what is backward vertical integration

Backward vertical integration is a form of vertical integration in which a company expands its role to fulfill tasks formerly completed by businesses up the supply chain. It occurs when a company acquires or merges with other businesses that supply raw materials needed in the production of its finished product. The goal of backward integration is to create a stable supply of inputs and ensure consistent quality in the final product. Companies pursue backward integration with the expectation that the process will result in cost savings, increased revenues, and improved efficiency in the production process. Backward integration is a strategy that uses vertical integration to boost efficiency, and it allows a company to control its suppliers of inventory and raw materials.