Definition: is a sub-type of vertical integration, which implies a supplier merging with or purchasing up the supply chain. In the majority of scenarios, this involves a consumer business of raw materials, which acquires the supplies independently or even sets up its personal facilities in order to ensure a more reliable supply method. Companies and businesses tend to pursue this method in order to improve production efficiency and to save budget. For instance, backward integration may allow a business to cut the cost of transportation, to make it more competitive, or to increase its profit margin.
In a Sentence:
In the given situation, it is better to employ backward integration in order to find new ways to increase your profit.
We decided to implement backward integration because we want a steadier supply. Luckily enough, the inputs have grown thanks to that.
Synonyms and related terms: forward integration, vertical integration, integration strategy, microeconomics, horizontal integration