Clubhouse Gourmet -A- (Scenario)
Imagine that you are the president of Clubhouse Gourmet, a successful chain of fast-food restaurants with 60 locations across Canada. The success you have experienced in the last five years has you considering various options about what to do next with the business. Should you continue to expand the business at the current rate? Or perhaps open new and different restaurants? What should you do?
-With the acquisition of Sandwich King,you now have more than 100 restaurant locations across Canada.The bread suppliers that you have been using are unable to keep up with demand in some markets,so you decide to purchase a wholesale bakery that is large enough to provide a secure supply of fresh bread to your busiest restaurants.Purchasing the bakery is an example of which strategy?

Question

Quizplus · Accepted Answer

Purchasing a supplier, in this case, a wholesale bakery, to secure a steady supply of essential inputs (fresh bread) for the restaurants is an example of backward vertical integration. This strategy involves acquiring or establishing businesses that supply inputs to the company's primary business, thereby integrating the supply chain and reducing dependency on external suppliers.