How is “vertical integration” defined in a global context?

In a global context, vertical integration refers to a strategy where a company expands its operations into different stages of production, either by taking control of supply chain activities or by acquiring companies that operate at different levels within that chain. This can involve a manufacturer purchasing its suppliers or distributors to create a more streamlined operation. By integrating vertically, a corporation can enhance efficiency, control quality, reduce transportation costs, and improve supply chain management, which is especially important in a global market where businesses often face complex logistics and competition.

This strategy can allow companies to better respond to market demands and reduce dependency on external parties, which can be critical when navigating the intricacies of global commerce. It aligns with the goal of gaining a competitive advantage by consolidating resources and capabilities under one umbrella, facilitating faster decision-making and reducing the risks associated with relying on third-party providers.