Full Vertical Integration Compounds Risk Because

question 2

Multiple Choice

Full vertical integration compounds risk because:

• A)Top managers have a complete knowledge of the entire value chain
• B)The capital invested and the fixed costs are often much higher for a vertically integrated firm
• C)A decline in sales and profits in the end market affects all stages simultaneously
• D)Both b and c above

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Definitions:

Deductive Reasoning

A logical process in which a conclusion is based on the concordance of multiple premises that are generally assumed to be true.

Syllogism

A form of logical reasoning where a conclusion is drawn from two given or assumed propositions (premises), each of which shares a common or middle term not present in the conclusion.

Aristotle

A Greek philosopher and polymath during the Classical period in Ancient Greece, one of the most influential figures in Western philosophy and science.

Equilateral Triangle

A polygon with three sides of equal length and three angles of equal measure, resulting in a symmetrical shape.