A Strategy of Vertical Integration Can Have Substantial Drawbacks,including

question 49

Multiple Choice

A strategy of vertical integration can have substantial drawbacks,including:

• A) whether horizontal integration can limit the performance of strategy-critical activities in ways that increase cost,build expertise,protect proprietary know-how,or increase differentiation.
• B) raising the firm's capital investment in the industry and increasing business risk,as well as providing less flexibility in accommodating shifting buyer preferences by locking the firm into relying on its own in-house activities.
• C) the environmental costs of coordinating operations across vertical chain activities.
• D) the ease to manage a set of skills and capabilities needed to operate in another stage of the vertical chain.
• E) the difficulties faced in entering outside vertical and horizontal markets.

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Definitions:

Square Feet

A unit of area measurement equivalent to a square measuring one foot on each side, commonly used in measuring real estate and building spaces.

Indirect Expenses

Costs that are not directly attributable to a specific product or service but are necessary for the overall operation of a business, such as utilities, rent, and administrative salaries.

Gross Sales

Gross sales represent the total sales revenue of a company, without deducting any sales returns, allowances, or discounts.

Direct Expense

Expenses that can be directly tied to the production or sale of specific goods or services.