Vertical Integration: A Concept That Reflects a Firm Supply Chain Ownership in Marketing

Definition of Vertical Integration

Vertical Integration can be defined as a concept in management, where a supply chain of any firm is owned by that firm. Marketers also utilize this concept during the marketing of their brand. Usually, every member of the supply chain designs a different product or service that is market specific. These products combine to fulfill a common need. Vertical Integration is the contrast of Horizontal Integration. This concept has even explained management styles that bring huge portions of the supply chain within a single corporation, apart from bringing it under a common ownership.

Textbooks on Vertical Integration

Marketers should have immense knowledge about Vertical Integration to improvise upon their Supply Chain skills regarding their brand. Hence, they can refer to some details of textbooks that are based on the topic of Vertical Integration as follows:

• Vertical Integration, Outsourcing, and Corporate Strategy by Kathryn Rudie Harrigan (Published by Beard Books – Year 2003).
• Vertical Integration by The University of California (Digitized in 2009 and Published in 1959).

Examples of Vertical Integration

Example 1: An interesting example of Vertical Integration can be its application by various oil firms across the globe. These firms, whether they are national or multi-national, usually adopt a structure as per vertical integration. It means that they are active along their entire supply chain starting from locating deposits, extraction of crude oil, transporting it across the world, right up to the last level of the consumer receiving it.

Example 2: Another interesting example of Vertical Integration can be its application by the telephone firms across the world in the twentieth century. They designed their telephones, telephone cables and other equipments under the vertical integration model.

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