What are some of the key issues to take into account when considering whether or not to vertically integrate?
What will be an ideal response?
The benefits of vertical integration include (1) a secure source of raw materials or distribution channels that cannot be "held hostage" to external markets where costs can fluctuate over time, (2) protection and control over assets and services required to produce and deliver valuable products and services, (3) access to new business opportunities and new forms of technologies, and (4) improved coordination of activities across the value chain. The risks of vertical integration include (1) the costs associated with increased overhead and capital expenditures to provide facilities, raw material inputs, and distribution channels inside the organization; (2) a loss of flexibility resulting from the inability to respond quickly to changes in the external environment, as the huge investments in vertical integration activities are generally not easily deployed elsewhere; (3) problems associated with unbalanced capacities or unfilled demand along the value chain; and (4) additional administrative costs associated with managing a more complex set of activities.
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According to Porter, the nature of the interaction between potential industry entrants, buyers, substitute products, suppliers, and rival firms determines:
A) whether or not the government will launch an antitrust investigation. B) the industry's profit potential in terms of long-run return on invested capital. C) whether a country can generate a balance of payments surplus. D) whether a country can create a comparative advantage in the production of differentiated products. E) whether a country can generate income by innovation.
Which of the following is considered to be a transaction control?
a. Controls to monitor other controls. b. Policies that address significant business control practices. c. Centralized processing controls. d. Physical controls to safeguard assets.
Assessing disclosures does not require reasonable assurance of which of the following?
a. The disclosures are understandable to users. b. Disclosed events and transactions have occurred and pertain to the entity. c. All material and immaterial disclosures have been reported. d. The information is disclosed accurately and at appropriate amounts.
. A study by Darden School of Business professor Saras D. Sarasvathy showed that 89% of experienced, serial entrepreneurs used ______ thinking.
a. predictive and casual thinking b. creative and effectual thinking c. predictive and effectual thinking d. creative and causal thinking