The diagram shows the growth of a firm through different types of integration. A supermarket chain takes over a chain of farms that supply it with vegetable...
Question 1 Report
The diagram shows the growth of a firm through different types of integration. A supermarket chain takes over a chain of farms that supply it with vegetables. This is an example of
Answer Details
The correct answer is backward vertical integration because the farms are at an earlier stage of the supply chain.
Backward vertical integration means a firm merges with or takes over a business at a previous stage in the production process. The supermarket (a retailer) is taking over farms (primary producers) that supply it with vegetables. The farms are further back in the supply chain, making this backward integration. This can help the supermarket secure its supply of fresh produce and control quality.
Forward vertical integration would mean moving toward the consumer, but the supermarket is already at the retail stage. Conglomerate integration applies to unrelated industries, but farming and food retail are in the same supply chain. Horizontal integration requires firms at the same stage, but farms and supermarkets operate at different stages.
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