Definition
When a company controls multiple stages of production or distribution within its supply chain, from raw materials to final sale. The corporate equivalent of growing your own vegetables, milling your own flour, and baking your own bread.
Example Usage
Tesla's vertical integration strategy includes manufacturing batteries, motors, and software in-house.
Origin
Industrial organization economics from the late 19th century, formalized by Ronald Coase in the 1930s
Fun Fact
Vertical integration is the opposite of outsourcing, meaning companies constantly swing between the two extremes every decade based on which consulting firm they hired most recently.
Source: Business strategy and economics terminology
Related Terms
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