MGT 247.Final.Chapter 8

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's: -level of diversification. -geographic scope. -vertical integration. -absorptive capacity.

Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy? -The first-line employees -The creditors -The chief executive officer -The middle manager

Which of the following statements is true of transaction costs? -When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate. -When companies transact in the open market, they incur internal transaction costs. -Transaction costs exclusively consist of external costs associated with economic exchanges. -Transaction costs are necessary to explain and predict the boundaries of a firm.

Which of the following is an example of an external transaction cost? -The cost of setting up a production unit -The cost of searching for a contract manufacturer -The cost of recruiting and retaining employees -The cost of maintaining plant and machinery

Which of the following is an example of an internal transaction cost? -The cost of searching for a contract manufacturer -The cost of signing a contract with a supplier -The cost of buying raw materials -The cost of maintaining a production unit

Which of the following statements is true of internal transaction costs? -Internal transaction costs arise when companies transact in the open market. -When the internal costs involved in pursuing an activity in-house are more than the costs of transacting, then the concerned firm should vertically integrate. -Internal transaction costs tend to increase with organizational size and complexity. -It is beneficial to "buy" goods or services rather than "make" when internal transaction costs are low.

A primary advantage of organizing economic activity within firms is the: -ability to coordinate highly complex tasks to allow for specialized division of labor. -low administrative costs because of reduced bureaucracy. -eradication of the principal-agent problem. -high-powered incentive to work as salaried employees for an existing firm.

_____ is best described as a situation in which one party is more informed than another, because of the possession of private information. -Information governance -Information asymmetry -Information deregulation -Information piracy

Which of the following firms is least integrated? -A firm that enters a joint venture with another company to develop a new technology -A firm that owns production subsidiaries across the globe -A firm that makes equity investments in its supplier's company -A firm that buys all the required raw materials from multiple external vendors

_____ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage. -Embargos -Cartel agreements -Strategic alliances -Corporate acquisitions

_____ is best described as a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property -Lean manufacturing -Licensing -Crowdsourcing -Bootlegging

Which of the following alternatives on the make-or-buy continuum allows for most integration? -Short-term contracting -Joint ventures -Licensing -Parent-subsidiary relationship

_____ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs. -Venture capitalism -Bootlegging -Vertical integration -Crowdsourcing

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing. -industry -functional department -customer segment -economy

_____ is best described as changes in an industry value chain that involve moving ownership of activities closer to the end (customer) point of the value chain. -Forward vertical integration -Corporate divestiture -Reverse engineering -Closed innovation

Which of the following best illustrates forward vertical integration? -A firm that manufactured and sold car engines to major automobile companies launches its own line of cars. -A chain of ice cream parlors launches a brand of toys and accessories for children. -A multinational coffee chain sources its coffee beans from plantations in Brazil and Vietnam. -A designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery.

_____ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes. -Taper integration -Open innovation -Diversification -Differentiation

When a firm is said to be pursuing a geographic diversification strategy, it means that the firm will: -introduce different products and services in an existing single market. -sell its products in several different regional, national, and international markets. -operate from multiple headquarters across the globe. -depend solely on its in-house facilities for all its production purposes.

Which of the following corporate strategies did ExxonMobil pursue by acquiring XTO Energy, a natural gas company? -Taper integration strategy -Differentiation strategy -Related diversification strategy -Cost-leadership strategy

A firm follows a(n) _____ when less than 70 percent of its revenues come from a single business and there are few, if any, linkages among its businesses. -related-constrained strategy -unrelated diversification strategy -differentiation strategy -dominant-business strategy

A _____ is best defined as a company that combines two or more strategic business units under one overarching corporation and follows an unrelated diversification strategy. -conglomerate -single-business firm -parent company -subsidiary

_____ is best described as the process of reorganizing and divesting business units and activities to refocus a company in order to leverage its core competencies more fully. -Reverse engineering -Restructuring -Rebooting -Reverse brainstorming

In the Boston Consulting Group (BCG) growth-share matrix, strategic business units categorized under dogs: -compete in a low-growth market but hold considerable market share. -hold a high market share in a fast-growing market. -compete in a high-growth market but have low and unstable earnings. -hold a small market share in a low-growth market.

_____ are strategic business units that compete in a low-growth market but hold considerable market share. -Dogs -Question marks -Cash cows -Stars

Strategic business units that have a relatively low market share but have the potential to grow are best categorized under _____ in the Boston Consulting Group (BCG) growth-share matrix. -dogs -stars -cash cows -question marks

A strategy of _____ will be most beneficial for a firm to enhance its overall corporate performance. -unrelated level of diversification -single-business level of diversification -dominant-business level of diversification -related-linked diversification