Definition of Forward integration:
The expansion of a company to gain control over processes which follow its own in the supply chain, such as distribution, retailing, etc.
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.
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.
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?
- Forward integration is colloquially referred to as "cutting out the middleman.".
- 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.
- 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