For Backward Vertical Integration into the Business of Suppliers to Be

question 73

Multiple Choice

For backward vertical integration into the business of suppliers to be a viable and profitable strategy,a company

• A) must first be a proficient manufacturer.
• B) must be able to achieve the same scale economies as outside suppliers and match or beat suppliers' production efficiency with no drop-off in quality.
• C) must have excess production capacity, so that it has ample in-house ability to undertake additional production activities.
• D) needs to have a wide product line, so that it can supply parts and components for many products.
• E) should have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

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Definitions:

Merkel Cells

Specialized skin cells involved in the sensation of touch.

Replenishment Cycle

The process and timeline involved in ordering and receiving new stock to replace sold or used inventory.

Expected Shortage

Expected shortage refers to the anticipated shortfall in inventory due to higher demand than the supply available.

Inventory Stock

The quantity of goods or materials a business holds for the purpose of resale or production.