Final answer:
Backward integration is a company strategy aimed at controlling elements of its supply chain by acquiring suppliers, which can lead to better customer service, stronger value-chain relationships, improved product quality, and less dependence on outside vendors.
Step-by-step explanation:
Backward integration refers to a company's strategy of acquiring or merging with its suppliers to control the supply chain. This approach can offer several potential benefits:
- Better customer service: By controlling the supply chain, companies may be better able to ensure timely delivery of inputs required for production, which can result in faster delivery times for customers.
- Stronger value-chain relationships: Integrating suppliers can lead to improved coordination and collaboration, enhancing overall value-chain efficiency.
- Improved product quality: Direct oversight of the production process can lead to higher quality inputs and therefore a better end product.
- Less dependence on outside vendors: Owning production of supplies reduces reliance on external vendors, which can mitigate the risk of supply chain disruptions.