business leaders began the practice of vertical integration because_____
big companies could grow by merging with other companies or acquiring them
factory workers could start in low positions and work their way up to manangment
large corporations could control the cycle of a product form creation to sale
small companies could grow so that the could compete with the larger companies
There are multiple reasons why business leaders began the practice of vertical integration, but the most relevant reason from the options provided is: large corporations could control the cycle of a product from creation to sale.
Vertical integration refers to the strategy of a company expanding its control over different stages of the supply chain, from raw materials to distribution. This practice allows companies to have more control and influence over the entire production process, which can lead to increased efficiency, cost savings, and competitive advantage. By vertically integrating, companies can manage the entire production cycle, from sourcing raw materials to manufacturing, distribution, and ultimately selling the product. This enables them to streamline operations, reduce costs, ensure consistent quality, and maintain greater control over their supply chain.
The other options provided are not accurate explanations for the practice of vertical integration:
- Big companies merging with or acquiring other companies primarily illustrates the concept of horizontal integration, which refers to combining companies operating at the same stage in the supply chain or industry to increase market share and competitiveness.
- Factory workers having the opportunity to start in low positions and work their way up to management is related to the concept of career progression within a company and is not directly related to vertical integration.
- The idea that small companies could grow to compete with larger companies usually does not occur through vertical integration. While small companies may choose to vertically integrate as a growth strategy, it is more common for them to focus on developing niche markets, differentiation strategies, or leveraging their agility to compete effectively.
Business leaders began the practice of vertical integration because large corporations could control the cycle of a product from creation to sale.
Business leaders began the practice of vertical integration because it allowed large corporations to control the entire cycle of a product, from its creation to its sale. This means that companies could own and manage all stages of production, including raw materials, manufacturing, distribution, and retail. By doing so, they could eliminate middlemen and potential bottlenecks in the supply chain, leading to increased efficiency and profitability.
To further explain how vertical integration works, let's take an example of a car manufacturing company. In traditional manufacturing, a car company would purchase different components such as engines, tires, and electronics from various suppliers. They would then assemble these components to create the final product.
However, by practicing vertical integration, the car company could acquire or merge with the suppliers of components. This would allow them to have direct control over the production and supply of these components, ensuring consistent quality, timely delivery, and potentially lower costs. Additionally, the car company could also establish its own dealership network, controlling the distribution and sale of their cars.
Vertical integration offers several advantages. Firstly, it provides companies with better control over their supply chain and reduces dependency on external suppliers. Secondly, it allows for cost savings and increased efficiency, as companies can streamline operations and eliminate profit margins for intermediaries. Lastly, vertical integration can give companies a competitive edge in the market by enabling them to offer differentiated products or services that are difficult for others to replicate.
Therefore, the correct option from the given choices is: Large corporations could control the cycle of a product from creation to sale.