What is 'vertical integration' in international business?

Vertical integration in international business refers to a strategic approach where a company takes control of multiple stages of production or distribution within the same industry. This means that a company can manage not only the sourcing of raw materials but also the manufacturing process and the distribution of finished goods. By doing so, the company can enhance efficiency, reduce costs, and increase its profit margins by eliminating intermediaries.

This strategy allows businesses to have greater control over their supply chain, which can lead to improved quality and reliability of products. Additionally, vertical integration can provide competitive advantages, such as better coordination of operations and the ability to respond quickly to market changes.

Other options do not accurately define vertical integration. For instance, increasing product visibility through advertising pertains more to marketing strategies rather than to production or distribution control. A focus solely on market diversification ignores the essence of integrating different levels of production within the same value chain. Lastly, techniques for economic forecasting are unrelated to the processes of production and distribution that define vertical integration.