Why Is Market Demand Uncertainty a Factor to Consider When

question 57

Multiple Choice

Why is market demand uncertainty a factor to consider when deciding whether to opt for vertical integration?

• A)The greater the unpredictability of demand, the greater the need to make suppliers suffer the consequences rather than the firm
• B)The greater the unpredictability of demand, the greater the consequences of compounded risk through vertical integration
• C)The more turbulent the demand, the greater the control advantage of vertical integration
• D)The more uncertain the market demand, the greater the bargaining power of the firm in the external market

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Definitions:

Stock Dividends Distributable

Represents shares of a company's stock that have been declared as dividends but have not yet been distributed to shareholders.

Dividends Declared

Profits announced by a company's board of directors to be distributed among shareholders.

Legal Capital

The minimum amount of equity that a company must maintain to protect creditors, often required by law.

Share Capital

The total amount of money raised by a company through the sale of shares to shareholders; represents the equity funding of the business.