A) Vertical integration boosts a firm's capital investment in the industry,thus increasing business risk if the industry becomes unattractive later.
B) Integrating backward into parts and components manufacture can impair a company's operating flexibility when it comes to changing out the use of certain parts and components.
C) Vertical integration limits a company's ability to achieve greater product differentiation and to exercise direct control over the costs of performing value chain activities.
D) Forward or backward integration often calls for radically different skills and business capabilities than the firm possesses.
E) Vertical integration poses all kinds of capacity-matching problems.
G) A) and B)
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A) What makes backward vertical integration such an attractive strategic option is the opportunity to capture the profit margins of suppliers and thereby increase the company's own profitability.
B) Backward vertical integration can produce a differentiation-based competitive advantage when a company,by performing activities internally rather than utilizing outside suppliers,ends up with a better-quality product/service offering,improves the caliber of its customer service,or in other ways enhances the performance of its final product.
C) For backward integration to be a viable and profitable strategy,a company must be able to (1) achieve the same scale economies as outside suppliers and (2) match or beat suppliers' production efficiency with no drop in quality.
D) The best potential for being able to reduce costs via a backward integration strategy exists in situations where suppliers have outsized profit margins,where the item being supplied is a major cost component,and where the requisite technological skills are easily mastered or can be gained by acquiring a supplier with the desired technological know-how.
E) Potential advantages of backward integration include sparing a company the uncertainty of being dependent on suppliers for crucial components or support services and lessening a company's vulnerability to powerful suppliers inclined to raise prices at every opportunity.
G) C) and E)
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A) growth in demand that depends on the development of complementary products or services that are not currently available and new industry infrastructure that is needed before buyer demand can surge.
B) quick market penetration and strong loyalty among first-time customers.
C) buyer behavior that is readily attracted to new technology or product features.
D) conditions that make imitation difficult and absolute cost advantages that accrue to those who make early commitments to new technologies,components,or distribution channels.
E) All of these choices are correct.
G) C) and E)
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A) full integration (participating in all stages of the industry vertical chain) .
B) partial integration (building positions in selected stages of the value chain) .
C) tapered integration (involves both outsourcing and performing the activity internally) .
D) forward integration (value chain activities performed by distributors) or backward toward suppliers.
E) All of these answer choices are correct.
G) A) and E)
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A) adding new features or models and otherwise broadening the product line to close off vacant niches and gaps to opportunity-seeking challengers
B) thwarting the efforts of rivals to attack with lower prices by maintaining economy-priced options of its own
C) engaging in a preemptive strike strategy in an effort to discourage rivals from being aggressive
D) signaling challengers that retaliation is likely in the event that they launch an attack
E) making early announcements about impending new products or price changes to induce potential buyers to postpone switching
G) All of the above
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A) when pioneering helps build a firm's image and reputation with buyers
B) when first-time customers remain strongly loyal to pioneering firms in making repeat purchases
C) when early commitments to new technologies,new-style components,new or emerging distribution channels,and so on can produce an absolute cost advantage over rivals
D) when moving first can constitute a preemptive strike,making imitation extra hard or unlikely
E) when rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products
G) None of the above
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A) an activity can be performed better or more cheaply by outside specialists.
B) it allows a company to focus on its core business and leverage its key resources.
C) outsourcing won't adversely hollow out the company's technical know-how,competencies,or capabilities while it improves organizational flexibility and speeds time to market.
D) it improves organizational flexibility and speeds time to market.
E) All of these choices are correct.
G) A) and D)
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