What kind of integration is vertical integration?
A)When the government outlaws discrimination against both short and tall people.
B)When two firms join together in a conglomerate merger.
C)When two firms related in the production process are owned by the same firm, as in a plywood manufacturer owning a logging company.
D)All of the above

Question

Quizplus · Accepted Answer

Vertical integration refers to the ownership by a firm of inputs (such as raw materials) and/or distribution channels (such as retail outlets) for its products. Option C perfectly defines vertical integration, as a plywood manufacturer owning a logging company are related in the production process, and by owning both, the plywood manufacturer has control over its input.

Option A describes a policy decision that prohibits discrimination, while option B describes a conglomerate merger, which could be horizontal or conglomerate integration, but not vertical. Therefore, options A and B are not valid choices for vertical integration.

What Kind of Integration Is Vertical Integration