Vertical and Horizontal integration

Integration

Integration is when two businesses join each other

Types of integration

Horizontal integration

Vertical integration

–        Backward vertical integration

–        Forward vertical integration

 

Horizontal integration

Horizontal integration happens when a business acquires or joins a business which is providing the same product at the same stage of production

–        Example: A Coffee shop acquires another coffee shop

 

Vertical integration

Backward vertical integration happens when a business acquires or joins one of its suppliers

–        Example: Coffee shop acquires a dairy farm

Forward vertical integration happens when a business acquires or joins one of its retailer or distributor

Example: a dairy farm acquires a coffee shop