Vertical integration means:

Question

BlackTom AI · Accepted Answer

In this question about vertical integration, we need to assess what each option implies about how a business organizes its production and supply chain.
Option a: 'Outsourcing all operations' would mean transferring production activities to external suppliers. This is the opposite of vertical integration, which involves internalizing stages of production within the same firm. So this choice describes outsourcing, not vertical integration.
Option b: 'Focusing only on core competencies' suggests a strategic narrowing of activities to what the firm does best, often accompanied by outsourcing or partnerships for other tasks. While related to strategic focus, it does not define vertical integration because vertical integration requires ownership or control of multiple stages in the production process, not just a focus on core activities.
Option c: 'Expanding horizontally into new markets' refers to horizontal growth—adding more of the same stage of production or product lines at the same level, or expanding market presence—rather than controlling multiple stages of production from raw materials to finished goods. This is about market expansion or product line diversification, not vertical integration.
Option d: 'Owning and controlling successive stages of production' captures the essence of vertical integration, which means the firm owns multiple steps in the production chain, potentially from suppliers to manufacturers to distributors. This arrangement reduces transaction costs, improves coordination, and can buffer against external supplier risks.
So, each incorrect option describes a strategy that differs from vertical integration, while option d aligns with the core concept of owning and controlling successive production stages.

Dashboard Quiz #1A (Lecture 1-3) Late Submissions and Approved AC Only

Vertical integration means:

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Dashboard Quiz #1A (Lecture 1-3) Late Submissions and Approved AC Only

Vertical integration means:

View Explanation

Log in for full answers

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Part 1What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor?Part 2 A. vertical integration B. horizontal integration C. virtual companies D. outsourcing