Question

Radial Autos currently sources components such as airbags, upholstery, and brake pads from various suppliers in the industry value chain. In order to lower costs and reduce the risk of interruptions in the supply of components, Radial should pursue

Answer 1

Backward integration.

Step-by-step explanation:

Integrative growth strategy is used by a companies to increase sales and profit through mutual beneficial agreements with other parties in the industry . It can be in the form of backward , forward , horizontal on conglomerate integration .

In backward integration agreement , the company forma a relationship with the producer and suppliers of raw materials in order ta gain the control os supplies and also save production cost.

This clearly explains the radial autos system of production operations

Answer 2

Answer: Radial Autos should pursue Backward Integration.

Explanation: Backward integration is the process in which a company purchases or internally produces segments of its own supply chain. Simply put, it is when a company acquires and controls certain inputs that could be utilized in the process of manufacturing its products or services.

This is a competitive strategy, because it lowers the cost of production and this will reflect in the price of the final product.

This is the strategy that Radial Autos should pursue in order to lower cost and reduce risk in interruption of the supply component, because in adopting this strategy, they will have total control over the inputs they use in production.