Investor Glossary-vertical integrationInvestor Glossary-vertical integrationInvestor Glossary-vertical integrationInvestor Glossary-vertical integrationInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Vertical Integration

The HTML to link to this page
 

In strategic management and microeconomics, vertical integration is the consolidation of upstream (suppliers) and/or downstream (customers) components of the value chain into a common ownership structure. Costs, market differentiation, and other business issues are impacted by the extent of vertical integration. For instance, vertical integration is a solution to what economists call the hold-up problem, a situation in which it would be efficient for two firms to cooperate, but the firms do not because of differences in bargaining power. Major players in the oil industry have extensive vertical integration. Oil giants including BP and Shell conduct exploration and crude recovery, transport and refining, and retail distribution and sale of fuel. Vertical integration focused on expanding downstream activity is called forward integration. Vertical integration focused on expanding upstream activity is called backward integration. Vertical integration should be distinguished from horizontal integration.



Rate this vertical integration definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: labor relations, balance sheet, VIX, implied volatility, current ratio, reverse mortgage, risk management, minority interest, option premium, inflation, EBITDA, average price per share, ex-dividend date, annual return, 144a, wholly-owned subsidiary, irrevocable trust, Key Rate Duration, APR, stock split, debt service coverage, deferred tax, 1031 exchange, LIBOR, real GDP, Zero Cost Collar, liquidity ratio, 1035 exchange, FTSE, phantom income, covered put, in escrow, stock market close, per diem, margin rate, open position, quality assurance, dividends payable, deferred revenue, required rate of return, FICO score, retained earnings, diluted share, 401a, class C shares, ex-dividend, command economy, limit order, cancelled check


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use