Vertical merger is the merger of two firms which are involved in which one of the following forms ?
Different stages of distribution and production in same business activity
Option 2 — Different stages of distribution and production in same business activity is correct.
A vertical merger joins two firms that operate at different stages of the same production-distribution chain, i.e. a buyer–seller relationship. A classic example is a car manufacturer merging with a tyre or steel supplier (backward integration), or with a dealership network (forward integration). The firms are not competitors; they occupy successive links of the same value chain.
The strategic logic is to secure supply, capture the supplier’s or distributor’s margin, cut transaction costs, and gain better control over quality and delivery. This distinguishes it from a horizontal merger (same stage, same product line) and a conglomerate merger (unrelated businesses).
| Merger type | Relationship of firms |
|---|---|
| Horizontal | Same product / same stage (competitors) |
| Vertical | Different stages of the same production-distribution chain |
| Conglomerate | Different, unrelated businesses |
Why the other options are wrong: Option 1 describes a horizontal merger; Option 3 describes a conglomerate merger; Option 4 mixes the two and does not define a vertical merger.
Takeaway: “vertical” means up or down the same supply chain, not sideways among rivals.
Similar Questions
When the target company uses the tactic of divestiture, to defend itself from a hostile takeover, it is said to sell the :
Pan Amsat developed a joint venture with Jsat Corporation to develop and send into orbit a small satellite. Which type of alliance the above statement represents ?
Who among the following has given the statement : “transition from single function focus to a multi function focus is essential for successful strategic management”?
__________ signals a strategic inflection point necessitating a radical strategic shift.
Match the items of List - I with List - II and select the code of correct matching :
List - I List - II (a) Merger of Vodafone and Idea (i) Business Strategy (b) Launch of Apple iphone 7 plus (ii) Operational Strategy (c) Manufacturing Samsung mobile handsets in India (iii) Corporate Strategy Code :
Which among the following is not a generic strategy ?
Which one among the following is not a correct statement ?
Which of the following statements is not correct about strategic management ?
Michael E. Porter’s five generic strategies are :
“Pepsi Co launched a hostile take over of Pepsi Bottling Group after its $ 4.2 billion offer was rejected”. Which strategy was used in this case ?
Important Questions from Strategic Management
- Strategic Management involves :
(a) Assessment of external environment
(b) Identification of subsystem
(c) Unity of command
(d) Span of control
(e) Assessment of resources and capabilities
(f) Identification of goal
Code : Put the following steps of strategic Management Process in correct sequence :
a. Scanning and Evaluation of Business Environment
b. Formulating strategies
c. Implementation of Corporate Strategy
d. Deciding about the Mission of the organisation
e. Setting Corporate Level Objective
Codes :
When the target company uses the tactic of divestiture, to defend itself from a hostile takeover, it is said to sell the :
Pan Amsat developed a joint venture with Jsat Corporation to develop and send into orbit a small satellite. Which type of alliance the above statement represents ?
Who among the following has given the statement : “transition from single function focus to a multi function focus is essential for successful strategic management”?
