Which of the following best describes vertical integration?

Vertical integration refers to a business strategy where a company expands its operations into different stages of production or distribution within the same industry. This typically involves acquiring or merging with suppliers (backward integration) or distributors (forward integration) to gain more control over the supply chain. By doing so, a company can reduce costs, improve efficiencies, and gain competitive advantages.

When a company opts for vertical integration, it aims to secure its supply sources or distribution channels, thus minimizing dependence on external entities and mitigating risks associated with supply chain disruptions. This strategy can lead to enhanced coordination, better quality control, and increased market power.

The other options do not align with the concept of vertical integration. For instance, outsourcing to third-party vendors implies a reduction of control over production and is contrary to the idea of integrating operations. Focusing on a single product line does not encompass the broader control over the supply chain that vertical integration entails. Producing goods or services previously mentioned does not capture the essence of vertically integrating across the supply chain.