What is forward integration as a method of diversification?

Forward integration is a strategy where a company takes control over the distribution and selling of its products, moving closer to the end consumer. This method of diversification allows a business to ensure better control over its supply chain, reduce dependency on third-party distributors, and potentially create a more efficient process for getting products to market. By selling directly to customers or taking over retail operations, a company can enhance its market presence, potentially improve profit margins, and gain insights into customer preferences.

This approach contrasts with the other options. Acquiring suppliers focuses on backward integration, where a company seeks to control its supply chain by obtaining sources of raw materials or components. Entering unrelated markets generally aligns with a different form of diversification strategy aimed at spreading risk across various industries rather than concentrating on the distribution process. Expanding marketing efforts to new demographics involves targeting different customer segments rather than directly securing the sales and distribution processes. Thus, forward integration specifically emphasizes enhancing the company's control over how products are sold and delivered to customers, making this option the most accurate representation of the concept.