Strategy - Vertical, Backward, Forward Integration & Dis-integration

The number of activities in the value chain that accomplished within a firm. The higher the number, the more vertically integrated the firm is. the value of vertical integration depends on:

1. Opportunism - happens when a firm is exploited by another in an exchange.

2. Integration should only be pursued if a firm already has VRIO resources in that area.

3. Integration decreases a firm's flexibility, so it should be pursued when it's certain that the investment will pay off.

Outsourcing or dis-integration can be valuable for commodity tasks that would require significant investment of resources.

Backward integration - happens when a firm start carrying out activities that are associated with supplier end of the value chain.

Forward integration - happens when a firm start carrying out activities at the customer end of the value chain.