Which term describes a strategy where a company buys into another firm at a later stage of production (downstream)?

Which term describes a strategy where a company buys into another firm at a later stage of production (downstream)?

• A. Diversification
• B. Takeover / Acquisition
• C. Horizontal Integration
• D. Vertical Integration (Forwards)

Answer: (D)

Moving toward the end of the production chain to gain control over how the product reaches customers is vertical integration, specifically forwards integration. This strategy lets a company take ownership of the next steps after production—such as distribution or retail—so it can coordinate production with sales, reduce costs, and secure better access to customers. Diversification would mean entering new products or markets, not necessarily along the same supply chain. Horizontal integration involves merging with another firm at the same production stage in the same industry. A takeover or acquisition is a general term for gaining control of another business, without signaling movement along the supply chain toward the customer.

Moving toward the end of the production chain to gain control over how the product reaches customers is vertical integration, specifically forwards integration. This strategy lets a company take ownership of the next steps after production—such as distribution or retail—so it can coordinate production with sales, reduce costs, and secure better access to customers.

Diversification would mean entering new products or markets, not necessarily along the same supply chain. Horizontal integration involves merging with another firm at the same production stage in the same industry. A takeover or acquisition is a general term for gaining control of another business, without signaling movement along the supply chain toward the customer.