Difference between revisions of "Vertical Integration"
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| − | A term used in microeconomics and management to describe the process whereby a company expands its business into areas that are at different points on the same production path. In a vertically integrated company, each member of the supply chain is engaged in a different part of the production process (e.g. manufacturing, transporting, marketing, and retailing). The products and services come under a common ownership. For instance, a solar company producing photovoltaic products may also manufacture cells, wafers, and modules to create these products. There are two forms of vertical integration: backward and forward. Vertical integration has a number of advantages. In addition to reducing costs and improving efficiency, it also helps to reduce turnaround time and increase financial growth. | + | A term used in microeconomics and management to describe the process whereby a company expands its business into areas that are at different points on the same production path. In a vertically integrated company, each member of the supply chain is engaged in a different part of the production process (e.g. manufacturing, transporting, marketing, and retailing). The products and services come under a common ownership. For instance, a solar company producing photovoltaic products may also manufacture cells, wafers, and modules to create these products. There are two forms of vertical integration: backward and forward. Vertical [[integration]] has a number of advantages. In addition to reducing costs and improving efficiency, it also helps to reduce turnaround time and increase financial growth. |
[[Category:The Cultural Diplomacy Dictionary]] | [[Category:The Cultural Diplomacy Dictionary]] | ||
Revision as of 09:34, 27 March 2014
A term used in microeconomics and management to describe the process whereby a company expands its business into areas that are at different points on the same production path. In a vertically integrated company, each member of the supply chain is engaged in a different part of the production process (e.g. manufacturing, transporting, marketing, and retailing). The products and services come under a common ownership. For instance, a solar company producing photovoltaic products may also manufacture cells, wafers, and modules to create these products. There are two forms of vertical integration: backward and forward. Vertical integration has a number of advantages. In addition to reducing costs and improving efficiency, it also helps to reduce turnaround time and increase financial growth.
