When a firm acquires its supplier, it is engaging in a(an)
A) merger.
B) unrelated acquisition.
C) hostile takeover.
D) vertical acquisition.

Question

Quizplus · Accepted Answer

When a firm acquires its supplier, it is engaging in a vertical acquisition. This type of acquisition occurs when a company acquires a business that is a part of its supply chain, either a supplier or a distributor, in order to control costs, improve efficiency, or gain a competitive advantage. A merger involves the combination of two or more companies into a single entity, while an unrelated acquisition is when a company acquires a business that is unrelated to its core operations. A hostile takeover occurs when a company acquires another company without the consent of its management or board of directors.

When a Firm Acquires Its Supplier, It Is Engaging in A(an)