Which of the Following Is Not a Potential Advantage of Backward

question 51

Multiple Choice

Which of the following is not a potential advantage of backward vertical integration?

• A) Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity)
• B) Reduced risks of disruptions in obtaining crucial components or support services
• C) Reduced costs
• D) Reduced business risk because of controlling a bigger portion of the overall industry value chain
• E) Adding to a company's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage

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Definitions:

Pre-Tax Net Profit

The amount of profit earned by a company before taxes are deducted.

Time Value

Refers to the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity.

Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price within a certain period.

Exercise Value

The value of an option if it were exercised immediately, typically the difference between the underlying asset's market price and the option's strike price.