Forward Vertical Integration involves which action?

Forward Vertical Integration involves which action?

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

Answer: (A)

Forward vertical integration means moving downstream in the supply chain to take control of activities that occur after the company in the value chain, such as distributors or retailers. Buying a customer directly illustrates this move toward the end user, giving the company control over distribution and sales, improving access to demand signals, and potentially increasing margins. Buying a supplier would be backward vertical integration, since that moves upstream toward raw materials. The other options don’t describe the downstream expansion in ownership and control that defines forward integration.

Forward vertical integration means moving downstream in the supply chain to take control of activities that occur after the company in the value chain, such as distributors or retailers. Buying a customer directly illustrates this move toward the end user, giving the company control over distribution and sales, improving access to demand signals, and potentially increasing margins. Buying a supplier would be backward vertical integration, since that moves upstream toward raw materials. The other options don’t describe the downstream expansion in ownership and control that defines forward integration.