Backward integration
[edit] Introduction
Backward integration is a form of vertical integration which involves a company buying some or all of its raw material suppliers from the upper side, irrespective of whether this is a single business or the entire supply chain. Such an action can avoid dependency on suppliers, maintains a constant supply of material, controls costs and improves profit margins, and can increase efficiency and competitiveness.
So, for example, a developer working on a large infrastructure contract likely to take many years to complete may find it economically viable to buy a small, local brickworks to ensure a constant supply of bricks at a reasonable cost.
Backward integration is often achieved by acquisition of, or merger with, the businesses further up the supply chain. As well as gaining a competitive advantage, the process can be used to make it more difficult for new companies to enter the market.
[edit] Forward integration
The opposite of backward integration is forward integration involving acquiring or merging with companies in the lower supply chain. This means the company seeking forward integration is looking to buy the distributors of its products or the retail stores that sell them. This can give a manufacturer better control in supplying its product to consumers as well as a better position to receive first-hand product feedback.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
RTPI leader to become new CIOB Chief Executive Officer
Dr Victoria Hills MRTPI, FICE to take over after Caroline Gumble’s departure.
Social and affordable housing, a long term plan for delivery
The “Delivering a Decade of Renewal for Social and Affordable Housing” strategy sets out future path.
A change to adoptive architecture
Effects of global weather warming on architectural detailing, material choice and human interaction.
The proposed publicly owned and backed subsidiary of Homes England, to facilitate new homes.
How big is the problem and what can we do to mitigate the effects?
Overheating guidance and tools for building designers
A number of cool guides to help with the heat.
The UK's Modern Industrial Strategy: A 10 year plan
Previous consultation criticism, current key elements and general support with some persisting reservations.
Building Safety Regulator reforms
New roles, new staff and a new fast track service pave the way for a single construction regulator.
Architectural Technologist CPDs and Communications
CIAT CPD… and how you can do it!
Cooling centres and cool spaces
Managing extreme heat in cities by directing the public to places for heat stress relief and water sources.
Winter gardens: A brief history and warm variations
Extending the season with glass in different forms and terms.
Restoring Great Yarmouth's Winter Gardens
Transforming one of the least sustainable constructions imaginable.
Construction Skills Mission Board launch sector drive
Newly formed government and industry collaboration set strategy for recruiting an additional 100,000 construction workers a year.
New Architects Code comes into effect in September 2025
ARB Architects Code of Conduct and Practice available with ongoing consultation regarding guidance.
Welsh Skills Body (Medr) launches ambitious plan
The new skills body brings together funding and regulation of tertiary education and research for the devolved nation.
Paul Gandy FCIOB announced as next CIOB President
Former Tilbury Douglas CEO takes helm.
UK Infrastructure: A 10 Year Strategy. In brief with reactions
With the National Infrastructure and Service Transformation Authority (NISTA).