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Vertical Integration May Raise a Firm's Cost Structure for All

Question 61

Multiple Choice

Vertical integration may raise a firm's cost structure for all of the following reasons except:


A) the greater the number of subunits in an organization,the more problems coordinating and controlling those units.
B) the firm that vertically integrates into component part manufacturing may find that because its internal suppliers have an active customer,they lack the motivation to be more efficient.
C) vertically integrated firms have to determine appropriate prices for goods transferred to subunits within the firm.
D) it makes planning,coordination,and scheduling of adjacent processes more difficult,as compared to buying from independent suppliers,particularly with just-in-time inventory systems.

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