Vertical integration (VI) is a strategy used by many companies to gain control over their industry’s value chain (suppliers and/or distributors).There are two types of Vertical integration, Forward integration and backward integration. The companies which have control on their suppliers are backward integrated, while the companies which expanded their activities to include control of the direct distribution of its products are forward integrated. There are some companies which use both forward and backward integration, Apple is a great example. Apple has used both types of Vertical integration strategy in their company in order to have more control over the value chain. This essay will discuss how Apple use Vertical integration strategy forward and Backward and how that strengthen its competitive position in the market. (1)
The Vertical integration strategy is one of the major considerations that company has to take when developing corporate level strategy. The company has to take the decision …show more content…
It controls all the links in the supply/distribution chain. The hardware & software is Apple’s core competencies. It develops Apps like (Itunes/ICloud) which it sells only through its own retail stores. Apple is a hardware company, a software company, a services company, and a retail company. Most technology companies in the world are vertically integrated in one or two links in the supply/distribution chain, but only Apple has all four entities working in harmony. This makes the competition with Apple very hard. This is one of the reason that Apple products do not get infected with viruses, which has crippled the software industry. In contrast, most other PC, smartphone and tablet vendors make the hardware (Dell, Toshiba, Motorola, Samsung, etc), put someone else’s software on it (Windows and Android), add third party services (Google, carrier services, etc.) and then sell it through someone else’s store.
The Vertical integration strategy is one of the major considerations that company has to take when developing corporate level strategy. The company has to take the decision …show more content…
It controls all the links in the supply/distribution chain. The hardware & software is Apple’s core competencies. It develops Apps like (Itunes/ICloud) which it sells only through its own retail stores. Apple is a hardware company, a software company, a services company, and a retail company. Most technology companies in the world are vertically integrated in one or two links in the supply/distribution chain, but only Apple has all four entities working in harmony. This makes the competition with Apple very hard. This is one of the reason that Apple products do not get infected with viruses, which has crippled the software industry. In contrast, most other PC, smartphone and tablet vendors make the hardware (Dell, Toshiba, Motorola, Samsung, etc), put someone else’s software on it (Windows and Android), add third party services (Google, carrier services, etc.) and then sell it through someone else’s store.