EOTO 2

 For the second technological EOTO post, I will be discussing the effects of Vertical Integration. By definition, vertical integration is when a company takes control over multiple parts of the production process involved with their service or product. The parts of the production process include the suppliers, distributors, and retailers. Simply put, it is basically the brand inside the brand of a company. Walmart has their great value products, which is their own brand the sell at their stores. They are able to distribute and produce their products at their own production plants, not having to deal with distribution problems. This business technique benefits the companies that use vertical integration by allowing them to control their own processes and lower the costs of their products. Another benefit is that there is an avoidance of supply distribution. Since a spot of the supply chain has been outsourced due to the company bringing in a part of production into their own hands, it allows the company to control the suppliers and the processes beneath it. An example of vertical integration is Netflix. Netflix was originally started as a DVD rental business. Today, this site is the most recognizable streaming service for binge worthy TV shows and movies. Netflix founders and executive soon realized that they could make their own original content, and decided to act on that. Now, Netflix has hundreds of original series and movies which means Netflix owns the rights to these and helped produce these movies. This integration allowed a surge of revenue increase and exposure for the site, which is why it is the most popular streaming service in the world. 

While presenting this in class, I discussed with the class and professor the numerous other great example of vertical integration in American businesses and technology. Netflix, Walmart, Target, and Amazon are some of the largest retailers and corporation in the world. All of these businesses have used vertical integration to get where they are now. As of recent, it was just announced that Amazon will be opening their own pharmacies and creating their own brand of medicine. This is huge news that will impact plenty of citizens and small businesses across the United States. When Amazon announces this, the local pharmacies in towns are now going to be at risk since Amazon can create an almost monopoly like business. Having their own medicine will be detrimental to smaller drug companies and pharmacies, since it is hard to compete with a corporation like Amazon. Overall, vertical integration allows companies to have more freedom in the production process and avoids supply distribution problems. 

https://www.investopedia.com/terms/v/verticalintegration.asp

https://www.thebalance.com/what-is-vertical-integration-3305807