Modern manufacturers, who need reliable sources of materials and technologically advanced components to operate profitably, face an increasingly difficult choice between owning the producers of these items (a practice known as backward integration) and buying from independent producers. Manufacturers who integrate may reap short-term rewards, but they often restrict their future capacity for innovative product development.
Backward integration removes the need for some purchasing and marketing functions, centralizes overhead, and permits manufacturers to eliminate duplicated efforts in research and development. Where components are commodities (ferrous metals or petroleum, for example), backward integration almost certainly boosts profits. Nevertheless, because product innovation means adopting the most technologically advanced and cost-effective ways of making components, backward integration may entail a serious risk for a technologically active company—for example, a producer of sophisticated consumer electronics.
According to the passage, when an assembler buys a firm that makes some important component of the end product that the assembler produces, independent suppliers of the same component may
withhold technological innovations from the assembler
experience improved profit margins on sales of their products
lower their prices to protect themselves from competition
suffer financial difficulties and go out of business
stop developing new versions of the component
Choice A is the best answer.
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作者: newcentury 时间: 2013-2-7 12:44
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