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integration (business)

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integration

Merger of two firms. Vertical integration occurs if the two firms are at different stages of the production process. Forward integration occurs when a firm takes over a company which buys its products, such as a car manufacturer taking over a car dealership. Backward integration occurs when one firm takes over another which supplies it, such as a car manufacturer taking over a car components company. Horizontal integration occurs if the two firms are at the same stage of the production process, such as one car manufacturer merging with another car manufacturer.
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