The direction of vertical integration can either be upstream (backward) or downstream (forward). Vertical integration is a process which is undertaken by the company to improve its control over the supply chain and give a better managed, more efficient and highly controlled supply chain. It mainly involves the parent company as well as its vendors and customers. That allows integrated suppliers to adapt more quickly to new trends. A vertical integration is when a firm extends its operations within its supply chain. vertical integration meaning: 1. a process in business where a company buys another company that supplies it with goods or that…. Vertical Integration – Definition, Types, Pros, Cons & Examples. Login Maximizing profit is the main objective of every business. For example, a 20th Century Fox owns the studios in Hollywood, they also own the cinemas, the TV channels and the DVD rental shops. In the supply chain, we have a number of stages such as; raw material, manufacturing, distribution, and retail. Vertical Integration is when a Media Company owns different businesses in the same chain of production and distribution. Ahsan Ali Shaw March 12, 2021. Vertical integration is a strategy used to expand a firm by gaining ownership of its previous supplier or distributor. These are all good reasons for vertical integration, but there is a very good and valid reason why the auto industry in recent decades decided for the opposite of vertical integration… A current example is the oil industry, in which a single firm commonly owns the oil wells, refines the oil, and sells gasoline. Vertical integration is one such method. Being vertically integrated means a business owns all stages of their supply chain, instead of working with a third-party. It means that a vertically integrated company will bring in previously outsourced operations in-house. Vertical integration is a common term used for businesses across a wide variety of industries, but what does vertical integration mean for cannabis? One of the main techniques companies uses is to achieve a cost advantage. In a perfect world, vertical integration is considered ideal because it reduces your operating costs. Meaning of vertical integration. Information and translations of vertical integration in the most comprehensive dictionary definitions resource on the web. However, if the integrated supplier is making products A and B – it may then need to make product C instead. Companies like GAP, Victoria’s Secret, Old Navy, Zara etc are all vertical operations. In apparel, a vertical manufacturer is one who produces and sells their own stuff. The vendors (from whom material is obtained) are known to lie upstream. They use various techniques and methods to increase the sale and revenue. 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