VERTICAL INTEGRATION MAY SAVE YOUR VISION.

If you are doing business or managing any, please SAVE this post and apply it some day.

Caveat: it is a long post but you would love it totally.

VERTICAL INTEGRATION MAY SAVE YOUR VISION.

Case Study 1: There is a business in Lokogoma axis of Abuja called EBEANO (many Nigerians know the brand). This business is a wholesale and retail brand that has more local appeal than her competitors like shoprite and park ‘n’ shop. I even hear they have the best fresh supplies of Nigeria food, leaves and veggies for soups. When Ebeano opened for business, one of the roads leading to the supermarket was untarred, rough and unfriendly. Over time, the business upgraded that road and made it one of the smoothest routes in the city of Abuja. Not only did this increase thoroughfare around the supermarket, it automatically increased traffic to the supermarket. If their leaves & veggies for soups are anything to go buy, perhaps they have their own farms where these are cultivated hence making it accessible, fresh and more affordable.

Case Study 2: There is a business in Abuja that operates majorly online. It is called THE HEALTH PLACE. The business started out by IMPORTING her supplements and supplies for healthy recommendations but over the last 3 years, THP has grown a massive stock in their own farms for virtually all that they sell. They have imported machinery that processes these farm produces and encapsulates the products into exotic finished healthy supplements. Almost all external costs cut off.

Both businesses are using vertical integration. I have shared more examples at the end of this post. Read to the very end.

What is vertical integration?

Vertical integration is a strategy whereby a company owns or controls its suppliers, distributors or retail locations to control its value or supply chain. Vertical integration benefits companies by allowing them to control process, reduce costs and improve efficiencies. (Investopedia, 2020)

In the immediate, vertical integration may look very costly to implement and even look senseless because of the costs and stress to achieve. In fact, most management consultants will tell you that vertical integration is the OPPOSITE of outsourcing. That is true. But if you understand the impact of crisis like COVID-19 dealt us, and if you further studied my post on VUCA (shared yesterday), you will see that vertical integration is almost the surest way to immune your business ultimately.

How to implement vertical integration:

1. Identify the MOST CRITICAL SERVICES in your internal value chain.

2. Create a plan to OWN your own internal machinery to CREATE, SERVICE & UTILIZE these machinery internal so as to have at least 75-80% control over your entire processes.

3. Sell the services that you have created. Become a hub of services. This goes way beyond your own primary services.

Example:

A school is primarily for learning and may focus solely on their curriculum, staff and students/pupils, but what if the school, over time, does the following:

1. Owns the building

2. Makes the road leading to their school and immediate community motor-able.

3. Provides a power plant that serves the school and the immediate community

4. Generates a water plant that serves the school and the immediate community

5. Trains artisans who become their own plumbers, painters, carpenters, mechanics, hair stylists, barbers, tailors, etc. All these services are needed by the school in the school

6. Etc.

These (the building and the services) all become services that the school sells to the community and generates lots of money in return over the years because they have become an independent ‘community’ of their own; way beyond just being a school. This is what the Living Faiths and the RCCGs have done.

Let me stop here… I am your Octopus, solving critical problems for you.

Let me know if this post helped you.

m a k t u b!!!

SO