The manager of Slick Lens, a sunglasses manufacturer, notices that the cost to distribute their sunglasses in the spot market has fallen. As a result of the change, which of the following is true?
A)The manager has more of an incentive to integrate backward.
B)The manager has less of an incentive to integrate backward.
C)The manager has less of an incentive to integrate forward.
D)The manager has more of an incentive to integrate forward.

Question

Quizplus · Accepted Answer

When distribution costs fall, the company has less incentive to integrate forward because it is cheaper to use the spot market for distribution rather than investing in its own distribution channels.

The Manager of Slick Lens, a Sunglasses Manufacturer, Notices That