A car manufacturer acquires a company that makes tires. Which of the following regarding its strategy is true? A. The company has effectively used vertical integration to increase its bargaining position B. The company has effectively reduced its operating costs by outsourcing its activities C. The company has efficiently capitalized on the experience and learning-curve effects D. The company has enhanced utility by allowing depreciation and other fixed costs to be spread over a larger unit volume E. The company has sacrificed quality by using a lower-cost input

Question

Business

Malik Ward

22 December, 18:56

A car manufacturer acquires a company that makes tires. Which of the following regarding its strategy is true? A. The company has effectively used vertical integration to increase its bargaining position B. The company has effectively reduced its operating costs by outsourcing its activities C. The company has efficiently capitalized on the experience and learning-curve effects D. The company has enhanced utility by allowing depreciation and other fixed costs to be spread over a larger unit volume E. The company has sacrificed quality by using a lower-cost input

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Brittany Lane · Answer 1

Option A

Explanation:

Vertical integration as per the microeconomics as well as management refers to the arrangement under which that firm owns a corporation's distribution network. Almost every supply chain member usually provides a unique goods or services, as well as the products incorporate to meet a widely accepted requirement.

Thus, from the above we can conclude that the given case illustrates vertical integration.