Vertical integration is the acquiring of control over a business’s manufacturers and or distribution networks. The main objective of vertical integration is to acquire partial or complete control over the supply chain. Vertical integration is normally of two types; forward integration and backward integration.
In backward integration, the business acquires control over manufacturers and control the production. In forwarding integration, control is acquired over the suppliers of finished products, distributors, and retailer networks. Under both options, huge capital is needed and this is one of the big drawbacks of vertical integration.
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