Intergrations

Question 1

Define Vertical forward intergration

Answer 1

Merging with other stages in the production process e.g Burberry buying chinese equivalent to selfridges

Question 2

What is an advantage of this

Answer 2

Burberry has full control on the marketing aspect of the company ( placement of products)

Question 3

Define vertical backward integration

Answer 3

Merging with another manufacturer before you in the production process e.g furniture manufacturer. Buying timber supplier

Question 4

What is an advantage of this

Answer 4

Benefit Cutting costs.cos they only pay for after those stages

Question 5

Define horizontal integration

Answer 5

A firm buying out another in the same industry at the same stage of the production processe.g. Adidas buying Reebok

Question 6

Advs of this

Answer 6

• synergy ~ new tech, IP, machinery = increase efficiency
• get rid of competition = increase selling price
• E.O.S = larger business = cheaper prices

Question 7

Define conglomerate intergration

Answer 7

When a firm buys or merges with another firm that has now clear connection to its own line of business e.g P&G buying Gillette

Question 8

What is a an advantage of this

Answer 8

Increases product portfolio and spreads risk