Question

A farmer realizes that he is not getting fair price from the agents who buy produce from him and sell it to the markets. As such, he decides to sell produce directly to the local market. This is an example of:Select one:a. FORWARD VERTICAL INTEGRATION Correctb. backward vertical integrationc. horizontal diversificationd. forward horizontal integratione. backward horizontal integration

Answer 1

Answer:

The answer is: A) Forward vertical integration (FVI)

Explanation:

FVI takes place when a company expands its business activities to take direct control of the distribution of their products.

The question is a textbook example of FVI. A company decides to sell their products directly to their customers bypassing the middlemen.

Internet sales are giving several companies this opportunity. For instance, every once in a while I get promotions directly from the Coca Cola Company offering me direct discounts on their products. Of course some type of courier or logistics company is needed, but the sale is made directly from the distributor bypassing the grocery store. A more common example is people buying their cars directly in the manufacturers website. In Germany, car vending machines are located right next to the factories. You buy online and you pick your car like a soda can, only on a huge scale.