Question #3: Vertical coordination can facilitate stronger customer-seller ties but at the
same time may increase the risk to the customer’s and supplier’s specific investments.
What are specific investments and why are they risky?
For companies to remain successful, a relationship between the customer and supplier
should be established. However, researchers have noted that creating such relationships can also
have the potential of becoming tense when it pertains to ensuring desired outcomes and the lack
of flexibility for unanticipated events (Kotler & Keller, 2012). The use of vertical coordination
would help garner stronger customer-seller ties. With the use of contracts and marketing
agreements between sellers and buyers, including the availability of timely, accurate price and
other market information, the possibility of achieving vertical coordination increases. It should
be noted, however, the use of vertical coordination may also increase the risk to a supplier’s and
