What kind of vertical integration strategy did Tesla choose for its distribution and supply chains: backward...
What kind of vertical integration strategy did Tesla choose for
its distribution and
supply chains: backward or forward integration? What are the
advantages of its
chosen strategies? What are the disadvantages?
Homework Answers
Tesla integrates a forward vertical integration strategy for its supply chains.
The advantages of forward vertical strategy:
1. In the forward vertical strategy, Tesla is becoming self-dependent and it will gain control of the resources as well as the inputs. Which basically means that Tesla will become its own supplier.
2. It will help Tesla to invest in assets that are specialized
3. Tesla will have more control over the business.
4. High level of certainty will be maintained in terms of quality.
The disadvantages of forward vertical strategy:
`1. Flexibility of Tesla will decrease
2. More problems for Tesla might create in future
3. It can create issues for Tesla during market entry.
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