This is where firms decide to merge when they are both operating at different stages of the production processes. This most commonly occurs when a company merges with an important supplier.
Below is a diagram to show this type of integration occurs when firms from different sectors such as the primary,secondary or tertiary sector merge with another to have one firm that has a complete production process of a good. However, there are two different forms of this type of integration. Vertical Forward Integration involves a supplier merging with one of its buyers such as a newspaper buying up a newsagents. Vertical Backward Integration involves a purchaser buying one of its suppliers such as a car manufacturer buying up a tyre company.
