Business School 101: Vertical Integration Quiz

What is the primary goal of vertical integration?

• To outsource more production processes

• To focus solely on retail operations

• To streamline operations by owning various production stages

• To increase the number of suppliers

Which stage in the cell phone industry value chain involves companies like Intel and LG?

• Final distribution

• Original equipment manufacturing

• Intermediate goods and components

• Raw materials

How did Amazon exemplify backward integration?

• By launching a new smartphone

• By becoming its own publisher

• By acquiring a tech company

• By opening physical bookstores

What is a key characteristic of forward integration?

• Skipping wholesalers to sell directly to consumers

• Acquiring raw material suppliers

• Focusing on manufacturing only

• Outsourcing distribution

Which company improved its customer experience through forward integration by acquiring Dynamic Yield?

• IKEA

• Apple

• McDonald's

• Amazon

What advantage does vertical integration provide in terms of pricing?

• Increases prices due to higher costs

• Focuses solely on luxury markets

• Allows capturing multiple profit stages, leading to lower consumer prices

• Eliminates the need for marketing

How does vertical integration enhance flexibility?

• By allowing quick changes in product design

• By enabling feedback from retail to manufacturing

• By reducing the number of suppliers

• By focusing on a single product line

What is a significant cost-related disadvantage of vertical integration?

• It decreases brand recognition

• It reduces the number of available products

• It requires significant financial investment and time

• It limits market expansion

Why might vertical integration lead to management difficulties?

• Because it involves managing different stages of the supply chain

• Because it focuses only on retail operations

• Because it reduces the number of employees

• Because it eliminates the need for marketing

What challenge does vertical integration pose in terms of focus?

• It requires expertise in multiple areas of the supply chain

• It limits the number of products offered

• It simplifies the business model

• It reduces the need for innovation