Question

In the late 19th century, Gustavus Swift owned meat-packing plants and refrigerated railcars which were used to ship meat. By being involved in various aspects of production, Swift controlled much of the meat industry. This is an example of what type of integration?

Answer 1

Vertical is the answer.

Answer 2

The correct answer is: "vertical integration".

Vertical integration takes place when a corporation expands its acitivites by acquiring and controlling business activities that constitute different stages within the production process. This form of expansion provides greater bargaining power to the corporation, as it controls most of the actors that participate in an industry, for example, the meat industry in the case of Gustavus Smith that owned meat-packing plants and also facilities for subsquent transport. Therefore, remaining participants usually have to accept the conditions that the vertically-integrated large corporation dictates.