The proposed merger between the retailer and one of its manufacturers, giving the manufacturer sole responsibility for a product family, is an example of vertical integration. Here’s why:

Control Over Supply Chain: Vertical integration involves merging with or acquiring firms at different stages of the production process (e.g., a retailer merging with a manufacturer).

Quality Control: By integrating vertically, the retailer gains better control over the production process, helping to ensure consistent product quality.

Supply Chain Efficiency: Vertical integration can streamline operations, reduce costs, and improve coordination between production and retail.

Reduction of Variability: The direct oversight and alignment of production processes can reduce variability in quality and improve overall supply chain performance.

References:

Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.

Harrigan, K. R. (1985). Vertical Integration and Corporate Strategy. Academy of Management Journal.