Vertical Integration

Vertical integration extends a firm’s competitive and operating scope within the same industry. A vertically integrated firm is one that performs value chain activities along more than one stage of an industry’s overall value chain

It involves expanding the firm’s range of value chain activities backward into sources of supply and/or forward toward end users. Thus, if a manufacturer invests in facilities to produce certain component parts that it formerly purchased from outside suppliers, it is engaging in vertical integration.

The two best reasons for investing company resources in vertical integration are to strengthen the firm’s competitive position and/or to boost its profitability. Vertical integration has no real payoff unless it produces sufficient cost savings to justify the extra investment, adds materially to a company’s technological and competitive strengths, and helps differentiate product offering.

A vertical integration strategy has appeal only if it significantly strengthens a firm’s competitive position and/or boosts its profitability.

[violetagonzalez]

I’m here for the relation of vertical integration and agribusiness. Can someone help explain that please.

[SsDiBoi]

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