Phoenix Guitars is interested in pursuing backward integration to take greater ownership of the extraction of raw materials and production of components used in its signature line of guitars. Although this approach would lower the overall cost of producing a guitar, the costs associated with producing electronic pickups for sound amplification are far greater than those associated with sourcing pickups from a reliable supplier. Which of the following approaches is likely to produce superior results?
A. Abandon the idea of vertical integration entirely.
B. Introduce a budget line of guitars to diversify the firm's offerings.
C. Invest in vertical integration despite the cost of producing pickups.
D. Pursue taper integration.
Answer: D
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