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:

Initial Public Offering

The first sale of stock by a private company to the public, often used by companies to raise capital for expansion.

Share Issuance

The process by which a company issues new shares of stock to investors or shareholders, increasing the number of outstanding shares.

Share Buy-backs

The process by which a company purchases its own shares from the marketplace, reducing the amount of outstanding stock on its balance sheet.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, thus having an ownership interest in the company.