If Happy Cows, a milk producer, purchases a dairy farm, this is an example of______ .
A)outsourcing
B)forward integration
C)backward integration
D)divestiture

Question

Quizplus · Accepted Answer

Backward integration occurs when a company acquires or merges with a company that supplies products or services needed for production. In this case, Happy Cows, a milk producer, purchasing a dairy farm (which supplies the raw milk needed for their production) is an example of backward integration, as it secures their supply chain and potentially reduces costs.

If Happy Cows, a Milk Producer, Purchases a Dairy Farm