Which of the Following Statements Regarding Vertical Integration Is FALSE

question 38

Multiple Choice

Which of the following statements regarding vertical integration is FALSE?

• A)Vertically integrated companies may be large,but unlike other large corporations,since they remain focused in one industry,they are easy to run.
• B)A company might not be happy with how its products are being distributed,so it might decide to take control of its distribution channels.
• C)A company might conclude that it can enhance its product if it has direct control of the inputs required to make the product.
• D)The principal benefit of vertical integration is coordination.By putting two companies under central control,management can ensure that both companies work toward a common goal.

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Definitions:

Consideration

A concept in contract law that involves something of value exchanged between parties as part of an agreement.

Subrogation

The legal right held by insurers to pursue a third party that caused an insurance loss to the insured.

Secured

Relating to a loan or obligation that is backed by collateral, ensuring the lender has recourse in case of default by the borrower.

Obligation

A legal or moral duty to do or not to do something, often resulting from a contract or promise.