Question

19. Which is a disadvantage of a company using horizontal integration?

a.It cannot break into new markets and diversify its product offering if too much capital was spent on horizontal integration.

b. It cannot establish a competitive advantage as a result of long-term profits.

c. It will not stay focused on what it knows and does best due to the distraction of horizontal integration.

d. It cannot take maximum advantage of its resources due to decisions for horizontal integration.

20. To increase the likelihood of success in expanding into new industries, a company must construct which two aspects of its business model?

a.Business level and corporate level

b. Division level and business level

c. Functional competency and business strategy

d. Business level and multibusiness level

21. Which of the following is a motive to implement a corporate-level strategy?

a.Focus on one of a company's businesses in particular

b. Increase competitive advantage

c. Increase industry rivalry

d. Decrease profitability

22. The use of long-term cooperative relationships, or investment into some of the activities normally performed by suppliers or buyers, in place of full ownership of operations that are backward or forward in the supply chain, is known as:

a.forfeited learning opportunities.

b. hostage taking.

c. quasi integration.

d. credible commitment

23. Vertical integration occurs when:

a.a company confines its operations either backward into an industry that produces inputs for the company's products or forward into an industry that uses, distributes, or sells the company's products.

b. a company expands its operations either backward into an industry that produces outputs for the company's products or forward into an industry that buys the company's products.

c. a company expands its operations either backward into an industry that produces inputs for the company's products or forward into an industry that uses, distributes, or sells the company's products.

d. a company expands its operations either forward into an industry that produces inputs for the company's products or backward into an industry that uses, distributes, or sells the company's products.

24. How does horizontal integration achieve an increase in profitability?

a.Increases production differentiation

b. Increases rivalry within the industry

c. Reduces bargaining power over suppliers and buyers

d. Increases the cost structure

Answer 1

19)

a. It cannot break into new markets and diversify its product offering if too much capital was spent ​​on horizontal integration.

(The main disadvantage of horizontal integration is that it reduces flexibility. Large organizations are harder to manage and they are less flexible in introducing innovations to the market. So it cannot break into new market and diversify its products)

20)

d. Business level and multi-business level

(Business level strategy help organizations establish a competitive advantage over industry rivals. Companies may also choose to compete across a broad market or a focused market. And multi business level helps the organization to expand its business with various industries)

21)

b. Increase competitive advantage

(A corporate-level strategy is when a business makes a decision that affects the whole company. The purpose of a corporate-level strategy is to maximize its profitability and maintain its financial success in the future. A corporate-level strategy is utilized to help increase competitive advantage over its competitors and to continue to offer a unique product or service to consumers.)

22)

c. Quasi Integration

(Quasi-Vertical Integration is the ownership by a downstream firm which is in the supply chain, closer to the point of end consumption or by an upstream firm of specialized tools and equipment or assets used in the primary processes of its supplier or customer.)

23)

c. a company expands its operations either backward into an industry that produces inputs for the company's products or forward into an industry that uses, distributes, or sells the company's products.

(Vertical integration is the corporate-level strategy that involves a company expanding its business operations either backward into a new industry that produces inputs for the company’s products {backward vertical integration} or forward into a new industry that uses, distributes, or sells the company’s products {forward vertical integration}.)

24.

a. Increases production differentiation

(The combined company can offer more product or service features. The purpose of horizontal integration is to grow the company in size, increase product differentiation, achieve economies of scale, reduce competition or access new markets.)