Razor Inc.,an automobile company,merges with Tyros Inc.,a firm that manufactures tires,in order to limit the uncertainty in the supply of automobile tires and reduce the production cost of its cars.This merger is an example of a:

A) vertical merger.
B) leveraged buyout.
C) horizontal merger.
D) shark repellant merger.
E) conglomerate merger.

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Licebo Makamba · Accepted Answer

Final Answer : A, Explanation :  A vertical merger occurs when two companies at different stages of production or the supply chain merge. Razor Inc. (an automobile company) merging with Tyros Inc. (a tire manufacturer) is an example of a vertical merger because it combines companies in different stages of the production process for automobiles, aiming to secure the supply of a key component (tires) and reduce production costs.

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