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The concept of business integration entails the strategies that are developed by business organizations for the purpose of synchronize the available resources pertaining to information and technology with the business cultures and existing objectives and goals. The purpose of business integration is to enable the business organization and the various elements operating within its scope to be able to engage and communicate with each other in the digital business platforms. These elements as being integral to the business operations of the organization can be identified to include the customers, the workforce of the organization, suppliers, government, service vendors, partners and all the other members on the supply chain as well as the group of stakeholders. The process of business integration thereby enables the digitalization of the supply chain thereby increasing its efficiency in achieving the targeted business outcomes and goals. The process of business integration further involves the formulation of several digital strategies that are required to be incorporated by the organization within the scope of its operations and thereby enabling the process of optimization of the key business processes and their automation.

Types of Integration in Business

Business integration may be conducted in various methods pertaining to the nature of the market in which the business organization operates as well as the structure of the supply chain which will be digitalized. In this respect, it can be observed that the different types of integration in business can be outlined to be the following:

1. Backward vertical integration –

This type of integration in business involves the acquisition of a business operating earlier in the existing supply chain of the business organization. In this regard, the supplier providing the business organization with the raw materials or resources required to conduct its business operations are acquired. For instance, in the case that a retailer acquires a wholesaler, the integration may be regarded as being backward vertical integration.

2. Forward vertical integration –

This type of integration in business involves the acquisition of a business further up within the supply chain as available to the business organization. This type of integration pertains to the taking over upon an element within the system of distribution, whether they are directly sold to the customers or not. For instance, this type of business integration involves a case where a car parts distributor is acquired by a vehicle manufacturer.

3. Horizontal integration –

This type of integration in business involves the acquisition of a supplier or distributor at the same level as the business organization itself. In other words, this type of integration is identified in the case that a business organization acquires the supply chain system of the different or same industries that are operating at the same level.

4. Conglomerate integration –

This type of integration in business involves the condition where a business organization acquires another entity that operates in a field that is completely unrelated. In this case of business integration, the business organization is identified to be willing to risk the enlargement of their portfolio and thereby of the diversification of the products and services being offered to the customer or clients.

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Forms of Integration

Considering the different types of integration in business as has been discussed in the previous sections the forms of business integration may be discussed in the broad sense. These two forms of integration may be identified to include vertical integration and horizontal integration. When a business organization acquires another business entity that is at the same level of production and within the same industry as them this known as horizontal integration. Effectively, the business organization is buying out one of its competitors. Vertical integration on the other hand relates to the arrangement in which a business organization decides to acquire another business organization that operates in the same industry as them but is at a different stage of the production process. In addition to this, another form of business integration may also be identified in terms of a conglomerate integration. Sometimes business organizations prefer moving into areas, which are not related to the identified core business operations. This situation could arise because they intend to expand the risk involved over a wider portfolio. This form of business integration is known as conglomerate integration or diversification.

Business Integration Examples

Various examples may be stated in terms of the conduction of the types of business integration discussed in the previous sections. These examples may be identified to be the following:

1. Amazon -Amazon has been identified to have vertically integrated most of its business operations. Not only does it act as a marketplace for buyers and sellers – but also it also offers its own products and services, as well as its own distribution channel. 
2. Carnegie Steel – this Company vertically integrated by acquiring companies before itself in the supply chain. The process of making steel requires raw material extraction – iron ore and coal.
3. Ikea -Ikea is recognized as a flat-pack retailer that sells mostly wooden furniture, but also other fixtures and fittings. It is the last in the supply chain as it directly sells to the final consumer.
4. Netflix - Netflix is identified as a provider of various types of streaming services – the end level of the supply chain, wherein there is direct engagement with the customer.

Different Methods of Integration

The method of business integration involves the estimation of the value that may be added for the business organization in terms of acquiring the targeted element present behind, further or unrelated to the existing supply chain and business operations. In this regard, the availability of the resources among these distributors and suppliers is to be considered and measured in terms of the business operations of the organization under evaluation. In addition to this, the business organization will also be required to restructure the supply chain in an effective manner so as to not cause any discrepancies in the overall business operations.

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