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What is the difference between forward vertical and backward vertical integration?
Wiki User
∙ 14y ago
Backward vertical integration is whereby an organisations gains ownership and power over it's suppliers. This is common in industries where costs are low and certainty is vital in maintaining competitive advantage. This strategy can be effective if current suppliers are unreliable, too costly and incapable of meeting the needs of an organisation. Forward vertical integration is whereby an organisation gains ownership and power over it's distributors and retailers. Examples can be the establishment of websites that sell directly to the consumer and therefore cutting the middle man. This strategy can be effective if distributors are unreliable and have high profit margins and incapable of serving the consumer.
Wiki User
∙ 14y ago
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