Under which of the following circumstances is vertical integration hazardous?
A) When the technology involved in different stages of production is changing rapidly
B) When vertical integration involves moving downstream into retailing
C) When the value added by successive stages of production is declining
D) When the industries involved are undergoing rapid expansion
E) When the company's competitors are also following a strategy of vertical integration

Question

Quizplus · Accepted Answer

When the technology involved in different stages of production is changing rapidly, vertical integration can be hazardous because it may lead to the company being unable to keep up with the changes in technology and losing its competitive advantage. This can also result in sunk costs from outdated equipment and technology.

Under Which of the Following Circumstances Is Vertical Integration Hazardous