A manufacturer is moving downstream in terms of product flow by launching a chain of retail outlets.Which diversification strategy is being used by the company?

Question

Quizplus · Accepted Answer

Forward vertical integration involves a firm moving downstream in terms of product flow, such as entering the distribution or retail sector. This is exactly what the manufacturer in the scenario is doing by launching a chain of retail outlets. Related diversification involves entering a new industry that is related to the firm's existing industry, which is not the case here. Backward integration involves a firm moving upstream in terms of product flow, such as entering the raw material or component supply sector. Conglomerate diversification involves entering a completely unrelated industry, which is also not the case here. Therefore, A) forward vertical integration is the best choice.

A Manufacturer Is Moving Downstream in Terms of Product Flow