Which statement correctly matches a type of integration with its characteristic?

Which statement correctly matches a type of integration with its characteristic?

• A. Forward vertical integration is when a business takes over a supplier in an earlier sector
• B. Backward vertical integration is when a business takes over a distributor in a later sector
• C. Conglomerate integration is when two businesses in different markets join through a takeover
• D. Outsourcing is when a company merges with another in a related market

Answer: (C)

Understanding the different ways firms extend control or diversify helps explain why the correct choice fits. Conglomerate integration is when two businesses operate in different markets and merge or are acquired, creating diversification across unrelated industries. The statement matches this definition because it describes two firms in different markets joining through a takeover. In contrast, forward vertical integration moves toward the customer—such as a manufacturer acquiring a distributor or retailer—while backward vertical integration moves toward the source of inputs, like acquiring a supplier. Outsourcing is not a merger at all; it involves contracting work to another company rather than combining ownership.

Understanding the different ways firms extend control or diversify helps explain why the correct choice fits. Conglomerate integration is when two businesses operate in different markets and merge or are acquired, creating diversification across unrelated industries. The statement matches this definition because it describes two firms in different markets joining through a takeover.

In contrast, forward vertical integration moves toward the customer—such as a manufacturer acquiring a distributor or retailer—while backward vertical integration moves toward the source of inputs, like acquiring a supplier. Outsourcing is not a merger at all; it involves contracting work to another company rather than combining ownership.