Which of the Following Statements Regarding Vertical Integration Is False

question 41

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:

Formal Rationality

Formal rationality denotes a mode of thought and action guided by rules, laws, and procedures often associated with bureaucratic organizations and procedures.

Charismatic Leader

An individual who inspires followers through their personal qualities, passion, and vision, rather than through traditional authority.

Authority Transfer

The process of delegating or shifting authority from one entity or individual to another, often seen in organizations and governance.

Ritualistic Tests

Procedures or ceremonies that are performed in a prescribed manner, often to assess conformity or adherence to social norms, rather than to measure actual competencies or skills.