Question

(a) What is vertical integration? Please explain.

(b) Explain how Apple Inc. is a vertically integrated company. You must give an explanation.

Answer 1

Verticle integration is a strategy where company owns/ manage or completely controls their suppliers , distributors or retail location to have a better value propisition and hold over their supply chain. This helps companies to reduce the cost of distribution,improve efficiencies and having better control over the entire goods flow and market connect.

b: Apple inc is a verticle integrated company as they have their own priority showrooms exclusively for Apple products. They distribute their finished products only through selected channeles which has direct control of the organization. The major channels are through priority showrooms, online e commerce , selective or focussed vendors. Thus Apple can enhance the visibility of supplychain and also reduce the Bull whip effects. It helps in better forecasting and market connect.