ASSIGNMENT

FAKULTI TEKNOLOGI KEJURUTERAAN

MEKANIKAL DAN PEMBUATAN
UNIVERSITI TEKNIKAL MALAYSIA MELAKA
BUSINESS PROCESS INTEGRATION
BMMW3633
(INTEGRASI PROSES PERNIAGAAN)

ASSIGNMENT 2

FORWARD AND BACKWARD PRODUCT INTEGRATION

Learning Outcome LO1 Describe the strategic importance of supply chain design, planning and operations.
(LO):
Program Outcome: PO2

Synopsis: This assignment will let the student to explore existing product strategy available in the market.
Besides, it will acquire affective’s skill that required student to respond the best practices in
business process plan.

Related Lecture’s 1. Understanding Business Process Strategy Concept

Topic:
2. Business Process Integration Performance: Achieving Strategic And Scope
5. Product Design and supply chain
6. coordination in a supply chain
8. Designing distribution networks and application to E-Business
Prepared by: Prof Madya Ts Dr Wan Hasrulnizzam Wan Mahmood Date: 2 Nov 2020

Approved by Dr Ridhwan Jumaidin Date

LM/SLM/HOD

QMS : REVISION RECORDS

Revision Date Approved by

Description Prepared by :
No (DD/MM/YY) LM/SLM/HOD:
ASSIGNMENT 1

Backward integration is a form of vertical integration in which a company expands its role to fulfill tasks
formerly completed by businesses up the supply chain. In other words, backward integration is when a
company buys another company that supplies the products or services needed for production. For
example, a company might buy their supplier of inventory or raw materials. Companies often complete
backward integration by acquiring or merging with these other businesses, but they can also establish
their own subsidiary to accomplish the task. Complete vertical integration occurs when a company
owns every stage of the production process, from raw materials to finished goods/services.
Companies often use integration as a means to take over a portion of the company's supply chain. A
supply chain is the group of individuals, organizations, resources, activities, and technologies involved
in the manufacturing and sale of a product. The supply chain starts with the delivery of raw materials
from a supplier to a manufacturer and ends with the sale of a final product to an end-consumer.
Backward integration is a strategy that uses vertical integration to boost efficiency. Vertical integration
is when a company encompasses multiple segments of the supply chain with the goal of controlling a
portion, or all, of their production process. Vertical integration might lead a company to control its
distributors that ship their product, the retail locations that sell their product, or in the case of backward
integration, their suppliers of inventory and raw materials. In short, backward integration occurs when a
company initiates a vertical integration by moving backward in its industry's supply chain.
Forward integration is a business strategy that involves a form of downstream vertical integration
whereby the company owns and controls business activities that are ahead in the value chain of its
industry, this might include among others direct distribution or supply of the company's products. This
type of vertical integration is conducted by a company advancing along the supply chain.
The rise of the internet has made forward integration both easier and a more popular approach to
business strategy. A manufacturer, for example, has the ability to set up an online store and use digital
marketing to sell its products. Previously, it had to use retail companies and marketing firms to
effectively sell the products.
The goal of forward integration is for a company to move forward in the supply chain, increasing its
overall ownership of the industry. Standard industries are made up of five steps in the supply chain: raw
materials, intermediate goods, manufacturing, marketing and sales, and after-sale service. If a
company wants to conduct a forward integration, it must advance along the chain while still maintaining
control of its current operations—its original place in the chain, so to speak.
ASSESSMENT CRITERIA:
Your response to each task will be graded separately based on the checklist attached. To obtain
maximum marks, ensure that your response addresses each of the tasks in the question accordingly.

Assignment checklist for Assignment 2

Assessment tasks Mark C/P/A level

allocation

Report:

Determine a type of raw material that is feasible to have forward 10 C2 –

and backward product integration in multi product value chains. Understanding

Analysis of the possible backward integration strategy 15 C4 –

Analysis

Analysis of the possible forward vertical strategy 15 C4 –

Analysis

Discuss the design options for a distribution network for above 15 C3 –

forward vertical strategy Applying

Suggest the e-business application to enhance the selected 15 C4 –

distribution network Analysis

Others:

Infographic poster 30 C6 –
- Poster/infographics size– A3 (either landscape or portrait orientation). Creating
- Present all information in a visual and concise way.
- Use only 2-3 different fonts, but be consistent between Titles, headers,
and text. Choose a font that is easy to read.
- Use colour to connect your ideas, sections, categories, make things
stand out, direct your audience through the story, and make things stand
out.
- Be sure to stick to a colour scheme (2-3 colours), use readable
text/colors, and aim for simplicity.
- The icon/image helps connect ideas and sections, makes things stand
out; directs your viewer through the display; suggests importance and
relevance.
- The bigger something is the more important it is; applies to text and
objects; should be large enough to read.

