What is forward integration also known as?

Forward integration is known as vertical integration because it refers to a company's strategy of expanding its operations into different stages of production within the same industry. By pursuing forward integration, a company takes control over the distribution or sale of its products, effectively moving closer to the end consumer. This means that the business not only produces goods but also handles their distribution, which can enhance efficiency, reduce costs, and improve market presence.

In business terms, vertical integration can occur in both forward and backward directions. While forward integration focuses on moving toward the customer and sales channels, backward integration would involve a company taking control over its supply chain by acquiring or merging with suppliers. Hence, categorizing forward integration as vertical integration appropriately emphasizes its role in connecting different levels of the supply chain, consolidating the firm's position in the market.

The other terms—horizontal integration, market expansion, and product differentiation—represent different strategic approaches. Horizontal integration refers to a company acquiring or merging with competitors at the same level of production, while market expansion involves increasing the presence in new markets or regions. Product differentiation focuses on creating unique products to stand out in the marketplace. Therefore, these terms do not capture the specific focus of forward integration on controlling subsequent stages in the production process.