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Dear tutor,
Please kindly explain the below sentence from the Kaplan textbook:
power of buyers: power greatest where the threat of backwards integration.
power of suppliers: power greatest where the possibility of integrating forwardWhat is the threat of backwards integration?
What is the possibility of integrating forward?Thank you very much.
regards,
Elaine
Backwards integration is where you take over or set up a supplier of the components you currently buy in. So if a buyer threatens to stop buying from you and sets up their own component manufacturer, you will be a bit worried.
Forwards integration for a manufacturer, is when it sets up its own retail distribution. If a supplier threatened to do that you, your own sales would be threatened.
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