Which of the following best illustrates forward vertical integration?
| A firm that manufactured and sold car engines to major automobile companies launches its own line of cars. | ||||
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| A designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery. |
Answer
Answer: Forward vertical integration – A firm that manufactured and sold car engines to major automobile companies launches its own line of cars.
In forward vertical integration, expansion of business activities to have the direct control of the supply or distribution and it helps in moving towards supply chain . It helps in reducing the steps involved in distribution process and also control over the pricing. Also, it offers advantage to both manufacturing organization and the customer or retailer.