Vertical Integration Can Raise Costs If, Over Time, a Company

question 18

True/False

Vertical integration can raise costs if, over time, a company continues to purchase inputs from company-owned suppliers when low-cost independent suppliers that can supply the same inputs exist.

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Definitions:

B2C

Business-to-Consumer, a commercial transaction model where businesses sell products or services directly to the end-users or consumers.

C2B

Consumer-to-Business, a business model where consumers create value or products that businesses purchase.

B2B

Business-to-Business, a model that involves transactions between two firms rather than between a firm and individual consumers.

Ordering Cost

The expenses incurred in placing and receiving orders for materials or products, including paperwork, communication, and transportation costs.