The manager of View Your World, a high- end window manufacturer, notices that the cost to distribute their windows in the spot market has fallen. As a result of the change, 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

When the distribution costs fall, it reduces the incentive for the manufacturer to integrate forward (towards distribution) as it becomes cheaper to outsource the distribution. Therefore, the manager of View Your World has less of an incentive to integrate forward.

The Manager of View Your World, a High- End Window