A ﬁrm that produces beer decides to take over a ﬁrm that makes tyres. This type of growth strategy would be called _____.
A) diversiﬁcation
B) horizontal integration
C) vertical integration
D) organic growth

Question

Quizplus · Accepted Answer

Diversification is a strategy where a firm expands into a different industry or market than the one it currently operates in. In this case, a beer producing firm taking over a tyre manufacturing firm represents a move into a completely different industry, which is why it's considered diversification. Horizontal integration involves a company acquiring or merging with competitors in the same industry, vertical integration refers to a company expanding into its supply chain, and organic growth is the process of business expansion due to increasing output, customer base expansion, or new product development, without mergers or acquisitions.

A ﬁRm That Produces Beer Decides to Take Over a ﬁRm