To Make a Choice Between Vertical Integration or External Sourcing

question 41

Multiple Choice

To make a choice between vertical integration or external sourcing, which statement is true?

• A)It depends on the specific factors prevailing
• B)Vertical integration is preferable in a technology-intensive industry
• C)Market sourcing is preferable when the industry is very fragmented
• D)It is simply a matter of managerial preference

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Definitions:

Stockholders' Equity

The ownership interest of shareholders in the assets of a corporation, after all liabilities have been subtracted.

Accounts Payable

The amounts owed by a business to its suppliers or creditors for goods and services received, representing short-term liabilities.

Accounts Receivable

Funds that are due to a company from its clients for the delivery of goods and services which payment is pending.

Net Assets

The total assets of a company minus its total liabilities; a measure of its financial health and value.