Vertical integration in business strategy typically refers to what?

Vertical integration is a business strategy that involves controlling multiple stages of production or supply within a company's own operations. This approach allows a business to manage the entire process from raw materials to the final product, which can lead to greater efficiencies, improved quality control, and reduced costs. By controlling various stages of the supply chain, companies can mitigate risks associated with reliance on external suppliers, enhance their competitive edge, and retain more profit by eliminating intermediaries.

For instance, a car manufacturer that produces its own parts rather than outsourcing them is an example of vertical integration. By adopting this strategy, the company can ensure consistency in quality, optimize production schedules, and respond more swiftly to market changes. This integrated process enables businesses to better align their operations with overall strategic goals, fostering a more cohesive and efficient workflow.