Vertical integration is a strategy whereby a company owns or controls its suppliers, distributors or retail locations to control its value or supply chain. Vertical integration benefits companies by allowing them to control process, reduce costs and improve efficiencies.
Vertical Integration. It was pioneered by tycoon Andrew Carnegie. It is when you combine into one organization all phases of manufacturing from mining to marketing. This makes supplies more reliable and improved efficiency. It controlled the quality of the product at all stages of production.
The joint-stock company was the forerunner of the modern corporation. In a JOINT-STOCK VENTURE, stock was sold to high net-worth investors who provided CAPITAL and had limited RISK. These companies had proven profitable in the past with trading ventures. The risk was small, and the returns were fairly quick.
