Which of the following problems is associated with the strategy of vertical integration?
A) Decrease in cost structure
B) Increase in industry competition
C) Vulnerability to unpredictable demand
D) Assured conflict with the antitrust authorities
E) Lack of bureaucratic costs

Question

Which of the following problems is associated with the strategy of vertical integration?
A) Decrease in cost structure
B) Increase in industry competition 
C) Vulnerability to unpredictable demand 
D) Assured conflict with the antitrust authorities
E) Lack of bureaucratic costs

Quizplus · Accepted Answer

Vertical integration involves integrating multiple stages of the production process, which can result in a company becoming vulnerable to unpredictable demand. For example, if a company that owns both a manufacturing plant and a retail store experiences a sudden drop in demand for its products, it may be stuck with excess inventory and no outlet to sell it. This is a problem that can arise from vertical integration. The other answer choices are not necessarily problems associated with vertical integration.

Which of the Following Problems Is Associated with the Strategy