MGEC40H3 Chapter 3: Chapter 3 textbook (4th edition)
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19 Apr 2011
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Vertical chain: the process that begins with the acquisition of raw materials and ends with the distribution and sale of finished g & s. Vertical boundaries: of a firm define the activities that the firm itself performs as opposed to purchases from independent firms in the market. ( ie vs outsourcing) Make or buy decision: a firm"s decision to perform an activity itself or to purchase it from an independent firm. Make means that the firm performs the activity itself; buy means it relies on an independent firm to perform the activity perhaps under a contract. Goods in an economy flow : along a vertical chain from raw materials and component parts to manufacturing through distribution & retailing. early steps in the vertical chain are upstream in the production process. Large hierarchial enterprises in the 1900s performed these support services (figure 3. 2) themselves to coordinate the flow of production through the vertical chain.
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