Floors Unlimited, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of using. A. Unrelated diversification to acquire market power by pooling negotiating power. B. related diversification to acquire economies of scope by leveraging core competencies. C. related diversification to acquire economies of scope by integrating vertically in order to acquire market power. D. all of the above.

Question

Marely Mack

Business

2 September, 18:09

Floors Unlimited, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of using. A. Unrelated diversification to acquire market power by pooling negotiating power. B. related diversification to acquire economies of scope by leveraging core competencies. C. related diversification to acquire economies of scope by integrating vertically in order to acquire market power. D. all of the above.

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Dangelo Moran · Answer 1

Option C. Related diversification to acquire economies of scope by integrating vertically in order to acquire market power.

Explanation:

The reason is that in the related diversification the company enters in a similar business which it has entered by investing in the raw material by manufacturing much of its own polypropylene fiber. Furthermore, it has integrated its operations vertically backward which means that the business has taken control of its input in manufacturing by investing in its customer's business.