Study Notes
Vertical Integration
- Level:
- A-Level
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 22 Mar 2021
Vertical integration involves acquiring a business in the same industry but at a different stage of the supply chain.
There are two main kinds of vertical integration:
Forward vertical integration: this an integration of a business that is closer to final consumers e.g. a manufacturer buying a retailer
Backward vertical integration: here the aquisition is operates earlier in the supply chain e.g. a manufacturer buying a raw material or component supplier
Examples of Vertical Integration
Film distributors owning cinemas + digital streaming platforms
Brewers owning/operating pubs (forward vertical) or buying hop farms (backward vertical)
Record labels and radio / online music stations
Drinks manufacturers such as Coca Cola integrating with bottling plants
Pig processing business buying a pig farm
Technology companies growing vertically through hardware, software and services
Recent Case Studies of Vertical Integration
Nov 2015: Apple buys Star Wars motion-capture company Faceshift
Nov 2015: Ikea Buys Romanian, Baltic Forests to Control Its Raw Materials
Oct 2015: Dell makes $67bn bet on EMC in tech history's largest acquisition. US computer giant Dell agrees to buy data storage company EMC
Sept 2015: (Wholesaler) Booker given green light for takeover deal worth £40m of Budgens and Londis grocery chains
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