What is Vertical Integration? Definition and meaning

Vertical Integration

Definition: Vertical Integration is a strategic approach of controlling or increasing the level of control a firm has over its inputs (raw materials and intermediate products) and distribution of its outputs (products and services).
The term refers to the degree of integration between a firm’s value chain and the value chains of its suppliers and distributors.
Unlike horizontal integration, in VI the firm acquires activities at other levels of the value chain.
There are two basic types of VI: backward integration and forward integration. See also Quasi-Vertical Integration.

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