Final Answer:
The choice best describes the diagram of Oil Co. A -> Oil Co. B -> Oil Co. C = Mega Oil Company is b. Vertical Integration. Therefore the correct answer is option b.
Step-by-step explanation:
The diagram illustrates vertical integration, where Oil Company A, Oil Company B, and Oil Company C are combined to form Mega Oil Company. Vertical integration involves the consolidation of different stages of production or distribution within an industry under a single ownership.
In this case, the integration is vertical as it spans multiple levels of the oil production and distribution process, from upstream exploration and extraction (Oil Co. A and B) to downstream refining and distribution (Oil Co. C, the final product), resulting in the creation of Mega Oil Company.
Vertical integration is a strategic business move aimed at enhancing efficiency and control throughout the supply chain. By integrating various stages, a company can streamline operations, reduce costs, and exert more influence over the quality and pricing of the final product. In the context of the oil industry, vertical integration might involve owning and controlling activities from oil exploration and extraction to refining and marketing.
This type of corporate structure is distinct from horizontal integration, which involves the merging or acquisition of companies operating at the same stage of the production process.
In the given scenario, the alignment of different stages of oil production and distribution signifies vertical integration, illustrating Mega Oil Company's control over diverse aspects of the oil supply chain. Therefore the correct answer is option b.