Vertical Integration by Zara,the Main Division and Brand of the Spanish

question 24

Multiple Choice

Vertical integration by Zara,the main division and brand of the Spanish clothing firm Inditex,illustrates:

• A)The potential of vertical integration to offer flexibility in responding to seasonal fluctuations in demand
• B)The potential for vertical integration to offer flexibility in responding to rapid changes in customer product preferences
• C)The potential for vertical integration to overcome problems arising from the need for transaction-specific investments by garment manufacturers
• D)The potential for vertical integration to exploit technical economies from co-locating adjacent processes.

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Definitions:

Net Advantage to Leasing

The benefit that arises from leasing an asset rather than purchasing it, considering factors like tax advantages and cash flow.

Tax Rate

The rate at which a person or business is taxed by the state on their earnings or gains.

CCA Rate

Capital Cost Allowance rate, which is the rate at which a business can claim depreciation on certain property types for tax purposes in Canada.

Straight-Line Depreciation

A system for dividing the cost of a solid asset throughout its operational life in equal yearly portions.