Vertical Integration

A strategy where a business expands its control over more stages of its own supply chain, either by acquiring suppliers (backward integration) or distribution channels (forward integration).

Vertical integration reduces dependency on third parties, improves margins, and gives greater control over quality and customer experience. It also creates barriers to entry that competitors cannot easily replicate.

A founder who sells handmade candles decides to manufacture her own fragrance blends rather than buying from a supplier. She controls quality, reduces cost, and creates a proprietary product competitors cannot copy.