CA Intermediate · Financial Management and Strategic Management · Strategic Choices
Kalyani Foods, a packaged snack maker, buys the company that supplies it with potato chips raw material so that it controls the quality and cost of its inputs. Which grand strategy does this move represent?
The move is backward integration. Kalyani Foods is taking over its own raw material supplier, so it moves towards the input end of its value chain to gain control over quality and cost. Forward integration would instead mean acquiring distributors or retailers.
- ABackward integrationCorrect
- BForward integration
- CHorizontal integration
- DConcentric diversification
Explanation
Acquiring a supplier moves the firm up the value chain towards its inputs, which is backward integration. Forward integration would involve acquiring distributors or retailers, and horizontal integration involves acquiring competitors.
Did you get it right without looking?
One question tells you little. A timed set on Strategic Choices shows your real accuracy, how long you take and where you lose marks.
More Strategic Choices questions
- Ravi Pharma, which currently sells generic medicines in India, plans to sell the same generic medicines to new customers in African countrie…
- Meghna Pharma, facing falling margins, decides to sell its loss-making API division to a competitor and use the proceeds to reduce debt and …
- Anand Foods, a regional biscuit brand, decides to compete by offering a product of comparable quality at the lowest cost in the industry, us…
- Kaveri Motors, a car maker, acquires a chain of dealerships to control sales, and also separately decides to buy a small software firm unrel…
- Tirupati Agro Foods, a regional packaged-snacks maker, decides to acquire a leading edible-oil refiner that supplies it with raw material, s…
- Rohini Pharma, a Hyderabad generic drug maker, is considering the following: it wants to buy a Bengaluru diagnostics-kit firm which has no l…