What is the term for a company expanding its operations by purchasing a supplier located earlier in the supply chain?

The term for a company expanding its operations by purchasing a supplier located earlier in the supply chain is known as backward integration. This strategic move allows a firm to gain control over its supply chain by acquiring suppliers that provide the raw materials or components necessary for its product.

By engaging in backward integration, a company can reduce its dependency on external suppliers, improve cost efficiency, and ensure the quality of the inputs it utilizes. This approach helps to streamline operations, mitigate risks associated with supply shortages, and enhance competitiveness within the market.

In contrast, other terms mentioned in the options relate to different strategies. Horizontal integration involves acquiring competitors or businesses at the same stage of production, while vertical integration refers to combining both backward and forward integration strategies, encompassing both suppliers and distribution channels. Market expansion typically focuses on entering new markets rather than altering supply chain relationships.