The manager of Steel Works learns of a new technological interdependency between the intermediate stage and the final stage of production. If Steel Works currently contracts with another firm for the intermediate stage of production, which of the following is true?
A)The manager has less of an incentive to integrate backward.
B)The manager has more of an incentive to integrate forward.
C)The manager has more of an incentive to integrate backward.
D)The manager has less of an incentive to integrate forward.

Question

Quizplus · Accepted Answer

The new technological interdependency between the intermediate and final stages of production suggests that closer coordination could lead to efficiencies or improvements. Integrating backward, which means taking control of the intermediate stage of production, would allow the manager to better manage this interdependency, thus providing more incentive to do so.

The Manager of Steel Works Learns of a New Technological