E15

Question 1

Integration

Answer 1

Occurs when two firms come together through either a merger or a takeover

Question 2

Backward vertical integration

Answer 2

This involves acquiring a business operating earlier in the supply chain

Question 3

Horizontal integration

Answer 3

Businesses in the same industry and which operate at the same stage of the production process are combined

Question 4

Forward vertical integration

Answer 4

Involves acquiring a business further up in the supply chain

Question 5

Conglomerate integration

Answer 5

This involves the combination of firms that are involved in unrelated business activity

Question 6

Internal economies of scale

Answer 6

When a firm grows in size and so benefits from lower average costs

Question 7

External economies of scale

Answer 7

When a whole industry grows in size so a firm within this industry benefits from lower average costs