Question: 3. Bindery Express LLC. is planning to expand the scope of its business activities by accepting graphic design orders. They are considering two options: Option

3. Bindery Express LLC. is planning to expand the scope of its business activities by accepting graphic design orders. They are considering two options: Option one: Once an order is placed, they will forward the order to a smaller online business, called: Grafix Virtual. They will collect 51% of the earnings from a given standardized graphic design order, and they will pay the remaining 49% to GV. We call this The Outsourcing Contract Option. Option two: They purchase 74% of the standing shares at GV, internalizing their graphic design activities. This leads to a merger between BE LLC and GV. We call this The Vertical Integration Option. Reflecting upon what you learned in Chapter 6, describe the pros and cons of each option. Under which conditions would you recommend the first option? How about the conditions under which you recommend the second option? Make sure that you describe those conditions clearly using bullet points. (20 points)

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