ITPEC IP April 2021 Question 82
ITPEC IP April 2021 — Question 82 of 100
A trading company making a retailer its subsidiary is vertical integration. The company brings a downstream stage of its value chain—retail distribution and sales—under common ownership, strengthening control from overseas procurement toward the final customer.
Answer (b)
Why not others:
- outsourcing inspection transfers an activity outside rather than integrating ownership
- one bank acquiring another bank at the same industry stage is horizontal integration
- several assemblers using one supplier's products is supplier dependence or standardization, not common ownership
Key rule: Vertical integration combines different upstream or downstream stages of one supply and distribution chain.
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