Which of the Following Is Not a Strategic Disadvantage of Vertical

question 9

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)Integrating backward into parts and components manufacture can impair a company's operating flexibility when it comes to changing out the use of certain parts and components.
• C)Vertical integration limits a company's ability to achieve greater product differentiation and to exercise direct control over the costs of performing value chain activities.
• 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:

Financial Statements

Structured reports that detail the financial performance, position, and cash flows of a business.

Exchange Rates

The rate at which one currency can be exchanged for another currency, which can fluctuate based on market conditions.

Statement of Retained Earnings

A financial document outlining the changes in retained earnings over a specific period, including net income and dividends paid.

Functional Currency

The foremost form of currency in the principal economic zone in which a corporation is active, reported in its financial accounts.