Definition

integration 

Integration (from the Latin integer, meaning whole or entire) generally means combining parts so that they work together or form a whole. In information technology, there are several common usages:
1) Integration during product development is a process in which separately produced components or subsystems are combined and problems in their interactions are addressed.
2) Integration is an activity by companies that specialize in bringing different manufacturers' products together into a smoothly working system.
3) In marketing usage, products or components said to be integrated appear to meet one or more of the following conditions:

A) They share a common purpose or set of objectives. (This is the loosest form of integration.)

B) They all observe the same standard or set of standard protocol or they share a mediating capability, such the Object Request Broker (ORB) in the Common Object Request Broker Architecture (CORBA).

C) They were all designed together at the same time with a unifying purpose and/or architecture. (They may be sold as piece-parts but they were designed with the same larger objectives and/or architecture.)

D) They share some of the same programming code.

E) They share some special knowledge of code (such as a lower-level program interface) that may or may not be publicly available. (If not publicly available, companies have been known to sue to make it available in order to make competition fair.)

In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership, but also into one corporation (as in the 1920s when the Ford River Rouge Complex began making much of its own steel rather than buy it from suppliers).
Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly.
Nineteenth-century steel tycoon Andrew Carnegie introduced the concept and use of vertical integration^[1]. This led other businesspeople to use the system to promote better financial growth and efficiency in their businesses.

Three types

Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers. Contrary to horizontal integration, which is a consolidation of many firms that handle the same part of the production process, vertical integration is typified by one firm engaged in different parts of production (e.g. growing raw materials, manufacturing, transporting, marketing, and/or retailing).
There are three varieties: backward (upstream) vertical integration, forward (downstream) vertical integration, and balanced (both upstream and downstream) vertical integration.

• A company exhibits backward vertical integration when it controls subsidiaries that produce some of the inputs used in the production of its products. For example, an automobile company may own a tire company, a glass company, and a metal company. Control of these three subsidiaries is intended to create a stable supply of inputs and ensure a consistent quality in their final product. It was the main business approach of Ford and other car companies in the 1920s, who sought to minimize costs by integrating the production of cars and car parts as exemplified in the Ford River Rouge Complex.
• A company tends toward forward vertical integration when it controls distribution centers and retailers where its products are sold.