Question at position 38 Backward Vertical Integration refers to a company acquiring one or more of their customer organizations.TrueFalse

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BlackTom AI · Accepted Answer

The question presents a statement about backward vertical integration and asks to determine whether it is true or false.
Option 1: 'True' — If a company acquires one or more of its customer organizations, that would be backward vertical integration in the sense that the firm is moving upstream to gain control over its suppliers or distributors that were previously outside the company. However, this statement defines backward integration more narrowly as acquiring customers, which is not the typical direction of backward integration; backward integration usually involves taking control of suppliers or intermediate production stages that precede the firm in the value chain. Therefore, labeling all such acquisitions of customers as backward integration would be misleading and incomplete, making this option inaccurate as a general definition.
Option 2: 'False' — Backward vertical integration is generally described as a company expanding its control to upstream activities, such as acquiring suppliers or raw-material producers, rather than acquiring customers. This aligns with the conventional understanding: the firm seeks greater control over inputs and upstream processes to reduce dependence, ensure supply, or improve margins. The statement provided in the question suggests a different direction (acquiring customers), which does not fit the standard concept of backward integration. This makes the option correct in the context of standard definitions.
In summary, the idea that backward vertical integration means acquiring customer organizations does not align with the established definition of moving upstream in the supply chain, whereas the standard interpretation focuses on upstream control over suppliers or production stages. Therefore, Option 2 is the more accurate choice given the conventional terminology, and Option 1 mischaracterizes the concept by misplacing the direction of integration.

Question at position 38 Backward Vertical Integration refers to a company acquiring one or more of their customer organizations.TrueFalse

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Question at position 38 Backward Vertical Integration refers to a company acquiring one or more of their customer organizations.TrueFalse

View Explanation

Log in for full answers

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Starbucks is analyzing how to strengthen its supply chain sustainability goals by sourcing directly from coffee farmers instead of regional brokers. While this increases control and transparency, it also adds complexity and risk. Which strategic framework best supports this decision?

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