Vertical Integration

The degree to which a firm has decided to directly produce multiple value-adding stages, from raw material to the sale of the productSomething that has been or is being produced. to the ultimate consumer. The more steps in the sequence, the greater the vertical integration. A manufacturer that decides to begin producing parts, components, and materials that it normally purchases is said to be backward integrated. Likewise, a manufacturer that decides to take over distributionOutbound logistics, from the end of the production... and perhaps sale to the ultimate consumer is said to be forward integrated.