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Vertical integration(business) (1 Viewer)

dr.nitin

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Can someone please explain to me what vertical integration is in business studies??
ive tried to read definitions but still dont get it
 

pabzieee

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its a simple concept really.

Horizontal : a business takesover/purchases another business within the same production level. e.g Woody Furnitures buying over Cheeky chairs ltd.
(same industry)
- both an intermediary/wholesalers

Vertical: if Woody furnitures decided to to purchase a timber yard (lumber yard). this would be known as vertical integration. because it is acquiring another business in a different stage in production.

any problems ask... =]
 

the-derivative

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Vertical integration is the process of joining together of businesses that are involved in different but related activities or processes which assist the business' original prime function.

E.g. a fruit store can purchase a truck company to assist in distribution.
 

Absolutezero

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Yeah, basically buying above or below you, in terms of how things are supplied. Hence, vertical.
 

nimssyk

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Hey.. i just copied this outta my notes..i hope this helps

• Vertical Integration is the expansion of a business’s production in different but related areas

--> Eg. when a computer assembly company buys the silicon chip making factory

--> Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers.

--> typified by one firm engaged in different parts of production (e.g. growing raw materials, manufacturing, transporting, marketing, and/or retailing).

• Good example is the oil industry where Companies such as ExxonMobil, Royal Dutch Shell, and BP and national often adopt a vertically integrated structure.
--> active along the entire supply chain from locating crude oil deposits, drilling and extracting crude, transporting it around the world, refining it into petroleum products such as petrol/gasoline, to distributing the fuel to company-owned retail stations, for sale to consumers.
 

Eddykungfu

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here is a pic I used in my notes of one of my case studies GE vertically/horizontally integrating.

hope that explains the concept.
 

xDell

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-Backward vertical integration is when businesses 'make' their components for e.g. Footlocker produces its leather and cotton thru having their own cotton fields, leather factories.
-Forward vertical integration is when businesses use facilities to deliver their finished products to the public e.g. Footlocker store.
 

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