What is backward integration?
In the world of business, it is not uncommon for one company to gain another corporation that has resources or produces goods or services that are important to the company's well -being. When the company decides to buy a corporation that was a stable supplier or seller, this is referred to as backward integration. Here are several backgrounds about how backward integration works and why this type of transaction can be attractive. This attraction can be based on the fact that products that are currently purchased have worked very well and help improve quality and lower limit.
It seems that the long -term relationship with the seller seems to be immediate, the company often begins to look at the total cost of business with the seller. If the acquisition of Throdejca and the integration of the supply chain into the corporate family appears to be reduced in the long run, in the long run, the initial costs would be approached by the seller to change the acquisition. Provided both sides are open to the idea of acquiringThe negotiations are open and eventually an agreement that is attractive to both sides is developed.
In some cases, backward integration occurs not because one company wishes to get a company, but because several seller customers want to ensure that the entity survives. As an example, a seller who supplies goods to three companies can have financial problems. Since these three companies do not want to look for a new seller, a working relationship is established where each of the three contributes to the purchase and continuing operation of the seller. This is often a mutually advantageous situation for everyone. The seller remains in business, and thzakazers continue to receive the products they rely on, often with a reduced rate.
Other back -integration applications include a supply chain solution where suppliers need to reduce the energy of suppliers. As a means of minimizing the input costs mCan a customer or a group of customers start buying a supplier. This helps to bring the supplier's energy under control, which allows each customer to better manage their individual input costs and possibly generate more income from other clients of the newly acquired dealer.