Which strategy combines forwards or backwards integration to promote growth?

Vertical integration is a strategy used by businesses to promote growth by controlling more than one stage of the supply chain. This can involve moving either forwards or backwards within the supply chain.

When a company engages in backwards integration, it takes control of its suppliers by acquiring or merging with them, which allows for tighter control over the supply of raw materials or components essential for their operations. Conversely, with forwards integration, the company takes over its distribution channels or retail outlets, allowing it to be more involved in the selling process and directly reach consumers.

By employing vertical integration, a company can enhance operational efficiencies, reduce costs, and increase its market power as it eliminates reliance on external suppliers or intermediaries. This comprehensive control over different levels of production and distribution facilitates strategic growth and responsiveness to market changes, aligning closely with the company's long-term goals. This focus on obtaining greater control and streamlining processes distinguishes vertical integration from other strategies like horizontal integration, which involves expanding at the same level within the industry.