In forward vertical integration, a company becomes its own ________, while in backward vertical integration, the company is its own ________.
A)supplier; distributor
B)supplier; customer
C)distributor; monitor
D)distributor; supplier

Question

Quizplus · Accepted Answer

In forward vertical integration, a company acquires or develops the capabilities to distribute its products or services directly instead of relying on external distributors. Therefore, the company becomes its own distributor. On the other hand, in backward vertical integration, a company acquires or develops the capabilities to produce its own inputs or raw materials instead of relying on external suppliers. Therefore, the company becomes its own supplier. The other options (A, B, and C) are incorrect because they do not accurately describe the relationship between the company and itself in the context of vertical integration.

In Forward Vertical Integration, a Company Becomes Its Own ________