Radial Autos currently sources components such as airbags, upholstery, and brake pads from various suppliers in the industry value chain. In order to lower costs and reduce the risk of interruptions in the supply of components, Radial should pursue
A) backward integration.
B) forward integration.
C) product diversification.
D) geographic diversification.

Question

Quizplus · Accepted Answer

Backward integration is moving ownership of activities upstream to the originating inputs of the value chain. By pursuing backward integration, Radial would produce all necessary components for its automobiles in-house, reducing the costs and potential for interruptions associated with sourcing components from external suppliers.

Radial Autos Currently Sources Components Such as Airbags, Upholstery, and Brake