Question

Which one of the following business strategies, used by Direct Writer insurers, involves an organization selling its product directly to the customer rather than through a wholesaler or other intermediary?

Select one:

a. Multi-divisional structure

b. Differentiation

c. Cost leadership

d. Vertical integration

Answer 1

d. vertical integration is the correct option.

vertical integration is a process, when a company controls two to more stages in the supply chain.

the supply cahin consist of the following stages :

1. procurement of raw materails

2. maufacturing

3. distribution

4. retail

the retailers purchase the products distributed by the wholesalers , which in turn reaches the consumer . when the business controls 2 or more stages in this supply chain it is called vertical integration.thus the role of the wholesaler and reatiler is directly controlled by the business itself. as it is cutting the middle man the business is to provide the product at a much lower cost.

cost leadership is a strategy of seeting up a price, which is lower than the prices of the competitors. it is a way of making the products more attractive and gaining a higher market share.

differentiation is a strategy of adding certain features to a product which differentiates it form the rest of the market.

multi divisional structure is dividing an organization into several divisions ,depending upon the geography,products and services and are controlled by a central agency.