Question

Considering the added value chain, backward integration refers to acquiring capabilities toward suppliers, while forward integration refers to acquiring capabilities toward distribution or even customers.
a) true
b) false

Answer 1

Answer:

a) true.

Explanation:

Backward integration can be defined as a process in which companies use a strategy of integrating with their suppliers in order to add value to their value chain. The advantages of this process are increased production efficiency, decreased costs, increased quality, increased profitability.

Forward integration refers to a company's control process in its supply chain. It is the process that a company acquires some resources to improve essential elements of the supply chain until the product or service reaches the final customer. The benefits are: increased market share, creation of competitive barriers, maintenance of process quality, etc.