A business strategy wherein a company owns or controls multiple stages of its supply chain is a key concept in economic geography. This control can encompass aspects ranging from raw materials extraction to manufacturing and distribution of the final product. For instance, an automotive manufacturer that not only assembles cars but also owns steel mills and transportation networks exemplifies this practice.
This organizational model offers several advantages, including increased efficiency, reduced transaction costs, and greater control over product quality and supply. Historically, it has been employed to secure access to essential resources, minimize dependence on external suppliers, and capture a larger share of the value chain. However, it can also lead to decreased flexibility and increased capital investment.