Backward vertical integration and forward vertical integration can be respectively defined as a situation where:
A)A firm takes over activities previously undertaken by its customers
B)A firm takes over activities producing some of its own main inputs, and takes over activities previously undertaken by some of its significant customers
C)A firm takes control of one of its rivals, and a firm takes control of one of its suppliers
D)A firm takes control of most of its suppliers, and of a few of its customers

Question

Quizplus · Accepted Answer

Backward vertical integration is when a firm takes over activities producing some of its own main inputs, and forward vertical integration is when a firm takes over activities previously undertaken by some of its significant customers. Therefore, option B correctly defines both forms of vertical integration. Option A is incorrect because it only defines backward vertical integration, while option C is incorrect because it defines horizontal integration (taking control of a rival) rather than vertical integration. Option D is incorrect because it describes a scenario where a firm takes control of most of its suppliers, which is not necessarily vertical integration.

Backward Vertical Integration and Forward Vertical Integration Can Be Respectively