What does backward integration involve in vertical mergers?

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Backward integration in vertical mergers refers to a company taking control over its supply chain by acquiring suppliers that are involved in the earlier stages of production. This strategy allows the merging company to have greater control over the quality, cost, and availability of the raw materials or components necessary for its products. By purchasing suppliers, a company can potentially reduce costs, streamline operations, and safeguard against supply chain disruptions. This form of integration enables a business to ensure a stable source of supply and can lead to improved efficiency in production processes.

In contrast, the other options represent different business strategies: acquiring distributors would be an example of forward integration, purchasing competitors relates to horizontal mergers, and integrating technology into supply chains does not directly pertain to the concept of vertical integration in the traditional sense. Thus, the focus on acquiring suppliers clearly identifies backward integration as the correct answer.

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