In the context of the primary reasons for vertical integration in companies, which of the following statements is true of coordination?
A)The greater the interdependence between activities, the more a company should vertically integrate.
B)Activities that require high levels of coordination are known to be modular in nature.
C)The greater the interdependence between activities, the more a company should rely on outsourcing.
D)Activities that require low levels of coordination are known to be reciprocal in nature.

Question

Quizplus · Accepted Answer

Coordination refers to the degree of interdependence between activities in a company. The greater the interdependence between activities, the more difficult it becomes to coordinate them through market transactions, and the more a company should vertically integrate to achieve greater coordination between these activities. Therefore, statement A is true. Statements B, C, and D are all incorrect. Activities that require high levels of coordination are unlikely to be modular, activities that require low levels of coordination are unlikely to be reciprocal, and the greater the interdependence between activities, the less a company should rely on outsourcing.

In the Context of the Primary Reasons for Vertical Integration