Question

If Walmart purchases a manufacturing plant to produce nothing but Walmart's dealer brand of laundry detergent, Walmart is engaging in:

a. monopoly
b. vertical integration
c. intertype competition
d. a contractual channel system
e. an administered channel system.

Answer 1

Walmart's act of purchasing a manufacturing plant to produce its own brand of laundry detergent exemplifies vertical integration, not a monopoly or other market strategy. Option b.

Step-by-step explanation:

When Walmart purchases a manufacturing plant specifically to produce its own brand of laundry detergent, this is a strategic move known as vertical integration. Vertical integration occurs when a company expands its operations into an area that serves its supply chain.

For Walmart, which typically operates as a retailer, moving into manufacturing is a way to control more of the production and distribution process of its goods, potentially reducing costs and increasing efficiency.

This strategy differs from a monopoly, which is an exclusive control over a commodity or service in a particular market, or a cartel, where a group has an agreement to manipulate prices or markets.

So Option b is correct.