Final answer:
When a buyer is a major shareholder of a supplier, it's called vertical ownership or vertical integration, where owning parts of the supply chain can improve control and efficiency. This often occurs in public companies, whose shareholders own shares and vote for the board of directors, with more shares leading to more votes.
Step-by-step explanation:
If a buyer is a major shareholder of a supplier, it is typically referred to as a situation of vertical ownership or vertical integration, where a company owns its upstream suppliers or its downstream buyers. This tends to give the major shareholder company a greater control over the supply chain, which can result in cost savings and improved efficiency for the business. In cases where public companies are involved, the shareholders own the company by buying its stock.
A public company is characterized by its decision to sell stock to financial investors, which then can be freely bought and sold, making the investors owners of the company to the extent of the shares they hold. Since these shareholders are a broad group, they vote for a board of directors. The more shares of stock a shareholder owns, the greater the number of votes that shareholder has in decisions, such as electing the board of directors.