What can result from suppliers' ability to integrate forward into markets?

Study for the Lululemon Strategy Exam. Access engaging materials and detailed explanations to prepare for your test. Elevate your strategy skills and be exam ready!

The correct answer highlights the idea that when suppliers are able to integrate forward into markets, it often leads to the development of private label brands. This occurs because suppliers gain more control over the branding and distribution of their products, allowing them to market their items directly to consumers rather than relying solely on retail partners. As a result, these suppliers can create their own brands that compete directly with established brands, often at lower prices. This strategy enables them to capture market share and potentially increase profit margins.

In contrast, increased supplier bargaining power and decreased competition among retailers may occur as suppliers integrate forward; however, they are not the direct outcomes of this forward integration. While higher prices for consumers can sometimes happen as a market consequence, it is not a guaranteed outcome. Instead, the focus on developing private label brands is the most relevant and direct result of suppliers moving closer to the end consumer in the marketplace.

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