If High Tech, a computer manufacturer, has a contract with Big Chips, a computer chip manufacturer, to produce the computer chips needed for High Tech's computers, this is an example of _______.
A)forward integration
B)outsourcing
C)backward integration
D)divestiture

Question

Quizplus · Accepted Answer

Outsourcing involves contracting with another company to perform a specific task or service, which is exactly what High Tech is doing with Big Chips to produce the computer chips needed for their computers. Forward integration involves a company moving forward in the supply chain to control the distribution or sale of its products or services (such as a computer manufacturer opening a retail store), while backward integration involves a company moving backward in the supply chain to control its own inputs (such as a computer manufacturer acquiring a chip manufacturer). Divestiture involves a company selling off a portion of its business or assets. None of these options accurately describe the relationship between High Tech and Big Chips.

If High Tech, a Computer Manufacturer, Has a Contract with Big