Question at position 27 Sanjay, owner of WashTubs, a washing machine company, is looking for an alternative to vertical integration. He decides to manufacture some of his own machine parts while keeping a few key suppliers in his industry value chain. This is known asbackward vertical integrationtaper integrationforward vertical integrationstrategic offshoringClear my selectionSingle choice
A
backward vertical integration
B
taper integration
C
forward vertical integration
D
strategic offshoring

Question

Question at position 27 Sanjay, owner of WashTubs, a washing machine company, is looking for an alternative to vertical integration. He decides to manufacture some of his own machine parts while keeping a few key suppliers in his industry value chain. This is known asbackward vertical integrationtaper integrationforward vertical integrationstrategic offshoringClear my selectionSingle choice

A

backward vertical integration

B

taper integration

C

forward vertical integration

D

strategic offshoring

BlackTom AI · Accepted Answer

Taper integration is the correct choice because it describes a firm that produces some inputs internally while still purchasing the remainder from external suppliers.

1. Relevant knowledge points and concepts
- Vertical integration: expanding ownership of activities either upstream (backward) toward suppliers or downstream (forward) toward distribution/retail.  
- Backward vertical integration: firm fully internalizes upstream suppliers (or substantially replaces them) to control inputs.  
- Forward vertical integration: firm takes over downstream activities (e.g., retailers, distributors).  
- Taper integration: a hybrid strategy in which a firm both makes a portion of its inputs in-house and buys the rest from the market (or sells some output in-house and also through independent intermediaries).  
- Strategic offshoring: relocating certain business processes or production to other countries or outsourcing internationally.

2. Step-by-step reasoning
- Sanjay decides to manufacture some of his own machine parts: this indicates movement upstream (producing inputs) rather than expanding downstream.  
- He also keeps a few key suppliers in the industry value chain: he does not fully internalize supplier activities; instead he continues to source from outside suppliers.  
- Combining in-house production of some parts with continued purchases from suppliers matches the definition of taper integration.

3. Calculations
- No numerical calculations are required; the determination is conceptual based on who produces inputs and whether external suppliers are retained.

4. Why the correct answer is correct
- Taper integration explicitly describes a mix of internal production and external sourcing. Sanjay’s behavior (manufacture some parts + keep key suppliers) is exactly that mix.

5. Why other options are incorrect
- Backward vertical integration would imply Sanjay entirely (or primarily) internalizes supplier operations, replacing external suppliers rather than retaining them.  
- Forward vertical integration would involve taking over downstream activities such as distribution or retail, not making inputs.  
- Strategic offshoring involves relocating activities abroad or outsourcing internationally, which isn’t indicated here.