What are the strategic disadvantages of a forward vertical integration strategy?
What will be an ideal response?
The most serious drawbacks to vertical integration include the following concerns:
• Vertical integration raises a firm's capital investment in the industry, thereby increasing business risk.
• Vertically integrated companies are often slow to embrace technological advances or more efficient production methods when they are saddled with older technology or facilities.
• Vertical integration can result in less flexibility in accommodating shifting buyer preferences.
• Vertical integration may not enable a company to realize economies of scale if its production levels are below the minimum efficient scale.
• Vertical integration poses all kinds of capacity-matching problems.
• Integration forward or backward often calls for developing new types of resources and capabilities.
You might also like to view...
Anheuser-Busch created a joint venture with Kirin Brewery, the market leader. Anheuser-Busch's 90 percent stake in the venture entitled it to market and distribute beer produced in Los Angeles
Indicate whether the statement is true or false
Which of the following is an example of a factoring agreement?
A) Selling an individual account receivable to a bank B) Selling financial securities that are collateralized by accounts receivable C) Pledging an single large account receivable to a bank D) Assigning a group of accounts receivable as collateral for a loan
"Friends Don't Let Friends Drive Drunk," is an example of marketing information to an interested audience
Indicate whether the statement is true or false
“Spectators” read blogs, listen to podcasts, and read online forums.
Indicate whether the statement is true or false