BUS/475: Integrated Business Topics Wk 4 - Practice: Ch . 8, Corporate Strategy: Vertical [due Day 5]

True or false: It can be riskier to own parts of the supply chain than to rely on external supply chains.

True

A conglomerate fits which type of corporate diversification model?

unrelated diversification

______ refers to the firms' ownership of its production of needed inputs or of the channels by which it distributes its outputs.

vertical integration

The two alternatives to vertical integration are which of the following? (Select all that apply.)

Taper integration; strategic outsourcing

What is a major disadvantage of organizing economic activity within firms?

principal-agent problem

Which of the following is a reason why a firm needs to grow?

reduce risk

Which of the following have significantly more value in their intended use than in their next-best use?

specialized assets

Long-term contracts (such as licensing and franchising), equity alliances, and joint ventures are examples of which of the following?

strategic alliances

Why do some firms choose alternatives to vertical integration?

to avoid the risks associated with vertical integration

Which of the following are the four underlying strategic management concepts that determine the scope of a firm? (Check all that apply.)

transaction costs core competencies economies of scope economies of scale

Which of the following are among the reasons firms need to grow? (Check all that apply.)

-to increase profits -to motivate management

Which of the following terms describes the strengths that allow a firm to distinguish itself from the competition?

core competencies

__ strategy involves the decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously.

corporate

When a business answers the question of where to compete, it is determining ___.

corporate strategy

Which of the following are alternatives on the make-or-buy continuum? (Check all that apply.)

equity alliances, joint ventures

Companies that transact in the open market incur ______.

external transaction costs

If a company moves ownership of activities closer to the end customer, such as providing after-sales support, it is engaging in ______ vertical integration.

forward

Which of the following are types of vertical integration along the industry value chain? (Check all that apply.)

forward and backward

Specialized assets have ______.

high opportunity cost

Amazon's continued focus on ______ is a key to its ongoing success.

innovation

Transaction costs include ______ costs associated with an economic exchange.

internal and external

Corporate strategy needs to be dynamic over time in order to ______. (Check all that apply.)

keep and maintain a competitive advantage respond to the ever-changing external environment diversify to capture growth opportunities

One way to overcome the principal-agent problem is to ______.

make managers owners through stock options

A non-diversified company focuses on which of the following?

single market

What are the three dimensions along which executives formulate corporate strategy?

the degree of vertical integration the geographic scope the type of diversification

The degree of vertical integration corresponds to ______.

the number of industry value chain stages in which a firm directly participates

Zipster is a local manufacturer of athletic shoes. Zipster has decided it wants to expand to global markets and to offer a larger selection of items. It plans to offer not just athletic shoes but also luggage and car accessories. Zipster is engaging in ______.

diversification

Amazon's explosive success is largely due to which of the following? (Check all that apply.)

diversification vertical integration

Firms that pursue an unrelated diversification strategy and are unable to create additional value tend to experience which of the following?

diversification discount

TWN, a large multinational corporation, chose to spin off one of its SBUs that was unrelated to TWN's core business in order to avoid the ______. When they announced the spin-off, the stock price of TWN went up by 5%.

diversification discount

In the ______ quadrant of the core competence--market matrix, the focus is on leveraging current core competencies to improve current market position.

existing competence--existing market

What are the four quadrants of the core competence-market matrix? (Check all that apply.)

existing competencies with existing markets new competencies with existing markets existing competencies with new markets new competencies with new markets

What happens when the markets along the industry value chain are too risky and alternatives too costly in time or money?

vertical market failure

To figure out if a firm's type of diversification is ______, one can ask questions about the degree to which the corporation's business units share core competencies.

related or unrelated