Backward Integration Strategy Assignment Help

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Backward integration in business is a form of vertical management. In this management, the merger or acquisition of a business occurs. But it is most essential to note that both the merging parties are from different positions of a supply chain. The buying of a wheat processing unit by a bakery to ensure its timely supply of wheat is a good example of backward integration. A supply chain typically begins with a supplier providing raw materials to the manufacturer and ends with a consumer receiving the finished item. It should be noticed that the bakery moves back in the supply chain while acquiring the wheat producer and hence the name. Such integrations are preferred to better the quality of raw materials and increase dependability for the same along with increase profit side by side. This also ensures a healthy business in the market. A global example of backward integration was set by Amazon- an online book seller when it bought a book producer. For insights on aspects and pros and cons of this process refer Backward Integration Strategy Assignment Help.

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Defining Problem

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Integration Strategy

The integration strategies explained in Backward Integration Strategy Assignment Help are
• Breadth of activities: It is the measure of exact number of tasks undertaken in house by a firm.
• Degree of internal transfer: It is the proportion of transfer of materials or resources that occurs within the firms. Fully integrated firms have a hundred per cent or so transfer of resources or services. On the other hand tapered integrated systems have a part transfer of materials. The left out materials that are needed are acquired through other sources. For detailed understanding of different aspects in the strategy formulation, go through Backward Integration Strategy Assignment Help.
• Form of ownership: This reflects the proportion of a firm’s equity in integration. While fully owned ventures are at practice, quasi integrated or joint ventures are a better option for ownership. This is because in the latter risk sharing occurs. This means the losses are shared as much as the profits. For information on advantages and disadvantages of backward integration, go through Backward Integration Strategy Assignment Help.
• Advantages and disadvantages: While the backward integration ensures constant supply of raw materials, greater market share and better coordination in the supply chain, it also has some problems with it. There is lack of flexibility as a strong bureaucracy is administered. The supply of materials might be of sub-standard quality due to ownership of both distribution and supply. Also, the company might end up spending a lot if it is unable to manage the newly acquired firms after integration. The risks from legal front due to large size are a matter of concern.


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