As companies expand and become more decentralized, they will often seek ways in which they can save money. Additionally, management will seek ways to increase efficiency, and that may include purchasing other companies. These acquisitions will involve an integration of the supply chain and will help the company better achieve long-term company goals. Which of the following is an example of an integration type other than backward vertical?
A) A busy carrier freight company buys a company that produces cardboard boxes to take advantage of internal transfer pricing.
B) A factory that produces handbags has purchased a company with a strong research and development department.
C) A farm that grows soybeans purchases a company that can convert the beans into soy milk that will be available for resale.
D) An auto mechanic at a small garage purchases the parts supply store next door to have quicker access to what they need to work efficiently.

Question

Quizplus · Accepted Answer

This question requires familiarity with integration, specifically backward vertical. This type of integration involves a company acquiring another company that exists within the same value chain. Choice C is the only choice listed that accurately depicts a situation where a company is buying another company within the same value chain that is an integration other than backward vertical. The other choices are forms of backward vertical integrations.

As Companies Expand and Become More Decentralized, They Will Often