Full vertical integration compounds risk because:
A)Top managers have a complete knowledge of the entire value chain
B)The capital invested and the fixed costs are often much higher for a vertically integrated firm
C)A decline in sales and profits in the end market affects all stages simultaneously
D)Both b and c above

Question

Quizplus · Accepted Answer

Full vertical integration requires significant investment in capital and fixed costs, which increases risks for the firm. Additionally, any decline in sales or profits in the end market affects all stages of production simultaneously, compounding risks further.

Full Vertical Integration Compounds Risk Because