Under which of the following circumstances is vertical integration hazardous?

Question

Quizplus · Accepted Answer

Vertical integration can become hazardous when a company is forced to purchase high-cost inputs from its own suppliers, even though low-cost external sources exist. This can lead to inflated costs and reduced profitability.

Answer: B 
 Vertical integration can also be hazardous when it involves moving downstream into retailing, as this can be a highly competitive and complex market that requires different skills and expertise than those required for manufacturing or distribution.

Answer: C 
 Vertical integration can become hazardous when the value added by successive stages of production is declining, as this can lead to reduced margins and ultimately unprofitable operations.

Answer: E 
 Vertical integration can be hazardous when a company's competitors are also following a strategy of vertical integration, as this can lead to increased competition and potentially reduced profitability for all companies involved.

Therefore, the best choices are: A, B, C, and E.

Under Which of the Following Circumstances Is Vertical Integration Hazardous