Stephan Owns a Small Specialty Cheese Factory in Switzerland

Stephan owns a small specialty cheese factory in Switzerland. For many years, he has purchased milk from the same dairy farmer and sold his cheese to a few cheese shops in a large nearby city. The dairy farmer now wants to retire and is going to sell the farm. Stephan must decide whether he should buy the dairy farm to ensure a continued supply of milk, try to negotiate with whoever buys the farm, or find a new milk supplier. Stephan also is considering a plan to add online cheese sales through a website for his factory. Describe the risks and benefits Stephan faces as he decides whether to expand his business vertically.