Which term describes a company that owns the entire chain from farming to distribution?

Which term describes a company that owns the entire chain from farming to distribution?

• A. Vertical Integration
• B. Horizontal Integration
• C. Outsourcing
• D. Franchising

Answer: (A)

Vertical integration is when a company owns multiple stages of the production and distribution process, from farming through processing and all the way to distribution. Owning the entire chain gives the company tight control over quality, timing, and costs, and can reduce dependence on external suppliers. That complete ownership of the stages from origin to consumer is what this term describes. If a company were to grow by buying other firms at the same stage of the process, that would be horizontal integration, not owning the full chain. Outsourcing means handing steps over to external partners rather than owning them, and franchising involves licensing the brand and business model to others who operate their own units, not controlling the entire supply chain.

Vertical integration is when a company owns multiple stages of the production and distribution process, from farming through processing and all the way to distribution. Owning the entire chain gives the company tight control over quality, timing, and costs, and can reduce dependence on external suppliers. That complete ownership of the stages from origin to consumer is what this term describes.

If a company were to grow by buying other firms at the same stage of the process, that would be horizontal integration, not owning the full chain. Outsourcing means handing steps over to external partners rather than owning them, and franchising involves licensing the brand and business model to others who operate their own units, not controlling the entire supply chain.