4.    When planning channels of distribution, a marketing manager should know that

    a)    vertically integrated systems are seldom used, because of the difficulty of maintaining control.
    The opposite is true: vertically integrated systems offer the highest level of control in a channel, since all decisions are made at head-office (or at least the major ones) and have to be followed by the channel members, who are employees of the company. If they fail to comply, they usually do not last very long in the company.  While it is true that it may not be the most common form of channel structure, they are less used because they require a high level of investment and different specialties.

    b)    a contractual system offers both flexibility and stability for its members.
    True. It offers some flexibility for both channel members (the franchisee) and the franchisor, since - depending on the type of franchising - there are more or less strict rules. They range from extremely controlled, like McDonald's, to less control, like Provigo stores. There is some stability in the channel, since there is a long-term contract between the parties, so neither can just sever the relationship overnight, which is the case in a traditional or an administered system.

    c)    the disadvantage of a corporate channel is reduced control over the distribution activities.
    This is basically the same as answer a), so is wrong again (theories don't change that quickly!)

    d)    all of the above.
    Well, obviously not.

    e)    none of the above.
    Ditto.