Hello,
Is it me (obviously English not my first language) that backward integration is described as ahead in the supply chain?
Hello,
Is it me (obviously English not my first language) that backward integration is described as ahead in the supply chain?
Backward integration is moving backwards in the supply chain: A banana distributor buys a banana farm
Forward integration is moving forwards in the supply chain: A banana distributor buys a smoothie shop
Backward integration: further away from customer
Forward integration: closer to the customer
Pretty sure it’s the other way around. See Q#1, National Plastics.
The entity moving “backwards” is the target/aquiree firm. The aquirer pulls the target back, further away from the consumer. In your hypo, a backward integration would be the banana farm (further from consumer) acquiring a banana distributor (closer to consumer)
It’s 100% not the other way around. From CFAI curriculum:
An example of backward integration is if a steel manufacturer purchases an iron ore mining company. When an acquirer purchases a company that is further down the value chain (a distributor), it is called forward integration. An example of forward integration is Merck & Co.’s 1993 acquisition of Medco Containment Services, a marketer of discount prescription medicines. The merger brought together the production and distribution of pharmaceuticals into one integrated company.
This would be a backwards interpretation.
Yep, apologies. I misread