One Huge Problem with Vertical Integration of Activities with Only

question 48

Multiple Choice

One huge problem with vertical integration of activities with only one major sellable output is

• A)the company will be too large to manage efficiently.
• B)the entire integrated value-chain is subject to the same single market risk.
• C)upstream stages are isolated from market forces.
• D)it's no longer possible to use external suppliers.

---

Definitions:

Merchandise Inventory

Finished goods available for sale to customers in a retail or wholesale business.

Periodic Inventory System

An inventory accounting system where inventory levels are updated and cost of goods sold is calculated at the end of an accounting period.

Perpetual Inventory System

A method of keeping track of inventory in real-time, where inventory levels are updated after every sale or purchase transaction.

FOB Shipping Point

A term used in shipping agreements indicating that the buyer is responsible for the cost of shipping and risk of loss from the shipping point.