When a firm has highly valuable company-specific capabilities,vertical integration will LEAST likely result in ________.
A) improving revenues
B) lowering overhead
C) reducing opportunism
D) minimizing direct costs
E) increasing net effectiveness

Question

Quizplus · Accepted Answer

Vertical integration involves acquiring and merging with other companies in the supply chain. When a firm has highly valuable company-specific capabilities, such as proprietary technology or expertise, vertical integration may not result in lowering overhead costs as the firm would still need to invest in maintaining and developing those capabilities. However, vertical integration can improve revenues by capturing additional profits along the supply chain, reduce opportunism by having more control over suppliers and customers, minimize direct costs by internalizing processes and activities, and increase net effectiveness by improving coordination and communication between different parts of the supply chain.

When a Firm Has Highly Valuable Company-Specific Capabilities,vertical Integration Will