A combination between which two of the following firms is most apt to reduce each firm's financial risk exposure?
A) citrus grower with another citrus grower
B) oil producer with another oil producer
C) clothing manufacturer with a cotton farmer
D) cereal maker with a cotton farmer
E) a shirt manufacturer with a pants manufacturer

Question

Quizplus · Accepted Answer

Combining a clothing manufacturer with a cotton farmer diversifies the operations across different stages of the supply chain, reducing the financial risk exposure through vertical integration. This allows the clothing manufacturer to secure a stable supply of raw materials (cotton) and potentially reduce costs and risks associated with cotton price fluctuations.

A Combination Between Which Two of the Following Firms Is