Which of the following statements regarding 'vertical integration' is FALSE?
A)A company might not be happy with how its products are being distributed, so it might decide to take control of its distribution channels.
B)Vertically integrated companies may be large, but unlike other large corporations, since they remain focused in one industry they are easy to run.
C)The principal benefit of vertical integration is coordination. By putting two companies under central control, management can ensure that both companies work toward a common goal.
D)A company might conclude that it can enhance its product if it has direct control of the inputs required to make the product.

Question

Quizplus · Accepted Answer

The statement that vertically integrated companies may be large, but unlike other large corporations, since they remain focused in one industry they are easy to run is false. While vertical integration may provide coordination benefits, it does not necessarily make the company easier to run, as it involves managing multiple levels of the supply chain and potentially diversifying into multiple industries.

Which of the Following Statements Regarding 'Vertical Integration' Is FALSE