Dragonfly, publishers of children's books, has purchased White Rabbit, another publisher of children's books. Both companies' books are sold to the same retail stores and schools. Their content is different because Dragonfly produces children's literature, whereas White Rabbit focuses on child-level nonfiction scientific and nature topics. Which of the following statements is probably TRUE about this acquisition?

Question

Quizplus · Accepted Answer

This is a horizontal acquisition because both companies produce and sell children's books. Vertical integration would involve one company acquiring a supplier or distributor, and conglomerate integration would involve acquiring a company in a different industry. Economies of scope are possible because both companies sell to the same retail stores and schools, but it depends on how the new company integrates and leverages their resources. There is no indication that this is an example of virtual integration because it involves an actual acquisition of a company.

Dragonfly, Publishers of Children's Books, Has Purchased White Rabbit, Another