8. A multinational firm acquires many of its components preassembled from suppli

Question

8. A multinational firm acquires many of its components preassembled from suppliers. One of these suppliers operates in a country with a much lower corporate income tax rate. How does this affect the vertical relationship between this supplier and the multinational?

a.     This will not affect the relationship.

b.     The multinational should stop working with the supplier.

c.    The multinational should consider purchasing this supplier.

d.     The multinational should move all its operations to the supplier’s home country.

Explanation / Answer

c.    The multinational should consider purchasing this supplier.

Horizontal integration means acquiring of a similar company while vertical integration means acquiring comapnies that are producing either before or after the acquiring comapny.

Acquiring this company will be advantageous for the multinational because it will secure supply, reduce the cost of supply and improves quality.

Related Questions

Navigate

• Browse (All)
• Browse 8
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.