At the time of writing, Tesla buys battery cells from Panasonic and assembles them into batteries for its electric cars. In the long term, Tesla plans to manufacture battery cells. Which organizational boundaries would change?
A) Horizontal.
B) Vertical.
C) Neither.

Question

Quizplus · Accepted Answer

Tesla moving from buying battery cells from Panasonic to manufacturing its own battery cells represents a change in vertical boundaries. This is because Tesla is integrating a previous step in its supply chain (battery cell production) into its operations, which is a form of vertical integration.

At the Time of Writing, Tesla Buys Battery Cells from Panasonic