Integration describes the process where a company expands its business by taking control of different stages of production or distribution.

There are three main types of integration:

• Vertical Integration: Moving towards raw materials (backwards) or closer to the customer (forwards). For example, a car maker buying a steel factory or opening their own retail stores.
• Horizontal Integration: Combining with other companies that operate at the same stage of production, such as one bakery buying another.
• Conglomerate Integration: Merging with companies in completely unrelated industries to increase diversification.

Businesses integrate for several reasons, including to secure supplies, lower costs, gain market power, and control important technology. However, this can lead to negative consequences, such as reduced competition and the potential for companies to abuse their market power.

Real-world examples include oil companies that manage everything from extraction to selling at gas stations, or film studios that handle production, distribution, and movie theater operations.