CA Inter P6 · Chapter 13 · Question 3 of 11
A two-wheeler manufacturer acquires a company that makes tyres and fuel tanks used in its motorcycles. This is an example of:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Backward vertical integration
Explanation
Backward integration means moving upstream into supplying one's own inputs. Acquiring a supplier of tyres and fuel tanks is therefore backward integration. Forward integration would mean moving towards the customer, for example opening company-owned dealerships. Acquiring another motorcycle maker would be horizontal integration.
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