SparklingLeaves Is One of the Major Suppliers of Automobile Tools

question 42

Multiple Choice

SparklingLeaves is one of the major suppliers of automobile tools to StanMotors, a leading automobile company. Many of the tools are customized to meet the specific needs of StanMotors and hence have little other value. In return, StanMotors has agreed to make SparklingLeaves its sole supplier of automobile equipment for a period of 15 years. This scenario illustrates:

• A) horizontal integration.
• B) credible commitment.
• C) competitive bidding.
• D) vertical integration.
• E) parallel sourcing.

---

Definitions:

Voting Rights

The entitlement of shareholders to vote on corporate matters and decisions during stockholders' meetings.

Additional Paid-In Capital

The amount of capital contributed by shareholders above the par value of the shares.

Treasury Stock

Refers to shares that were once part of the outstanding shares but were bought back by the company, reducing the amount of stock on the open market.

Par Value

A nominal value of a security, such as a bond or stock, which is set by the issuing company and does not necessarily reflect its market value.