For Backward Vertical Integration into the Business of Suppliers to Be

question 25

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 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:

End-of-period Spreadsheet

A tool used in accounting to compile all account balances and adjustments at the end of a period in order to prepare financial statements.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries made in the previous period.

General Journal

A comprehensive journal that records all types of accounting transactions, without limitation to specific categories.

Balance Sheet Columns

The sections in a balance sheet showing assets, liabilities, and shareholders' equity at a specific point in time.