BlockWood Inc. has been providing raw materials to Couches Corp., a furniture company. The management at Couches recently decided to cut the prices it pays for the raw materials. BlockWood Inc. tried to negotiate a price that would be feasible for both companies, but Couches did not agree to pay more than what they had quoted. As BlockWood Inc. was facing similar difficulties with other buyers too, it eventually stopped supplying raw materials and took to manufacturing furniture instead. This scenario best illustrates ________.
A)barriers to entry
B)barriers to exit
C)backward integration
D)forward integration

Question

Quizplus · Accepted Answer

Forward integration is when a company expands its operations into an area that is at a later stage in the production process than its current operations. In this case, BlockWood Inc. moved from supplying raw materials to manufacturing furniture, which is a step forward in the production process.