Question

Which business practice is described by the following secenario? A steel mill owner buys the mine that produces iron ore, the railroad that transports the iron ore, the factory that makes steelmaking furnaces, and the company that advertises the steel.

a) selling stock.
b) horizontal integration.
c) scientific management.
d) vertical integration.

Answer 1

d) vertical integration

Step-by-step explanation:

This business practice is called a vertical integration. Vertical integration is when a company purchases and acquires other companies that work in the production process. The main reason of this practice is to strength their supply chain, reduce production costs, and manage all aspects of the product. By owning all of the process companies, they could make the best out of all of them and create plans to increase their productivity. It creates guarantees efficiency in the production side and prevents delays and slow downs in any production side.