Sweet Leaf Tea a Texasbased maker of bottled iced tea is a s

Sweet Leaf Tea, a Texas-based maker of bottled iced tea, is a small but fast-growing firm that has gained a loyal following for its use of fresh, organic ingredients in its beverages. Although beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and honey it uses with less costly high-fructose corn syrup, Sweet Leaf refused because of the company\'s mission to provide a high-quality, organic beverage to consumers. The 11-year-old company has 50 employees, and its products are available in 30% of the U.S. market. Sweet Leaf Tea recently received multimillion dollar investments that will enable the business to expand its national presence.

Solution

Question:

Sweet Leaf Tea, a Texas-based maker of bottled iced tea, is a small but fast-growing firm that has gained a loyal following for its use of fresh, organic ingredients in its beverages. Although beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and honey it uses with less costly high-fructose corn syrup, Sweet Leaf refused because of the company\'s mission to provide a high-quality, organic beverage to consumers. The 11-year-old company has 50 employees, and its products are available in 30% of the U.S. market. Sweet Leaf Tea recently received multimillion dollar investments that will enable the business to expand its national presence.

Which of the following, if true, would most likely undermine the argument that Sweet Leaf Tea should implement a corporate-level strategy of vertical integration?

A) Sweet Leaf Tea lacks the facilities or knowledge to produce the raw ingredients for its beverages.

B) Market research suggests that Sweet Leaf Tea customers primarily purchase only one flavor of tea.

C) Most loyal customers of Sweet Leaf Tea purchase the beverage at neighborhood convenience stores.

D) Sweet Leaf Tea has decided to lower its prices by replacing cane sugar with corn syrup in some of its beverages.

E) Sugar farmers used by Sweet Leaf Tea have agreed to a fixed price for the next 5 years so that the company can keep prices low.

Answer: is (A) Sweet Leaf Tea lacks the facilities or knowledge to produce the raw ingredients for its beverages.

Explanation:

Vertical integration means expansion of a business by buying out suppliers of commodities or raw materials required to create its own products.

Hence a corporate-level strategy of vertical integration would require Sweet Leaf to acquire its suppliers who are currently supplying the raw materials. And the only reason that the company Sweet Leaf would go for vertical integration is because the Sweet Leaf currently lacks the facilities and knowledge to produce raw materials.