Vertical integration MGMT 449

What is vertical integration?

It’s when a company expands along its supply chain by taking control of another stage — either by acquiring suppliers (backward) or distributors (forward).

What is backward integration?

When a company moves upstream by taking over or creating its own suppliers.
🧠 Example: Netflix making its own shows instead of buying them from studios.

What is forward integration?

When a company moves downstream by taking control of distribution or sales channels.
🧠 Example: Apple opening its own retail stores.

Can vertical integration be done through internal development?

Yes — companies can build new capabilities themselves or acquire others to expand along the supply chain.

What’s an example of forward integration?

Comcast acquiring NBC Universal (they moved from distribution into content creation).

How do oil companies show vertical integration?

They control everything from drilling (extraction) to refining and selling gas at stations — full supply chain control.

Which of the following is NOT vertical integration?

Any activity outside of the supply chain stages — like expanding into a totally new industry that’s unrelated to production or distribution.