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.

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Definitions:

Expected Rate of Return

The average return that an investor anticipates to earn on an investment, considering all potential outcomes and their probabilities.

Expected Return

The weighted average of all possible returns for a given investment, considering the probabilities of each outcome.

Standard Deviation

A measure of the dispersion or variability of a set of data points or investment returns, indicating the degree of risk or volatility.

Risk-Free Asset

An investment with a guaranteed return and no risk of financial loss, typically represented by government bonds.