In the context of the primary reasons for vertical integration in companies, what do capabilities refer to?
A)Whether a company has the finances to handle and overcome organizational criticism
B)Whether a company knows when it should establish and exercise strict rules and regulations
C)Whether a company can economize on scarce inputs in order to reduce transaction costs
D)Whether a company has the right resources to perform an activity better than other firms

Question

Quizplus · Accepted Answer

Capabilities refer to whether a company has the right resources, skills, knowledge, and technology to perform an activity better than other firms. Vertical integration can help a company leverage its capabilities to increase efficiency and reduce costs, by bringing certain activities in-house instead of relying on external suppliers.

In the Context of the Primary Reasons for Vertical Integration