Downline Vertical Integration

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Definition: Downline Vertical Integration

When a business expands its operations within the same value chain, it is known as vertical integration. Vertical integration is of two types: Upline vertical integration or backward integration and downline vertical integration or forward integration.


If a business starts producing what its customer produced previously, it is forward integration and if the business buys out its suppliers, it is backward integration.


Example

In the electronics space, a Korean company, majorly a supplier of displays to other manufacturers underwent downline vertical integration, and started manufacturing devices to be sold in the same market. Here, the Korean company expanded within the sane supply chain or vertically integrated through downline.


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