For Backward Vertical Integration into the Business of Suppliers to Be

question 11

Multiple Choice

For backward vertical integration into the business of suppliers to be a viable and profitable strategy,a company must

• A) have considerable expertise in supply chain management,transportation logistics,and inventory control techniques.
• B) be able to achieve the same scale economies as outside suppliers and also match or beat suppliers' production efficiency with no drop in quality.
• C) have large state-of-the-art production facilities so that it can fully capture all economies of scale in producing parts and components.
• D) have core competences in R&D,product design and engineering,and distribution logistics so that it will have adequate capabilities to produce and distribute parts and components in a timely and cost-effective manner.
• E) have a distinctive competence in production process technology and at least a core competence in manufacturing R&D.

---

Definitions:

Constant Rate

A steady, unchanging value or percentage used in financial calculations, such as a fixed interest rate over time.

Required Return

The minimum expected return on an investment necessary for an investor to consider it worthwhile, taking into account the risk involved.

Stock Price

The current market price at which a share of a company is bought or sold.

Dividend Growth Rate

The rate at which a company's dividend payments increase over a period.