Forward integration
Forward integration extends an organisation’s activities towards later stages of its supply chain and its final customers. A manufacturer might add distribution, retailing or direct selling. Greater control over customer access and service may create value, but the organisation also takes on investment, operating risks and capabilities previously supplied by intermediaries.
Worked example
A furniture manufacturer opens its own stores instead of relying entirely on independent retailers. It gains direct customer information and retail margins but must fund premises, staff and inventory in the stores.
Common mistake
Selling more through an existing independent retailer does not by itself mean that the manufacturer has integrated into retailing.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBL | Direct | September 2026–June 2027 |