What term describes expanding by purchasing distributors or retailers at a later stage of production?

What term describes expanding by purchasing distributors or retailers at a later stage of production?

• A. Vertical Integration (Forwards)
• B. Horizontal Integration
• C. Mergers
• D. Stock

Answer: (A)

Forward vertical integration is when a business expands by buying distributors or retailers to move closer to the customer. This allows the company to control how its products are sold, secure better access to markets, reduce reliance on middlemen, and often improve profit margins by capturing more of the value chain. It differs from expanding by acquiring rivals at the same production stage (horizontal integration) or from mergers and other structures that don’t specifically involve moving down the supply chain. The other terms don’t describe this move toward the end of the production process.

Forward vertical integration is when a business expands by buying distributors or retailers to move closer to the customer. This allows the company to control how its products are sold, secure better access to markets, reduce reliance on middlemen, and often improve profit margins by capturing more of the value chain. It differs from expanding by acquiring rivals at the same production stage (horizontal integration) or from mergers and other structures that don’t specifically involve moving down the supply chain. The other terms don’t describe this move toward the end of the production process.