Environmental scanning is the study and interpretation of the forces existing in the external and
internal environments.
The external environment includes:
• Social forces
• Economic forces
• Political forces
• Technological forces
• Environmental forces
Forward integration is a strategy where the company gains control of the business activities that are
ahead in the value chain. This is a type of vertical integration of the supply chain. Forward integration
practically means “removing the middleman”. Manufacturers may skip the wholesalers/retailers in
the value chain to sell directly to customers.
 As an example, imagine that a company produces shoes and it opens its shoe retail outlet as
well. So the company will directly sell its designs to customers instead of selling them
through other retail stores.
Backward integration is a strategy where the company gains control of the business activities that
were behind in its value chain. The company gains control over the raw materials using the
backward integration method.
Backward integration is where a company expands across multiple supply chain segments, which
are behind its value chain, to control a part or entire production process. This is a form of vertical
integration, where the company performs tasks that were formerly performed by its suppliers.
Differences between Forward Integration and Backward Integration are explained in the below
points,
1. Forward integration is where the company gains control of the business activities that are
ahead in the value chain. Backward integration is where the company gains control of the
business activities that were behind in their value chain.
2. In forward integration, the company acquires or merges with a distributor. In backward
integration, the company acquires/merges with a supplier or manufacturer.
3. In forward integration, the company gains control over the distribution chain. In backward
integration, the company gains control over the supply chain.
4. The main purpose of forward integration is to obtain a greater market share. The main
purpose of backward integration is to realize economies of scale.
5. Example of Forward Integration: A FMCG goods production company acquires or starts a
distribution company. Now the company can have entire control over their distribution
process.
Example of Backward Integration: A clothing manufacturing company acquires or starts a
fabric company. Now the company can have enough raw materials for making dresses.
Stars: Products with high market growth and a high market share.
Dogs: Products with low market growth and a low market share.
Cash cows: Products with low market growth but a high market share.
Inbound Logistics Inbound logistics is primarily associated with receiving, storing, and distributing
inputs to the product. It includes material handling, warehousing, inventory control, vehicle
scheduling, and returns to suppliers.
 inbound logistics receiving, storing, and distributing inputs of a product.