5 Problem Set #4 1. Please answer these questions regarding vertical integration: a. Why might you see more vertical integration in stable, mature technology industries and less vertical integration in highly volatile, constantly changing technological industries? b. Why might a firm such as Tiffany's the international fine jeweler, luxury watchmaker, and silversmith - engage in high degrees of vertical integration? c. The CEO of Gadget Corporation, a major consumer electronics firm, announces a strategy of backward integration, arguing that this will enable Gadget to "capture the 10% profit margin that suppliers are earning while selling their components to our firm." What is your assessment of this CEO's logic for vertical integration? d. Why might a firm backward integrate for a portion of their parts and components needs, perhaps only building enough capacity to supply 25% of their needs, while continuing to purchase 75% of their parts from outside suppliers? 5 Problem Set #4 1. Please answer these questions regarding vertical integration: a. Why might you see more vertical integration in stable, mature technology industries and less vertical integration in highly volatile, constantly changing technological industries? b. Why might a firm such as Tiffany's the international fine jeweler, luxury watchmaker, and silversmith - engage in high degrees of vertical integration? c. The CEO of Gadget Corporation, a major consumer electronics firm, announces a strategy of backward integration, arguing that this will enable Gadget to "capture the 10% profit margin that suppliers are earning while selling their components to our firm." What is your assessment of this CEO's logic for vertical integration? d. Why might a firm backward integrate for a portion of their parts and components needs, perhaps only building enough capacity to supply 25% of their needs, while continuing to purchase 75% of their parts from outside suppliers