Shaw Industries, a Giant Carpet Manufacturer, Increases Its Control Over

question 94

Multiple Choice

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of using

• A)related diversification to acquire market power by pooling negotiating power.
• B)related diversification to acquire economies of scope by leveraging core competencies.
• C)related diversification to acquire economies of scope by integrating vertically in order to acquire market power.
• D)related diversification to acquire market power by integrating vertically.

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Definitions:

Net Income

What remains as a company's profit once revenue is adjusted for taxes and expenses.

Return On Assets

A financial metric that measures the profitability of a company relative to its total assets, indicating how efficiently a company uses its assets to generate earnings.

Price-Earnings Ratio

A valuation metric for stocks, calculating the ratio of a company's current share price to its per-share earnings.

Market Price

The current value at which a good, service, or asset is traded on the market, determined by supply and demand dynamics.