In which scenario does backwards integration typically occur?

Backwards integration typically occurs when a manufacturer acquires their suppliers. This strategy allows the manufacturer to take control of the supply chain and reduce reliance on external suppliers. By integrating backwards, a company can secure the necessary raw materials and components needed for production, which can lead to greater efficiency, cost savings, and improved quality control.

This approach is particularly beneficial in industries where supply chain disruptions can significantly impact production and delivery timelines. When a manufacturer owns or controls the sources of their inputs, they can better manage inventory, negotiate costs, and ensure that they are receiving a consistent quality of materials. This logically leads to enhanced competitive advantage in the marketplace.

In contrast, the other scenarios do not exemplify backwards integration. Selling directly to consumers pertains more to forward integration, expanding service offerings does not necessarily involve control over supply chains, and collaborating with another firm generally relates to partnerships rather than the acquisition of supply sources.