What does vertical expansion primarily involve?

Vertical expansion mainly refers to a company’s strategic move to grow by acquiring or gaining control over suppliers of essential resources, which is reflected in the answer selection. This approach enables a business to secure key inputs and improve its supply chain efficiency. By incorporating suppliers into its operations, a company can ensure greater control over production processes, reduce costs associated with procurement, and enhance the quality and reliability of its products or services.

Additionally, vertical expansion may facilitate better coordination between different stages of production, leading to faster response times to market changes and decreased reliance on external vendors. This strategy is a fundamental aspect of vertical integration, wherein a company seeks to own or control more of the supply chain to achieve a competitive advantage.

While acquiring unrelated businesses, purchasing companies that are customers, or investing in technology upgrades are strategic moves, they represent different dimensions of growth strategies not primarily focused on vertical expansion. Vertical expansion is specifically about moving up or down the supply chain, which is why the correct answer emphasizes gaining suppliers. This focus on strengthening supply chain relationships aligns with the core objectives of achieving vertical integration in a business context.