Question

Vertical integration is a strategy in which a company expands backwards into an industry that provides outputs for its products. Usha Martin followed this strategy by:
a. aking coal and then starting to make wire ropes.
b. making wire ropes and expanding to make the steel for the ropes.
c. implementing coal mining and then starting to make steel.
d. making steel and expanding to making the wire ropes out of it.

Answer 1

Answer:

The correct answer is letter "B": making wire ropes and expanding to make the steel for the ropes.

Explanation:

Indian company Usha Martin Ltd. manufactures wires and steel to be traded worldwide. Usha Martin operations are centralized from is headquarters from where it designs, cuts, manufactures and distributes steel. The company acquires raw material on its own through coal mining to later be sent to its power plant where the mineral is produced until it is transformed for sale.

By making wire ropes, expanding to steel ropes while having full control of all the production operations, Usha Martin is implementing a vertical integration.