MindMap Gallery Types of vertical integration
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This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
Types of vertical integration
Vertical integration refers to the behavior of a company or organization merging or acquiring companies upstream or downstream in the supply chain.
The purpose of vertical integration is to integrate resources, improve efficiency and control costs.
Vertical integration can help companies achieve closer collaboration in the supply chain and strengthen control over the entire industrial chain.
Types of vertical integration
forward vertical integration
Definition: A company acquires or merges with downstream businesses to control the distribution and sale of products.
Purpose and advantages
Expand market share and increase product sales.
Control product quality and price.
Strengthen control over sales channels and improve market response speed.
backward vertical integration
Definition: A company acquires or merges with upstream companies to control the supply and production of products.
Purpose and advantages
Ensure supply stability and quality control of raw materials.
Reduce product manufacturing costs.
Strengthen control of the supply chain and improve production efficiency.
two-way vertical integration
Definition: A company engages in both forward and backward vertical integration, that is, acquiring upstream and downstream businesses.
Purpose and advantages
Realize the control and optimization of the entire industry chain.
Improve synergy and reduce intermediate costs.
Enhance the competitiveness and market position of enterprises.
parallel vertical integration
Definition: A company acquires or merges with businesses similar to its own in the same industry.
Purpose and advantages
Expand market share and increase product line diversity.
Achieve economies of scale and reduce costs.
Share resources and technology to improve innovation capabilities.
Factors affecting vertical integration
Market demand and prospects
Whether the control and expansion of distribution channels is conducive to market development and sales growth.
Product life cycle and market development trends.
Industry competition and supply chain characteristics
Whether there are potential partners and suitable acquisition targets.
Supply chain complexity and the company's position within the supply chain.
resources and capabilities
Whether the company's own resources and capabilities are suitable for vertical integration.
Have the ability to manage the merger and acquisition integration process.
legal and policy environment
Whether there are legal and policy restrictions, such as antitrust regulations.
Government policy support and supervision of vertical integration activities.
Vertical integration case study
Forward vertical integration case
For example, an electronics manufacturer acquires an electronics retailer to control product sales channels and market share.
The case for backward vertical integration
For example, an automobile manufacturer acquires a parts supplier to ensure stable supply and quality of parts.
Two-way vertical integration case
For example, a food processing company acquired both raw material suppliers and food retailers, achieving control of the entire industry chain from product research and development to sales.
Parallel vertical integration case
For example, a telecommunications operator acquires an Internet service provider to expand its business scope and increase product diversity.