218k views
3 votes
Which of the following is NOT a limitation directly relating to vertical integration?

a. bureaucratic costs
b. the loss of flexibility through investment in specific technologies
c. capacity balance and coordination problems from changes in demand
d. imitation of core technology by potential competitors

1 Answer

3 votes

Final answer:

The limitation not directly related to vertical integration is the 'imitation of core technology by potential competitors' because vertical integration focuses on controlling different stages of production, not technological competition.

Step-by-step explanation:

The limitation that is NOT directly related to vertical integration is 'imitation of core technology by potential competitors'. Vertical integration involves a company controlling multiple stages of production or distribution within the same industry, which can bring several limitations. These limitations include bureaucratic costs due to the increase in organizational complexity, loss of flexibility as the company becomes committed to certain technologies, and issues with capacity balance and coordination due to fluctuations in demand that affect different stages of the production process.

However, the risk of imitation of core technology by potential competitors is not a direct limitation of vertical integration itself; rather, it is more associated with competitive risk in a broader business context.

User Sahil Arora
by
8.0k points