Several parties are planning to start a new business together. They are deciding whether to form a firm that operates as a fully vertically integrated firm (i.e., Firm V) OR or a firm that is involved solely in the manufacturing (or production) segment of the industry value chain (Firm M).

Which of the following statements about Firm V and Firm M is / are likely to be true?

1. Firm V will have more control over variables such as quality and sustainability of output compared to Firm M.

2. Firm V will have lower total costs compared to Firm M.

3. Firm V will have more external suppliers (i.e., suppliers from different firms) to manage compared to Firm M.

Group of answer choices

Statement 1 only

Statement 2 only

Statement 2 and 3 only

Statement 1 and 2 only

Statement 1, 2 and 3