Question

Billy is the CEO of Billy’s Kicks, a soccer ball retailer. He decides to purchase the synthetic rubber manufacturing firm so he can create his own soccer balls and sell them, nationally, in his retail stores. In order to do this, Billy will need to engage in ________, which is a corporate level strategy.

A. backward vertical integration B. differentiation C. horizontal integration D. forward vertical integration

Answer 1

Billy is the CEO of Billy’s Kicks, a soccer ball retailer.

He decides to purchase the synthetic rubber manufacturing firm so he can create his own soccer balls and sell them, nationally, in his retail stores.

In order to do this, Billy will need to engage in backward vertical integration, which is a corporate level strategy.

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Correct answer:

A. backward vertical integration

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Explanation:

In this type of strategy, the company acquires raw material sourcing and procurement, and thus has greater control over the supply chain. Since these activities are before the final product, it is called backward integration.