TOTAL 100
SPECIFIC INSTRUCTION

1. Work in a group of THREE students.

2. The selected raw material must unique and different with others group.
Must get an approval from the lecturer to start the assignment.
3. Answer in ENGLISH .
4. Number of words : 1000 - 3000 excluding references (if any).
5. Submit your assignment ONCE only in a SINGLE file.
6. Submit your assignment ONLINE (in pdf file).
7. Presentation via a REPORT and INFOGRAFIC POSTER.
8. Submission date: Week 10 (latest by 12pm – 18th December 2020)
9. This assignment accounts for 10% of the total marks for the course.
APPENDIX
 ASSIGNMENT 2
FAKULTI TEKNOLOGI KEJURUTERAAN
MEKANIKAL DAN PEMBUATAN
UNIVERSITI TEKNIKAL MALAYSIA MELAKA
BUSINESS PROCESS INTEGRATION
BMMW3633
(INTEGRASI PROSES PERNIAGAAN)

ASSIGNMENT 2

FORWARD AND BACKWARD PRODUCT INTEGRATION

LECTURER’S NAME PROF MADYA TS DR WAN HASRULNIZZAM WAN MAHMOOD

STUDENT’S PHOTO STUDENT’S NAME MATRIX NO:

S1.

S2.

S3.
ASSESSEMENT RUBRICS

MARK GIVEN MARKS

ASSESSMENT TASK/ITEMS
ALLOCATION S1 S2 S3
Determine a type of raw material that is 10
feasible to have forward and backward
1.
product integration in multi product value
chains.
Analysis of the possible backward 15
2.
integration strategy
Analysis of the possible forward vertical 15
3.
strategy
Discuss the design options for a 15
4. distribution network for above forward
vertical strategy
Suggest the e-business application to 15
5. enhance the selected distribution
network
6. Other: Infographic Poster 30

TOTAL MARKS 100

Approved By: ………………………………………………..…..

(Instructor’s Signature & Stamp)

Date: …………………………………………….........
1.0 Determine a type of raw material that is feasible to have forward and backward product integration
in multi product value chains.

Figure 1: Corn
For this assignment, we had chose corn as our raw material. Corn usually can be eaten
fresh, canned, or frozen before the kernels become tough and starchy. Corn is a type of vegetable
that contain starch and sugar. There are a lot of food based product can be produce using corn
such as canned corn, corn flour, corn oil, cereal and many more. To produce this food based
product, a manufacturer needs supply of corn as raw materials and other raw materials. So, the
manufacturers need to have supplier from corn field to supply corn to produce this food based
product and sold it to the distributors like a retail grocery stores. This process is called vertical
integration.
Vertical integration is a process from the suppliers to the manufacturers and sold it to the
end consumer. For example, a canned corn manufacturers need to get supplies of corn from the
supplier to produce this product. After the manufacturers produces the canned corn, it will be sold
to the distributors like grocery stores to sold it to the end consumers. All this process is known as
vertical integration. In vertical integration, there is two types of integration which are backward
integration and forward integration. Backward integration is an integration when a canned corn
manufacturer have a business of growing its own corn field. While the forward integration is an
integration when the canned corn manufacturer gets in a business of its own retail outlet to sell their
product.

Figure 2: Example of vertical integration

2.0 Analysis of the possible backward integration strategy

Figure 3: Example of backward integration

Above figure show an example of backward integration on canned corn process. As we can
see, a canned corn manufacturer need supply of corn to produce large scale of canned corn. Usually,
the manufacturer will have supplier of corn from certain corn field around the country to supply corns to
them. Backward integration is a strategy when a manufacturer have their own business of corn field to
have their own supply of corns to produce canned corn.
There is a few possible backward integration strategy but this strategy can have advantages
and disadvantages to the manufacturers. From the advantages side, the canned corn manufacturer can
increase control on the supply chain. For example, they can control the production of corn until the
production of the end product. There will not be a problem if corns are highly demand in the market and
low supply of corn because the manufacturer have their own corn field that supply the corns. They can
also control the quality of corn to be used in the production of canned corn. The manufacturer will
receives adequate supplies of corn without have to worry about the corn being sold to the competitor.
Next, the backward integration strategy can increase the efficiency on the manufacturing process. This
is because the canned corn manufacturer can control when and which material to produce and how to
produce. With improving the efficiency, the manufacturer can save its cost on the material which gets
unnecessarily wasted due to over purchase.
Altough the backward integration strategy have advantages, it also have disadvantages when a
manufacturer practice this strategy. The disadvantages that the manufacturer may face is huge
investments. This is because integration, merging, or acquiring the manufacturer will require huge
investments. For example, the manufacturer need to buy corn field that can accommodate the
production of canned corn. It needs a corn field that can provides enough corn without need to have
other supplier to supply corn to them. Next, there will be low quality products when there is no
competitors in the market. If a canned corn manufacturing have no competitors, the manufacturer will
become less efficient in terms of innovation, research, and development as the manufacturer know that
their canned corn can sell whatever it produces and this will affect the quality of the products.
 From this, we can analyse that a manufacturer needs to do a research or perform due diligence
before deciding on integrating backward. The manufacturer need to consider various factors such as
the cost, check the process, the workforce and other if this factors will help them to have a better and
efficient supply chain. In this case, the canned corn manufacturer can consider the backward
integration strategy as the industries of canned corn have competitors in the market such as Ayam
Brand, S&W, Yeo’s, REX, and many more. By applying the backward integration strategy, the
manufacturer can have their own supply of corns and will do an innovation, research, and development
on marketing their canned corn with the best quality.

3.0 Analysis of the possible forward vertical strategy

4.0 Discuss the design options for a distribution network for above forward vertical strategy
5.0 Suggest the e-business application to enhance the selected distribution network
6.0 Infographic poster