An expert response to: Economics
1. Identify whether each of the following transactions involves spot exchange, contract, or vertical integration.
a. Barnacle, Inc., has a legal obligation to purchase 2 tons of structural steel per week to manufacture conveyor frames.
b. Exxon-Mobil uses the oil extracted from its wells to produce raw polypropylene, a type of plastic.
c. Boat Lifts R Us purchases generic AC motors from a local distributor.
d. Kaspar Construction - a home-building contractor - purchases 50 pounds of nails from the local Home Depot.
2. Recently, spun-off Pitney Bowes Office Services Inc. - the fax and copier division of Pitney Bowes Inc. - signed a five-year, $25 million contract for IT services from CGI Group, a Canadian information technology company. If you were the manager of the Pitney Bowes division, how would you justify the long-term nature of your contract with CGI Group?