Forward integration

Forward integration,

Definition of Forward integration:

  1. The expansion of a company to gain control over processes which follow its own in the supply chain, such as distribution, retailing, etc.

  2. Forward integration is a business strategy that involves a form of vertical integration whereby business activities are expanded to include control of the direct distribution or supply of a company's products. This type of vertical integration is conducted by a company advancing along the supply chain.

  3. A good example of forward integration would be a farmer who directly sells his crops at a local grocery store rather than to a distribution center that controls the placement of foodstuffs to various supermarkets. Or, a clothing label that opens up its own boutiques, selling its designs directly to customers instead of or in addition to selling them through department stores.

  4. Type of vertical integration where a manufacturer acquires the channels of distribution of its outputs to achieve greater economies of scale or higher market share.

How to use Forward integration in a sentence?

  1. Forward integration is colloquially referred to as "cutting out the middleman.".
  2. While forward integration can be a way to increase a company's control of its product and profits, there can be a danger of diluting the core competencies and business.
  3. Forward integration is a business strategy that involves expanding a company's activities to include the direct distribution of its products.

Meaning of Forward integration & Forward integration Definition