Vertical Integrating the Manufacture of Component Parts Increases an Organization's

question 96

Multiple Choice

Vertical integrating the manufacture of component parts increases an organization's scope,and the resulting increase in organizational complexity can raise a firm's cost structure.Which of the following is not a reason for this?

• A) vertically integrated firms have to determine appropriate prices for goods transferred to subunits within the firm
• B) the greater the number of subunits in an organization, the greater are the problems of coordinating and controlling those units
• C) the firm that vertically integrates into component part manufacture may find that because its internal suppliers have a captive customer in the firm, they lack an incentive to reduce costs
• D) vertically integrated firms have to find a way to distribute supplies to each subunit within a reasonable time frame
• E) the greater the number of subunits the greater the amount of information that must be managed

---

Definitions:

Conscious Thought

The process by which individuals are aware of and can think about their thoughts, feelings, and beliefs.

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Social Interest

A concept in psychology that refers to an individual's inclination towards empathy, cooperation, and a sense of belonging within a community.

Adler

Alfred Adler was a psychotherapist and founder of the school of individual psychology, emphasizing the importance of feelings of inferiority and societal engagement.