What is the aim of vertical integration in business strategy?

Vertical integration in business strategy focuses on controlling multiple levels of the supply chain, which includes the production of materials and the distribution of finished products. By producing and distributing supplies in-house, a company can increase efficiency, reduce costs, and enhance control over the quality of its products. This strategy allows businesses to streamline operations, mitigate risks associated with dependency on external suppliers and distributors, and potentially improve profit margins.

When a company achieves vertical integration, it can lead to better coordination of its various processes and an ability to respond more quickly to market changes. This strategy can significantly enhance competitive advantage as it consolidates resources and capabilities under one organization, thus fostering innovation and improving overall strategic alignment.