Why Vertical Integration Made Tesla More Powerful
What changes are expected in the supply chain in the future
Vertical and horizontal integrations are two different integration strategies to expand the business. Both strategies have advantages and risks, and each company chooses one of them to achieve the best growth for the company and ensure its profitability. Regardless of the strategy considered, the company must first know which part of the product has a maximum impact on profits.
First, we need to know what horizontal and vertical integration are, their impact on business growth, and why a business expands vertically or horizontally.
Horizontal integration is a strategy to buy a competitor; for example, a manufacturer buys a manufacturer, or a distributor buys a distributor.
Vertical integration is a strategy forward or backward toward the supply chain. The company buys the supplier toward customers, which is forward vertical integration; for example, a manufacturer buys a retailer. Or the company buys the supplier toward raw material, which is backward vertical integration; for instance, a manufacturer buys a supplier of the raw material company needed for the final product. Vertical integration brings part of the production process in-house instead of outsourcing.
