Which statement about entering the supply stage of the value chain as part of a vertical integration strategy is true?Multiple choice question.Matching a supplier's production efficiency often requires significant investment in research and development.Companies that enter the supply stage of the value chain are likely to face few difficulties keeping pace with changes in technology.Most companies that enter the supply stage of the value chain have greater production capacity than existing suppliers.Matching a supplier's production efficiency is among the least challenging obstacles to backward integration.
Question
Which statement about entering the supply stage of the value chain as part of a vertical integration strategy is true?Multiple choice question.Matching a supplier's production efficiency often requires significant investment in research and development.Companies that enter the supply stage of the value chain are likely to face few difficulties keeping pace with changes in technology.Most companies that enter the supply stage of the value chain have greater production capacity than existing suppliers.Matching a supplier's production efficiency is among the least challenging obstacles to backward integration.
Solution
The correct statement about entering the supply stage of the value chain as part of a vertical integration strategy is: "Matching a supplier's production efficiency often requires significant investment in research and development."
This is true because when a company decides to integrate vertically and enter the supply stage, it needs to match or even surpass the efficiency of its previous suppliers. This often requires significant investment in research and development to understand the best practices, technologies, and processes. This can be a challenging and costly process, but it can also lead to greater control over the supply chain and potential cost savings in the long run.
Similar Questions
A firm with a vertical integration strategy that seeks full integrationMultiple choice question.adopts a vertical integration strategy that begins aggressively but slows down over time.starts up operations in discrete stages of the value-chain system.participates in all stages of the industry value-chain system.combines in-house and outsourced activity in any given stage of the value chain system.
In some cases, backward vertical integration can increase efficiency byMultiple choice question.improving the competitive position of existing suppliers in the value chain.giving a company proprietary knowledge that is expensive to keep from rivals.coordinating production flows and preventing bottlenecks.allowing a company to outsource activities that are too costly to perform in-house.
Select all that applyWhen there are improvements in technology at the supply stage of the value chain, a vertically integrated companyMultiple select question.will likely be in a good position to shop the market and purchase optimal products from suppliers.is likely to improve customer service by relying on older plants and technologies.may be required to incur high costs for abandoning old technologies in an effort to keep pace with suppliers.may need to continue producing suboptimal products rather than upgrading its technology.
Why do some firms choose alternatives to vertical integration?Multiple choice question.to control every stage in the industry value chainto avoid the risks associated with vertical integrationto avoid strict financial regulationsto avoid the risks associated with diversification
Integration in Supply chain
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