CA Intermediate · Financial Management and Strategic Management · Strategic Choices
Tarini Foods, a Pune-based packaged snack maker, buys a regional rival that supplies the same type of snacks to the same retail chains, to gain market share and cut duplicate costs. Which grand strategy does this move represent?
The move is horizontal integration through acquisition. Tarini Foods is buying a competitor at the same stage of the value chain with similar products and customers, which increases market share and removes duplicate costs. It is not backward integration, since the target is not an input supplier.
- AHorizontal integration through acquisitionCorrect
- BBackward vertical integration
- CConcentric diversification into an unrelated field
- DDivestment of a business unit
Explanation
The target operates at the same stage of the value chain and sells similar products, so the acquisition is horizontal integration. Backward integration would mean buying a supplier of inputs, which is not the case here. The move is not unrelated diversification, as the product is the same.
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