Forward Integration

Forward integration is an aspect of strategic development relating to securing inputs and acquisition … most often used to refer to an organisation’s attempt to expand downstream into industries that distribute the organisation’s products (Lysons and Farrington, 2006).

Information about Forward Integration

Forward integration is an aspect of strategic development relating to securing inputs and acquisition. The term is most often used to refer to organisational attempts to expand downstream into industries that distribute its products, for instance, that of a vehicle manufacturer acquiring a car distribution chain (Lysons and Farrington, 2006). Backward integration strategies (vertical integration), on the other hand, adopt the opposite approach: vertical integration refers to an organisation’s attempt to expand upstream into industries that provide inputs, for instance, a vehicle manufacturer acquiring a steel rolling plant (Lysons and Farrington, 2006). Forward (and backward) integration is an important concept in terms of the value chain. During each stage in the chain, value is intended to be added to the product. The company at a particular stage in the value chain takes the product produced during the previous stage and transforms it in such a way that it is worth more to the organisation and customer at the next stage in the value chain (Hill and Jones, 2010).

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