10. A computer manufacturer purchases the company that supplies computer chips for the company. Which type of corporate strategy is the company using
Answer: C
Vertical integration
The company is utilizing a vertical integration strategy by acquiring its chip supplier. This approach allows the manufacturer to control more of its supply chain, enhance efficiency, and reduce dependency on external suppliers.
A) Domain selection
Domain selection refers to a company's decision regarding the markets and industries in which it competes. This option is incorrect because the scenario describes a specific action of acquiring a supplier, rather than a general market choice.
B) Conglomerate diversification
Conglomerate diversification involves entering into new markets or industries that are unrelated to a company's existing business. This option is incorrect because the acquisition pertains to a supplier within the same industry, rather than branching out into entirely different sectors.
C) Vertical integration
Vertical integration is the correct choice as it involves a company acquiring its supplier to gain control over its production process. This strategy can lead to cost savings, improved efficiencies, and better supply chain management.
D) Strategic alliance
A strategic alliance involves a partnership between companies to pursue a set of agreed-upon objectives while remaining independent organizations. This option is incorrect because the acquisition signifies a full ownership rather than a collaborative partnership.
Conclusion
Vertical integration is the correct answer as it directly relates to the company's strategy of acquiring its supplier to streamline operations and secure its supply chain. Other options such as domain selection, conglomerate diversification, and strategic alliances do not accurately describe the actions taken by the manufacturer in this scenario.