High School

When General Motors considers making its own automotive parts, Delphi Automotive Supply Company, which supplies parts to GM, would be concerned with the impact on their business relationship and potential loss of sales.

Answer :

Final answer:

This question is about the business strategy of vertical integration. When a firm like GM considers manufacturing its own auto parts, it creates a concern for its supplier, Delphi, of losing a major client and associated revenue.

Explanation:

When General Motors contemplates manufacturing its own automotive parts, Delphi Automotive Supply Company, which is a significant parts supplier for GM, would be worried about the potential for loss of a major client. This is a concern related to the business strategy of vertical integration, which entails an organization expanding its operations to include different stages of production or distribution within its own business boundaries. In this scenario, if GM starts to produce their own parts, it might minimize or cut its reliance on Delphi, leading to reduced revenue for Delphi. This illustrates why suppliers like Delphi need to monitor their customer's business strategies, as changes can have a direct impact on their bottom-line.

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