When a company buys up firms supplying it with raw materials, this is an example of
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When a company buys up firms supplying it with raw materials, this is an example of backward integration. Backward integration is when a company acquires or merges with a supplier of its raw materials or components. This strategy is used to gain more control over the supply chain, reduce costs, and increase efficiency. By bringing the supplier in-house, the company can eliminate the uncertainties associated with external suppliers such as delivery delays, quality issues, and price fluctuations.