase in cost.
- Related Questions & Answers
- Explain horizontal integration in strategic management
- Difference between vertical integration and horizontal integration
- Difference between Strategy and Strategic Management
- Explain the TCP Connection Management
- Explain about modelling in financial management.
- Explain about forecasting in financial management.
- Explain about factoring in financial management.
- Explain the concept of Post-Merger Integration (PMI)
- Explain the importance of financial management.
- Explain about cash flows in financial management.
- Explain about sensitivity analysis in financial management.
- Explain about venture capital in financial management.
- Explain about recourse factoring in financial management.
- Explain various sources of finance in financial management.
- Explain about various financial statements in financial management.