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Backward Integration is also a type of vertical integration that involves the purchase of the supplier or formation of a merger with them in the supply chain. It is mentioned in Backward Integration Strategy Homework Help that companies follow backward integration when they expect improved efficiency and cost saving. This is done by integration of two or more companies at different positions in the supply chain. It is given in Backward Integration Strategy Homework Help that Backward Integration Strategy combines the individual resources, technologies and activities in the production of products. It starts with the distribution of raw materials from supplier to manufacturers and ends after the sale of the final product to the end consumer. Backward Integration Strategy Homework Help also discusses the difference between backward integration and forward integration. Forward integration relates to the acquisition of the distributor whereas backward integration is associated with the acquisition of supplier.
Disadvantages of Backward Integration Strategy
The drawbacks of Backward Integration Strategy are discussed below in Backward Integration Strategy Homework Help.
• At times established companies have to be sacrificed for the development of fresh competencies.
• Backward Integration leads to higher costs in the market due to lack of supplier competition. Other disadvantages of Backward Integration Strategy can be studied in Backward Integration Strategy Homework Help.
• It creates an upstream capacity to maintain downstream with an adequate supply when the demand is very heavy. This leads to a demand for increased investment.
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