Analysis of Pros and Cons of Vertical Integration in Terms of Overall Strategy

Running head: STRATEGIC MANAGEMENT
Strategic Management
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1STRATEGIC MANAGEMENT
Topic- Analysis of Pros and Cons of Vertical Integration in Terms of Overall Strategy
Introduction
When the company is wanting to expand their business operations in the various
steps, however, they prefer to remain on the same type of path of production, the vertical
integration is the vital aspect which can be followed. There are two kinds of vertical
integration which includes both forward as well as backward (Zhou & Wan, 2017). Forward
vertical integration mainly takes place while the company tries going forward in the cycle of
production while analyzing the entire control. The entire distribution can be in form of
forward integration and backward integration moves in the complete opposite direction
wherein the manufacturer who tries in assuming the control of supplies required for the
different goods as well as services needs to be mainly focused on the backward integration.
Pros of Vertical Integration
The quality assurance can be built in the entire system as when the vertical
integration is successful, it will be allowing the different companies to put eyes on the quality
of the products and services which are being delivered by them. From initial supply to final
sale, the better-quality assurance process in the system helps in creating value proposition
which is reliable (Levy, Spiegel & Gilo, 2018). It will be generating the greater satisfaction
among the different customers that helps in building loyalty and the return on revenues will
be effective.
The different companies which are vertically integrated can be successful in
withstanding the economic kind of changes than the different companies which have not
(Koch, Wendling & Wilson, 2017). The stability with the supply chain control can be helpful
in eliminating the unpredictability in a successful manner. Vertical integration helps in