QUESTION 4

You have become the owner-manager of a small local bubble tea seller that has outlets in 10

prime shopping-center locations across Singapore. Given the structure of this market

discussed in question 3, you are considering vertical and horizontal integration. Using the

theory of the optimal boundary of the firm, discuss the make-or-buy decision as well as the

scope for horizontal integration and diversification of your firm. What stages of the vertical

chain should you consider conducting inhouse? What other horizontal markets may you

integrate into?