medium · GMAT Verbal

On business strategy, why might a luxury goods company choose vertical integration over outsourcing?

1. Vertical integration eliminates any need for the firm to invest in product design.
2. Its competitive edge relies on tightly coordinating design with in-house manufacturing.
3. Internalizing transactions is always more efficient, regardless of the industry involved.
4. Information technology has made monitoring external suppliers more expensive than before.
5. Outsourcing imposes capital demands too steep for design-focused firms to bear.

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