Forward Integration

Forward integration is a type of vertical merger (vertical integration) in which a supplier acquires a manufacturer or a manufacturer acquires a distributor.

Businesses engage in forward integration either to generate a higher margin from a key input which it owns or produces or to better market its products and increase its profitability.

Example

If Intel acquires Dell, it is a forward integration because it is an acquisition of manufacturer by a supplier.

If Dell acquires a distributor of computers such as BestBuy it will be a forward integration too since it is an acquisition of a distributor by a manufacturer.

Written by Obaidullah Jan, ACA, CFA and last modified on

Related Topics

In this chapter

XPLAIND.com is a free educational website; of students, by students, and for students. You are welcome to learn a range of topics from accounting, economics, finance and more. We hope you like the work that has been done, and if you have any suggestions, your feedback is highly valuable. Let's connect!

Copyright © 2010-2019 XPLAIND.com