Which of the Following Is NOT a Strategic Disadvantage of Vertical

question 82

Multiple Choice

Which of the following is NOT a strategic disadvantage of vertical integration?

• A) Vertical integration boosts a firm's capital investment in the industry, thus increasing business risk if the industry becomes unattractive later.
• B) Vertical integration backward into parts and components manufacturing can impair a company's operating flexibility when it comes to changing out the use of certain parts and components.
• C) Vertical integration reduces the opportunity for achieving greater product differentiation.
• D) Forward or backward integration often calls for radically different skills and business capabilities than the firm possesses.
• E) Vertical integration poses all kinds of capacity-matching problems.

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Definitions:

Budget Surplus

A situation where income or revenues exceed expenditures over a specific period of time, typically a fiscal year.

Budget Deficit

A budget deficit happens when a government's expenditures surpass its revenues within a given fiscal period.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Net Capital Outflow

Refers to the difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreigners. A positive net capital outflow means a country is investing more abroad than others are investing in it.