ITPEC IP April 2019 Question 81
ITPEC IP April 2019 — Question 81 of 100
Making a major retailer a subsidiary is vertical integration because the trading company gains control of a downstream sales channel. Vertical integration combines organizations at different stages of the same supply chain, such as sourcing, manufacturing, distribution, and retail.
Answer (b)
Why not others:
- outsourcing inspection transfers an activity to a partner rather than integrating it
- one bank acquiring another bank at the same stage is horizontal integration
- several assemblers using one supplier's components describes dependence or standardization, not ownership integration
Key rule: Vertical integration joins successive value-chain stages; horizontal integration combines competitors or firms at the same stage.
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