Automakers do not manufacture chips and so when demand for automobiles and trucks crashed right after the Covid-19 pandemic, they cut their chip orders. However, when demand bounced back, their chip supply did not necessarily bounce back. Had they been vertically integrated, this situation would not have occurred. this is an example of: lexibility, managing strategically different businesses, develop distinctive capabilities, the incentive problem, competitive effects, differences in optimal scale in different stages of production, compounding risk