Sweet Leaf Tea,a Texas-based maker of bottled iced tea,is a small but fast-growing firm that has gained a loyal following for its use of fresh,organic ingredients in its beverages.Although beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and honey it uses with less costly high-fructose corn syrup,Sweet Leaf refused because of the company's mission to provide a high-quality,organic beverage to consumers.The 11-year old company has 50 employees,and its products are available in 30% of the U.S.market.Sweet Leaf Tea recently received multi-million dollar investments which will enable the business to expand its national presence. Which of the following,if true,would most likely undermine the argument that Sweet Leaf Tea should
Implement a corporate-level strategy of vertical integration?
A)Sweet Leaf Tea lacks the facilities or knowledge to produce the raw ingredients for its beverages.
B)Market research suggests that Sweet Leaf Tea customers primarily purchase only one flavor of tea.
C)Most loyal customers of Sweet Leaf Tea purchase the beverage at neighborhood convenience stores.
D)Sugar farmers used by Sweet Leaf Tea have agreed to a fixed price for the next 5 years so that the company can keep prices low.

Question

Quizplus · Accepted Answer

A) A corporate-level strategy of vertical integration would require Sweet Leaf to expand by either producing its own raw materials or selling its products directly.If the company lacks the facilities and knowledge to produce raw materials or the price of sugar is guaranteed to remain stable for 5 years,then vertical integration is a bad idea.If loyal customers purchase the tea at convenience stores,then selling the product through specialized stores would not likely be beneficial.

Sweet Leaf Tea,a Texas-Based Maker of Bottled Iced Tea,is a Small