verticals schmerticals

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** Click here for Episode 183 **

In AMT183, my brother tried to translate the businesspeak term ‘verticals’ into a recognisable concept, yet my argot-lite brain refused to compute. Thankfully I now have pictoral aids from Chris from Cardiff, Australia:

Based on my rudimentary knowledge of business jargon (from Year 12 Business Studies), my understanding of “verticals” is thus:

A “vertical” is, much like Martin and Olly suggested, a broad term for the different “genres” of businesses in the marketplace. I think one of the easiest ways to explain vertical and horizontal businesses is using a graphical analogy for wheat.

In the diagram, the vertical lines represent some of the different commercial functions of wheat. Each dot on the line represents a different point in the process between the raw material and the finished product. The processing business (marked with the red line) is able to sell its services horizontally to the different lines of use, thus expanding its market potential. The processing needed for wheat to become suitable for bread (pre-milling) is marginally different to the processing for wheat to be suitable for use in a distillery, so the business can expand over multiple markets.

Much of the time, a big business in the main markets will buy out the businesses or facilities which perform the different tasks on the vertical axis, this is called vertical integration.

So, in short, “verticals” are the general markets which a business can sell its services to.

Thanks, Chris. I will try to work the term into a sentence today.

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