MDC Exam 2 - Chapter 4 & 5 Question and answers correctly solved

MDC Exam 2 - Chapter 4 & 5 Question and answers correctly solved MDC Exam 2 - Chapter 4 & 5 Vertical integration is when... - correct answer one organization does all the work (production, sales, inventory, credit) Forward or downstream vertical integration - correct answer a manufacturer integrates the distribution function Backward or upstream vertical integration - correct answer a distributor or retailer produces it's own branded source of product Outsourcing is when - correct answer an organization decides to buy the services from a third party Cost of make-or-buy channels - correct answer - manufacturer assumes all the distribution costs - often the costs and risks are underestimated Benefits of make-or-buy channels - correct answer - control - opportunity 3 most common payment options for "buying" market channels - correct answer 1. margin: difference between price and COGS 2. commission: fraction of retail price 3. royalty: percentage of reseller's business Primary criteria in the buying perspective is - correct answer Return on Investment