Suppose we have two firms (Firm 1 & Firm 2)enter into a transaction where Firm 1 is upstream of firm 2 in a vertical chain.What term best describes the organization of the transaction where the two firms are independent,each with control over its own assets?
A)Backward Integration
B)Forward integration
C)Nonintegration
D)Contractually unbound
E)Contractually bound

Question

Quizplus · Accepted Answer

Nonintegration refers to a situation where two firms in a vertical chain are independent, each with control over its own assets. In this type of transaction, the two firms do not integrate their operations or assets, and instead operate separately while engaging in a transaction. Neither firm has control over the other. Therefore, option C is the correct answer. Option A (Backward Integration) refers to a situation where a firm acquires or merges with a supplier, while option B (Forward Integration) refers to a situation where a firm acquires or merges with a buyer. Option D (Contractually unbound) and Option E (Contractually bound) refer to the terms of the contract but do not describe the organization of the transaction.

Suppose We Have Two Firms (Firm 1 & Firm 2)enter