Management Information System (MIS) Practice Exam

Markets comprised of firms operating within a certain industry sector are known as what type of markets?

1. Vertical

2. Parallel

3. Horizontal

4. Focused

The correct answer is: Vertical

The term that best describes markets comprised of firms operating within a certain industry sector is "vertical markets." Vertical markets refer to niche markets that focus on a specific industry or sector, where the businesses involved offer products or services tailored to meet the unique needs of that industry. For instance, companies supplying software for healthcare, automotive, or manufacturing industries exemplify vertical markets as they operate within specified sectors and cater to particular demands and requirements. On the other hand, parallel markets typically refer to markets that operate alongside, but not directly in competition with each other, often involving complementary products or services. Horizontal markets, in contrast, encompass a broader range of industries and sectors, where firms provide similar products or services across multiple industries rather than focusing on a single niche. Focused markets can also denote targeted sectors, but they don’t capture the specific nature of vertical integration within a distinct industry as accurately as vertical markets do. Therefore, the term "vertical" is precise in identifying the nature of markets made up of firms within the same industry sector.