What is the term for when a buyer owns companies within its own supply chain?

The correct term for when a buyer owns companies within its own supply chain is vertical integration. This concept refers to the process whereby a company takes control of multiple stages of production or distribution within its supply chain. By owning the suppliers of raw materials as well as the processes that transform these materials into the final product, the company can achieve greater efficiency, reduce costs, and increase control over the quality of the materials and products.

Vertical integration can take two forms: forward integration, where a company moves closer to the end customer by acquiring businesses further down the supply chain, and backward integration, where a company acquires businesses that provide the raw materials or components necessary for production. This approach can enhance a company's competitive advantage by streamlining operations and ensuring a steady supply of essential inputs.

In contrast, horizontal integration refers to acquiring or merging with other companies at the same stage of production to expand market share or reduce competition. Conglomerate integration involves a company acquiring businesses in unrelated fields, which diversifies its operations but does not relate directly to the supply chain. Strategic alignment focuses more on partnerships and cooperation between firms rather than ownership within the supply chain. Therefore, vertical integration best captures the concept of a buyer owning companies within its own supply chain.