BUSINESS ADMINISTRATION
STRATEGIC MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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backward horizontal integration.
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forward horizontal integration.
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backward vertical integration.
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forward vertical integration.
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Detailed explanation-1: -A cola company decided to become its own distributor so the company would have sole control of the way its products reached different markets. This is an example of. backward horizontal integration.
Detailed explanation-2: -Vertical integration strategies allow a firm to gain control over distributors and suppliers, whereas horizontal integration refers to gaining ownership and/or control over competitors. Vertical and horizontal actions by firms are broadly referred to as integration strategies.
Detailed explanation-3: -Gaining ownership or increased control over distributors or retailers is called forward integration strategy. True. Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward.
Detailed explanation-4: -For instance, a fast food retail chain acquires a bun or a cup factory to reduce dependencies and cut costs. This acts as a major example of vertical integration strategy.
Detailed explanation-5: -Backward integration is a strategy of seeking ownership or increased control of a firm’s suppliers. This strategy can be especially appropriate when a firm’s current suppliers are unreliable, too costly, or cannot meet the firm’s needs.