A major problem with vertical integration is that a downturn in the end market affects the entire integrated value chain, representing possible unacceptably high risk.

Question

Quizplus · Accepted Answer

This statement is true. Vertical integration means that a company owns and operates all aspects of the supply chain, from raw materials to end distribution. If the end market experiences a downturn, it can affect every aspect of the supply chain owned by the company, leading to significant risk and potential losses.

A Major Problem with Vertical Integration Is That a Downturn