The purchasing of raw material sources or distribution facilities is known as
A) horizontal integration.
B) diversification.
C) economies of scale.
D) diseconomies of scale.
E) vertical integration.

Question

Quizplus · Accepted Answer

Vertical integration refers to the purchasing of raw material sources or distribution facilities with the aim of gaining control over the supply chain and increasing efficiency. Horizontal integration involves merging with or acquiring competitors, diversification refers to expanding into new markets or products, economies of scale refer to cost savings that occur as production levels increase, and diseconomies of scale refer to cost increases that occur when production levels become too large.

The Purchasing of Raw Material Sources or Distribution Facilities Is