Hickory Divine is one of the leading manufacturers in the hardwood furniture industry. Hickory Divine has many small competitors, none of which controls a significant portion of the industry. Hickory, like most of the furniture manufacturers, sells its products to a broad variety of small furniture stores throughout the country, none of which represents a large percentage of Hickory's sales. When purchasing the products it uses for manufacturing its furniture, Hickory is able to choose from many suppliers since the wood it uses is an undifferentiated commodity, and Hickory is able to easily switch to any supplier that has the best price and delivery times. While growth in the hardwood furniture industry has historically been in the double digits, the industry growth rate has slowed considerably into the single digits, to approximately 5% in recent years; consumers have been purchasing less expensive furniture made of composite wood that is considerably less expensive than hardwood furniture but that looks and functions very similarly once it is painted.
-If Hickory Divine were to open its own chain of furniture stores, this would be an example of
A) complementors.
B) backward vertical integration.
C) consolidation.
D) forward vertical integration.

Question

Quizplus · Accepted Answer

Opening its own chain of furniture stores would be an example of forward vertical integration, as Hickory Divine would be integrating forward into the distribution channel by selling its products directly to consumers. This would allow Hickory to have more control over the distribution of its products and potentially capture a larger portion of the market.

Hickory Divine Is One of the Leading Manufacturers in the Hardwood