Question

Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This allowed Titan Autos to use its technological competencies along with Cadvia Autos's marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate?

A. Backward integration
B. Forward integration
C. Horizontal integration
D. Vertical integration

Answer 1

The merger of Titan Autos Inc. and Cadvia Autos Inc. exemplifies Horizontal integration, where companies in the same industry and stage merge to pool their strengths and achieve a larger market share.

Step-by-step explanation:

The scenario described best illustrates C. Horizontal integration. This type of merger occurs when two companies at the same stage in the same industry combine their resources to gain a larger market share and competitive advantage. By merging, Titan Autos Inc. and Cadvia Autos Inc. are able to leverage their respective strengths: Titan's technological competencies and Cadvia's marketing capabilities, resulting in an enhanced competitive position in the automotive market. This stands in contrast with vertical integration, which would involve acquiring businesses at different stages of production, and backward or forward integration, which entails merging with suppliers or distributors, respectively.