Vertical integration

The objective of vertical integration is to become nearer to the end user, either by removing an external function or by controlling the costs paid for outside substances (as in a manufacturing context). Think about a car manufacturer; here, the producer want to control the purchase price of a material necessary for their success, like steel, by having a steel mill. This gets rid of an external function, putting the producer in more direct contact with the end user, the car buyer. Vertically integrating your approach from the territory business might mean selecting owner financing on properties rather than choosing an outside source of funding. In down markets, this removal of outside financing can be vital to survival.

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