A strategy of vertical integration may be a risky strategy for a company to pursue when demand is:
A) predictable.
B) stable.
C) unpredictable.
D) steadily increasing.
E) rapidly increasing.

Question

Quizplus · Accepted Answer

Vertical integration involves expanding a business by taking over functions previously performed by suppliers or distributors. This can be a risky strategy when demand is unpredictable, as the company may end up with excess capacity if demand falls short or face production bottlenecks if demand surges unexpectedly. Therefore, the best answer is C, unpredictable demand.

A Strategy of Vertical Integration May Be a Risky Strategy