---
title: Vertical Integration Definition | What Are Vertical Integrations
description: "Vertical integration occurs when a firm acquires all facets of a supply chain in the pursuit of cost reduction and efficiency. There are two forms of integration: forward and backward integration."
image: https://www.realized1031.com/hubfs/social-suggested-images/Realized_Glossary_Graphic-4.jpg
---

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# Vertical Integration

Vertical integration occurs when a firm acquires all facets of a supply chain in the pursuit of cost reduction and efficiency. 

There are two forms of integration: forward and backward integration. A firm in the business of distribution seeks forward integration by reducing transportation costs, etc., while a firm seeking backward integration is typically in manufacturing and reduces its costs in the process of combining inputs to create value in a finished product.

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