SAT Subject US History Practice Question 955: Answer and Explanation

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Question: 955

36. Horizontal integration occurs in business when a company

A. acquires ownership or control over other companies in the same business.
B. controls all aspects of the production and distribution of its product.
C. creates locally owned franchises.
D. changes its ownership from a single proprietor to a board of directors.
E. uses scientific management techniques to increase efficiency.

Correct Answer: A

Explanation:

Horizontal integration involves a company gaining control over a particular industry by acquiring competing companies or entering into a trust agreement. Successful horizontal integration can result in a monopoly. The control of all aspects of production and distribution of a product (B) is called vertical integration. Franchises (C) are associated with post-World War II businesses, such as McDonald's. Many corporations in the Gilded Age changed from single proprietorships to corporations, which had boards of directors (D), but this is not a horizontal integration. Scientific management (E) is associated with Frederick Winslow Taylor.

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