Delta Airlines announced that it was purchasing an oil refinery for $150 million and that it would spend an additional $100 million to upgrade the facility. Jet fuel is a major expense for airlines and Delta hoped that this would allow it to control costs. In this example, Delta is using which of the following strategies?
A) Unrelated diversification
B) Product development
C) Market penetration
D) Backward vertical integration
E) Related diversification

Question

Quizplus · Accepted Answer

Backward vertical integration involves a company acquiring or merging with its suppliers to control its supply chain, which is what Delta is doing by purchasing an oil refinery to manage its jet fuel costs.

Delta Airlines Announced That It Was Purchasing an Oil Refinery