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For manufacturing of Nirma detergent, an important raw material used Linear Alkaline Benzyne which was earlier purchased is now manufactured by Nirma itself. Which of the following type of Expansion done by Nirma in the above case?
- a)Horizontal expansion
- b)Backward expansion
- c)Forward expansion
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
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For manufacturing of Nirma detergent, an important raw material used L...
Backward Expansion
Backward expansion refers to a situation where a company starts producing its own raw materials or components instead of relying on external suppliers. In the case of Nirma manufacturing Linear Alkaline Benzyne (an important raw material for their detergent production), they are engaging in backward expansion.
Explanation:
1. Previous reliance on external suppliers: Nirma used to purchase Linear Alkaline Benzyne from external suppliers for the manufacturing of their detergent.
2. Internal production: By starting to manufacture Linear Alkaline Benzyne in-house, Nirma is now able to control the quality, cost, and supply of this crucial raw material.
3. Cost savings: By eliminating the need to purchase Linear Alkaline Benzyne from external suppliers, Nirma can potentially reduce costs and improve their profit margins.
4. Supply chain control: Producing their own raw material allows Nirma to have better control over their supply chain, ensuring a steady and reliable source of Linear Alkaline Benzyne for their detergent production.
5. Competitive advantage: Backward expansion can give Nirma a competitive advantage in the market by reducing their dependence on external suppliers and increasing their operational efficiency.
In conclusion, Nirma's decision to start manufacturing Linear Alkaline Benzyne internally represents a strategic move towards backward expansion, which can benefit the company in terms of cost savings, supply chain control, and competitive advantage.
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For manufacturing of Nirma detergent, an important raw material used L...
Backward Expansion:
- Backward expansion refers to a strategy in which a company decides to produce its own raw materials or components instead of purchasing them from external suppliers.
- In the given case, Nirma detergent was initially purchasing Linear Alkaline Benzyne as a raw material.
- However, Nirma has now made the decision to manufacture Linear Alkaline Benzyne in-house instead of relying on external suppliers.
- This means that Nirma has expanded its operations backward in the supply chain by producing its own raw material.
- This backward expansion allows Nirma to have better control over the quality, availability, and cost of Linear Alkaline Benzyne, ultimately improving its overall production process and reducing dependence on external suppliers.
- By implementing backward expansion, Nirma can also potentially reduce costs and increase profitability in the long run.
- Therefore, the type of expansion done by Nirma in this case is backward expansion.
- The other options, horizontal expansion and forward expansion, do not align with the given scenario.
- Backward expansion refers to a strategy in which a company decides to produce its own raw materials or components instead of purchasing them from external suppliers.
- In the given case, Nirma detergent was initially purchasing Linear Alkaline Benzyne as a raw material.
- However, Nirma has now made the decision to manufacture Linear Alkaline Benzyne in-house instead of relying on external suppliers.
- This means that Nirma has expanded its operations backward in the supply chain by producing its own raw material.
- This backward expansion allows Nirma to have better control over the quality, availability, and cost of Linear Alkaline Benzyne, ultimately improving its overall production process and reducing dependence on external suppliers.
- By implementing backward expansion, Nirma can also potentially reduce costs and increase profitability in the long run.
- Therefore, the type of expansion done by Nirma in this case is backward expansion.
- The other options, horizontal expansion and forward expansion, do not align with the given scenario.
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For manufacturing of Nirma detergent, an important raw material used Linear Alkaline Benzyne which was earlier purchased is now manufactured by Nirma itself. Which of the following type of Expansion done by Nirma in the above case?a)Horizontal expansionb)Backward expansionc)Forward expansiond)None of the aboveCorrect answer is option 'B'. Can you explain this answer?
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