Benefits of backward vertical integration

• Backwards vertical integration: This is when a business merges with or takes over another business at the previous stage in the production process within the same industry. In other words this is when a business merges with or takes over a supplier
• The objective here is to reduce costs or secure supplies. Another benefit includes having more control over the quality of the product and the supply chain
• Control of the quality and delivery of raw materials: The business can dictate when products or raw materials are delivered. The business also has full control over the production process and raw materials used, they can control quality which is important for manufacturers
• Profit margin of the supplier is removed: Business will be able to obtain their stock or raw materials for cost price, as the profit margin of the supplier is removed. This reduces variable costs and leads to increased profits