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Forward integration is a type of business planning. This integration strategy was discovered in the year 1990. There are basically two major types of integration that is vertical integration and horizontal integration. Hence again the vertical integration is been divided into two types that is forward integration and backward integration. Vertical integration is an action which is used by the company or an organisation to rule over its distributors in order to increase the demand in the market power. It is somewhat cost effective in many ways. The main aim of this forward integration is to proceed further with this supply chain. The industrial value chain generally consists of the raw materials, intermediate goods, manufacturing, marketing sales, after sales services. Usually each person of this value chain creates different goods. The forward integration usually deals with the business activities which enlarge to authorize the handing out of the company’s goods directly. It is a chain which directly links the distributors with the customers. Basically two matters have to be considered before an integration that is costs and scope of firm. Students looking forward for various notes on forward integration can refer to Forward integration strategy Assignment Help where it is been described more briefly.
Characteristics, Advantages and Disadvantages of Forward Integration Strategy
Characteristics of forward integration given in Forward integration strategy Assignment Help are
• If the production organisation kept itself busy in value chain of sales and after sales services then it acquires forward integration planning.
• This planning is generally executed whenever the company sets up to build higher economic goals in the market power.
• With its increase in demand globally, the forward integration strategy becomes much accepted.
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Effectiveness of forward integration strategy given in Forward integration strategy Assignment Help are:
• Suppliers keep high profit limits.
• Suppliers are not cost effective and are difficult to meet the demands.
• Limited numbers of quality suppliers are accessible.
• There are several advantages of stable production.
• However this forward integration avoids transitional profits.
Advantages of forward integration strategy given in Forward integration strategy Assignment Help are:
• It includes a flexible manufacturing process.
• Transportation costs are generally low.
• Petroleum companies and the food companies are the major usage of this forward integration scheme.
• Direct process where there is no involvement of third party.
• With respect to the quality control, the goods been produced are of high grade.
Disadvantages of forward integration strategy given in Forward integration strategy Assignment Help are:
• The past supplier of this trade may think of attacking or reacting which may harm the manufacturing process and this creates a balancing problem.
• Producers generally control the approach to raw materials and critical ingredients with scant origin.
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