The best reason for investing company resources in vertical integration (either forward or backward) is to

Question

BlackTom AI · Accepted Answer

The question asks: The best reason for investing company resources in vertical integration (either forward or backward) is to

Option 1: 'expand into foreign markets and/or control more of the industry value chain.' While vertical integration can help control more of the value chain, expanding into foreign markets is not inherently a core reason for vertical integration itself; it relates more to market globalization and strategic expansion than to the fundamental justification for integrating activities in the value chain.

Option 2: 'broaden the firm's product line and/or avoid the need for outsourcing.' Broadening the product line can be a benefit of diversification, but it is not the central rationale for vertical integration. Likewise, avoiding outsourcing is a potential motive, yet this description is partial and does not capture the full strategic rationale behind integrating activities through the value chain.

Option 3: 'gain a first-mover advantage over rivals in revamping the industry value chain.' This implies temporary competitive advantage from speed of implementation, but vertical integration is not primarily pursued to secure a first-mover edge in the industry value chain; more robust justifications center on control, coordination, and cost/quality advantages rather than mere timing advantage.

Option 4: 'add materially to a company's technological capabilities, strengthen the company's competitive position, and/or boost its profitability.' This choice directly aligns with the core reasons for vertical integration: leveraging internal capabilities, enhancing competitive position through better coordination and control, and driving profitability through efficiency, quality, and integration of activities.

Option 5: 'achieve product differentiation and/or lengthen the company's value chain to include more activities performed in-house and thereby gain a greater ability to reduce internal operating costs.' While this option mentions performing more activities in-house and cost reductions, the phrasing is somewhat convoluted and the emphasis on product differentiation is not the central universal justification for vertical integration. The stronger, more general justification centers on strengthening competitiveness and profitability through integration of critical value-chain activities and capabilities, as captured in Option 4.

In summary, the strongest, most broadly applicable justification among the choices is the one that centers on building technological capabilities, strengthening competitive positioning, and boosting profitability, which encompasses the strategic goals of vertical integration beyond mere expansion, outsourcing avoidance, or first-mover considerations.

The best reason for investing company resources in vertical integration (either forward or backward) is to

View Explanation

Log in for full answers

Similar Questions

Starbucks is analyzing how to strengthen its supply chain sustainability goals by sourcing directly from coffee farmers instead of regional brokers. While this increases control and transparency, it also adds complexity and risk. Which strategic framework best supports this decision?

Part 1What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor?Part 2 A. vertical integration B. horizontal integration C. virtual companies D. outsourcing

Question at position 38 Backward Vertical Integration refers to a company acquiring one or more of their customer organizations.TrueFalse

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

Vertical integration means:

Question at position 10 Companies today are focused on vertical integration encompassing the ownership and coordination of all supply chain activities while also outsourcing their core competenciesTrueFalse

Question at position 7 When Luckin acquires coffee farms to secure its bean supply, this is an example of:Market diversificationforward integrationHorizontal integrationvertical integration

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler

The best reason for investing company resources in vertical integration (either forward or backward) is to

View Explanation

Log in for full answers

Similar Questions

Starbucks is analyzing how to strengthen its supply chain sustainability goals by sourcing directly from coffee farmers instead of regional brokers. While this increases control and transparency, it also adds complexity and risk. Which strategic framework best supports this decision?

Part 1What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a​ distributor?Part 2 A. vertical integration B. horizontal integration C. virtual companies D. outsourcing

Question at position 38 Backward Vertical Integration refers to a company acquiring one or more of their customer organizations.TrueFalse

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

Vertical integration means:

Question at position 10 Companies today are focused on vertical integration encompassing the ownership and coordination of all supply chain activities while also outsourcing their core competenciesTrueFalse

Question at position 7 When Luckin acquires coffee farms to secure its bean supply, this is an example of:Market diversificationforward integrationHorizontal integrationvertical integration

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

Part 1What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor?Part 2 A. vertical integration B. horizontal integration C. virtual companies D. outsourcing