MGT 4335 CHAPTER 7 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
A company that participates in only one activity in the value chain is ________. - Answers vertically
specialized
If an oil exploring company wants to start refining the oil that they find, this company is forward
integrating. - Answers True
Which is not one of the three reasons a company should vertically integrate? - Answers Capacity
Activities with great interdependence should highly consider being ________. - Answers vertically
integrated
North Road LLC, an apparel company, found that its fashion supplies and accessories section was not
generating much profit. Thus, the company contracted this section of its business to another company
that designs and manufactures these products in a better way. The management of North Road
realized that the employees of North Road could use the time to focus on other aspects that bring
profit to the company. This scenario best illustrates _________. - Answers outsourcing
Which of the following scenarios illustrates the concept of outsourcing? - Answers Virgo Corp., a
company that contracts out a business activity to another company
Vertical integration can be best defined as _________. - Answers bringing business processes or
activities previously conducted by outside companies in-house
The sequence of all activities that are performed by a firm to turn raw materials into a finished
product that is sold to a buyer best describes the term _________. - Answers value chain
Yellow Express LLC is a company in the computer hardware industry that solely manufactures
microchips. Yellow Express LLC is _________. - Answers vertically specialized
Activities closer to the beginning of the industry value chain are referred to as _________. - Answers
upstream activities
Browns Inc., a well-established suitcase brand, started manufacturing its own suitcases. It added new
features in its suitcases such as water-resistance and extra storage space. The initiation by Browns Inc.
to manufacture its own suitcases best illustrates _________. - Answers backward integration
In the context of the primary reasons for vertical integration in companies, what do capabilities refer
to? - Answers Whether a company has the right resources to perform an activity better than other
firms
White Flower Corp. and DLG Inc. are competitors in the crockery industry. Claude, the head of
operations at White Flower, says that the company is able to undertake its in-house business
processes and activities much better than DLG. This, Claude says, helps White Flower produce better
quality products that DLG. In the context of vertical integration, Claude's statements refer to the
concept of _________. - Answers coordination
Which of the following best illustrates a vertically integrated company with control? - Answers
Blueberry Inc., a confectionery company, which has a stronghold over an important resource of the
company that helps in differentiating its final product
In the context of the primary reasons for vertical integration in companies, which of the following
statements is true of coordination? - Answers The greater the interdependence between activities,
the more a company should vertically integrate.
A car has to go through several different levels of manufacturing processes before it can be painted.
The painting process cannot be initiated until a car is externally assembled and then inspected. This
type of interdependence can be best termed as _________. - Answers sequential interdependence
Having more flexibility, or being less vertically integrated, is more valuable when _________. -
Answers new technologies are innovated
Violet Inc. has been undertaking a lot of responsibilities as a company in order to be the best in its
industry. Over time, however, these responsibilities become tough to handle and the company finds it
difficult to efficiently manage the time and effort to perform its activities. In contrast, other firms in
the industry that outsource some of their activities to smaller companies find it easier to generate
more profit than Violet Inc. The situation faced by Violet Inc. in this example illustrates one of the
important disadvantages of vertical integration that is _________. - Answers loss of focus
Nate, the managing director of Juniper Inc., believes that instead of making auto parts on its own, it
should rather outsource these tasks to other companies so that the company can focus only on the
critical aspects of the final product. His colleague, Salma, believes that the company would have more
competitive advantage if it made its own auto parts. Which of the following statements strengthens
A company that participates in only one activity in the value chain is ________. - Answers vertically
specialized
If an oil exploring company wants to start refining the oil that they find, this company is forward
integrating. - Answers True
Which is not one of the three reasons a company should vertically integrate? - Answers Capacity
Activities with great interdependence should highly consider being ________. - Answers vertically
integrated
North Road LLC, an apparel company, found that its fashion supplies and accessories section was not
generating much profit. Thus, the company contracted this section of its business to another company
that designs and manufactures these products in a better way. The management of North Road
realized that the employees of North Road could use the time to focus on other aspects that bring
profit to the company. This scenario best illustrates _________. - Answers outsourcing
Which of the following scenarios illustrates the concept of outsourcing? - Answers Virgo Corp., a
company that contracts out a business activity to another company
Vertical integration can be best defined as _________. - Answers bringing business processes or
activities previously conducted by outside companies in-house
The sequence of all activities that are performed by a firm to turn raw materials into a finished
product that is sold to a buyer best describes the term _________. - Answers value chain
Yellow Express LLC is a company in the computer hardware industry that solely manufactures
microchips. Yellow Express LLC is _________. - Answers vertically specialized
Activities closer to the beginning of the industry value chain are referred to as _________. - Answers
upstream activities
Browns Inc., a well-established suitcase brand, started manufacturing its own suitcases. It added new
features in its suitcases such as water-resistance and extra storage space. The initiation by Browns Inc.
to manufacture its own suitcases best illustrates _________. - Answers backward integration
In the context of the primary reasons for vertical integration in companies, what do capabilities refer
to? - Answers Whether a company has the right resources to perform an activity better than other
firms
White Flower Corp. and DLG Inc. are competitors in the crockery industry. Claude, the head of
operations at White Flower, says that the company is able to undertake its in-house business
processes and activities much better than DLG. This, Claude says, helps White Flower produce better
quality products that DLG. In the context of vertical integration, Claude's statements refer to the
concept of _________. - Answers coordination
Which of the following best illustrates a vertically integrated company with control? - Answers
Blueberry Inc., a confectionery company, which has a stronghold over an important resource of the
company that helps in differentiating its final product
In the context of the primary reasons for vertical integration in companies, which of the following
statements is true of coordination? - Answers The greater the interdependence between activities,
the more a company should vertically integrate.
A car has to go through several different levels of manufacturing processes before it can be painted.
The painting process cannot be initiated until a car is externally assembled and then inspected. This
type of interdependence can be best termed as _________. - Answers sequential interdependence
Having more flexibility, or being less vertically integrated, is more valuable when _________. -
Answers new technologies are innovated
Violet Inc. has been undertaking a lot of responsibilities as a company in order to be the best in its
industry. Over time, however, these responsibilities become tough to handle and the company finds it
difficult to efficiently manage the time and effort to perform its activities. In contrast, other firms in
the industry that outsource some of their activities to smaller companies find it easier to generate
more profit than Violet Inc. The situation faced by Violet Inc. in this example illustrates one of the
important disadvantages of vertical integration that is _________. - Answers loss of focus
Nate, the managing director of Juniper Inc., believes that instead of making auto parts on its own, it
should rather outsource these tasks to other companies so that the company can focus only on the
critical aspects of the final product. His colleague, Salma, believes that the company would have more
competitive advantage if it made its own auto parts. Which of the following statements strengthens
