1. Evaluate Costco's vertical-integration move.

a. Why is Costco doing this? You should be able to answer the following:

i. Why are rotisserie chickens so important strategically to Costco? For that matter, what is Costco's revenue model (it is ok to quickly do extra research if you don't know)?

ii. In what ways is the current supplier market failing Costco? Why is this the case? How competitive is the supplier market?

b. Why Nebraska?

c. What are the risks of this move? What advice would you give to Costco regarding these risks?

d. Overall, why might vertical integration make sense in this particular market for Costco? Describe a hypothetical grocery chain for which this move would not make as much sense. Be sure to use ideas from the article and also basics from microeconomics about cost structures.