Vertical Integration

• It is the consolidating process it means that an organization is involve in the aspects of services and other process that goes with the production of the product or services.

Vertical Integration classified into two:

1. Backward Integration

• It is an acquisition brought strategy when the business organization buys one of its suppliers. For example, I am operating a big bakery chain or pastries. All those pastries shop or baker shop they have a regular business partner a supplier of their flour. When there was a time that the price of bread is on the rise because of the scarcity of resources raw materials or resources in terms of flour. So, most of the organization click in the pastries or the bakery industry was threatened with supplies of flour. So came with the idea that business of this nature would like to purchase the existence of the supplier business so that they would have a free hand in terms of supply and the profitability of cost. Because given that this is are owned already business establishment which is supposedly only the supplier, they could acquire the raw materials at a lower cost.

1. Forward Integration

• This is carried out where the organization buys a distribution company relative to their distribution of their products and services. For example, shoppe. Shoppe is all along tack with the service of J&T, LBC and other that carries for distributions purchases of consumers online. If you have notice there was a time specially when where hit and audit there was a delay of deliver of product and services ordered at shoppe. Later on, we found out tat shoppe is able to established there own shoppe express delivery of which they acquired a distribution company to exactly focus on the distribution of the purchase product online of the consumers in that seems it would not be taken in to account additional distribution cost of items.

QUESTION:

Give three examples of the following (do not include those mentioned in the reference) and give a brief background/description of the undertaking

1. Horizontal Integration

2. Vertical Integration

- Backward Integration

- Forward Integration