Question

1. Which of the following is NOT an advantage of vertical integration?

a) Integration improves strategic focus, giving the organization a competitive advantage b) All of the alternatives are advantages c) Companies can obtain more predictable deliveries by reducing dependence on external parties d) Lead times can be reduced by better coordination of actions taken across different stages e) Supply disruptions happen less frequently due to improved control and visibility 2. Car maker Tesla has chosen to manufacture their car batteries themselves by building their own $5 billion Gigafactory in Nevada. There are other companies that have been developing and manufacturing batteries much longer such as LG, Panasonic, and Samsung. What is Tesla's primary reason for building batteries themselves rather than out-sourcing to one of these well-established battery producers? a) To improve communication with their raw material suppliers b) To reduce lead time in their retail store supply chain c) To control this strategic process as it is critical for the company's success d) To improve the quality of their batteries

Answer 1

Answer:1. Which of the following is NOT an advantage of vertical integration?Answer: b) All of the alternatives are advantagesExplanation:Vertical integration refers to the integration of several organizational functions like supply chain management, production process, inventory control, and distribution, under a single umbrella. It can be either forward or backward.Vertical integration can have numerous advantages for organizations, which include improving strategic focus, providing competitive advantages, making deliveries more predictable, reducing lead times, and decreasing supply disruptions. Therefore, All of the alternatives are advantages for vertical integration.2. Car maker Tesla has chosen to manufacture their car batteries themselves by building their own $5 billion Gigafactory in Nevada. There are other companies that have been developing and manufacturing batteries much longer such as LG, Panasonic, and Samsung. What is Tesla's primary reason for building batteries themselves rather than out-sourcing to one of these well-established battery producers?Answer: c) To control this strategic process as it is critical for the company's successExplanation:Tesla has chosen to manufacture car batteries in-house rather than outsourcing it to established battery manufacturers like LG, Samsung, or Panasonic. The primary reason for this is to gain better control over the battery manufacturing process, which is a crucial component of their electric car production. They can control the production process by having an in-house battery manufacturing facility. Tesla can also protect their intellectual property, improve efficiency, reduce costs, and better integrate battery production into their vehicle production. Therefore, To control this strategic process as it is critical for the company's success is the primary reason why Tesla has chosen to manufacture their car batteries themselves.