Question

Jose runs a gallery which specializes in neon art with an emphasis on vacation icons like flamingos, dolphins, and palm trees. Since demand was high and supplies were low, he decided to buy an old warehouse and then hire craftspeople to work there in order to produce the art. He would provide them with all of the supplies they needed, and he would be their only customer.
a) Jose engaged in _________.

Answer 1

Options: a. Vertical integration b. Horizontal integration

Answer: A. Vertical integration

Explanation: Vertical integration is a concept in management which allows the company to manage the flow of resources both in and out. In vertical integration the company controls every other aspects such as Supply of materials,Supply chain, distribution etc Vertical integration will help the company to control its affairs,save cost of operations, help to improve quality and guarantee timelines in delivery of orders.

Answer 2

Answer:

The correct answer is letter "E": vertical integration.

Explanation:

When an individual or company buys or manages other businesses across its supply chain, vertical integration takes place. Vertical integration could be backward and forward. In backward vertical integration, a supplier owns businesses that provide inputs for production processes for companies. In forward vertical integration, a company owns another business to get the supply chain closer to the end-consumer.

Thus, Jose's business is an example of backward vertical integration.