Backward Vertical Integration involves which action?

Backward Vertical Integration involves which action?

• A. Company buys a supplier
• B. Company buys a customer
• C. Local branches buy everything
• D. Corporate buys everything

Answer: (A)

Backward vertical integration is when a company expands control over its inputs by acquiring or owning its suppliers. By buying a supplier, the company secures essential inputs, can negotiate better prices, reduce supply risk, and influence quality and delivery times. This directly reflects moving upstream in the supply chain. Buying a customer would be forward integration, which is moving downstream toward the end user. The other options don’t describe this upstream expansion, so the action of acquiring a supplier best fits backward vertical integration.

Backward vertical integration is when a company expands control over its inputs by acquiring or owning its suppliers. By buying a supplier, the company secures essential inputs, can negotiate better prices, reduce supply risk, and influence quality and delivery times. This directly reflects moving upstream in the supply chain. Buying a customer would be forward integration, which is moving downstream toward the end user. The other options don’t describe this upstream expansion, so the action of acquiring a supplier best fits backward vertical integration.