For a Backward Vertical Integration Strategy into the Business of Suppliers

question 42

Multiple Choice

For a backward vertical integration strategy into the business of suppliers to be viable and profitable, a company must possess

• A)the capability to achieve the same scale economies as outside suppliers and also match or beat suppliers' production efficiency with no drop in quality.
• B)considerable expertise in supply chain management, transportation logistics, and inventory control techniques.
• C)large state-of-the-art production facilities so that it can fully capture all economies of scale in producing parts and components.
• D)a distinctive competence in production process technology and at least a core competence in manufacturing R&D.
• E)excess production capacity so that it has an ample in-house ability to undertake additional production activities.

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Definitions:

Linear Relationship

A type of relationship between two variables where the relationship can be graphically represented by a straight line, indicating a constant rate of change.

Causal Relationship

A connection between two variables where a change in one variable is responsible for a change in another variable.

F Test

A statistical method employed to ascertain if significant variance differences exist among two or more groups.

Coefficient Of Correlation

A numerical measure that quantifies the degree to which two variables are linearly related.