Vertical Integration Can Be Disadvantageous When

question 30

Multiple Choice

Vertical integration can be disadvantageous when:

• A) competitors are vertically integrated.
• B) demand is stable.
• C) industry technology is changing rapidly.
• D) the company is operating in the home country.
• E) costs of company decreases.

---

Definitions:

Preferred Dividends

Dividends that are paid out to preferred shareholders at a fixed rate before any dividends are paid to common shareholders.

Common Dividends

Payments made to shareholders out of a corporation's earnings, reflecting the portion allocated to holders of common shares.

Liquidation

The process of converting assets into cash, often during the winding down of a business or the selling off of stock.

Preferred Stock

Preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shareholders typically receive dividends before common shareholders.