MAN 4720 KING FSU CH. 8
Taper integration allows firms to
-be more flexible when responding to market changes such as fluctuations in demands -gain knowledge from external sources
_______ costs refer to the costs that arise from managing the linked businesses in a related-constrained or related-linked diversification scenario
Coordination
The persons responsible for forming corporate-level strategy are the
Executives
Forms of specialized assets include which of the following
Human-assets, physial asset, site specificity
________ costs refer to the costs that arise from managing the linked businesses in a related-constrained or related-linked diversification scenario
Influence
_______ and ______ are the two tpes of long-term contracts
Licensing and Franchising
Which of the following is NOT a dimension along which corporate strategy is assessed
The size of the company in comparison to its main competitors
Which of the following is a fundamental corporate-level strategic decision
What products and services should the firm offer
Stages four and five of the industry value chain involves
after-sales service and support, sales, and marketing
Costs associated with related-diversification strategies
coordination and influence
Describe the strengths that allow a firm to distinguish itself from the competition
core competencies
"where in the world should the firm compete?" is a ____________-level strategic question
corporate
_______ refers to an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes
diversification
Spin off an SBU which is unrelated to a core business in order to avoid the _______. When they announced the spin off, the stock price went up by 5%
diversification discount.
In the _______ quadrant of the core comp-market matrix, the focus is on leveraging core competencies to improve current market position
existing competence-exisiting market
Vertical integration along the industry value chain can be described as
forward and backward vertical integration
Risks of vertical integration are increased costs, reduced quality, reduced flexibility and
increased potential for legal repercussions
Transformation of raw materials into finished goods and services along distinct stages, each of which represents a distinct industry in which a number of different firms are competing
industry value chain
_______ is a situation in which one party has more knowledge than another due to the possession of private knowledge
information asymmetry
What level of diversification leads to the highest level of performance
moderate
Four quadrants of the core competencies-market matrix are which of the following
new and existing markets
A ________ diversification strategy refers to a firm that pursues both product and geographic diversification
product-market
Types of general diversification stratgies
product-market, geographic, product
The first stage of the industry value chain is typically
raw materials
Risks of vertical integration
reduced flexibility, increased costs, reduced quality
Growth share matrix requires managers to view their SBU's in terms of relative market _______ and speed of market ________
share and growth
Which types of diversification tend to have the lowest performances
single business and unrelated diversification
Why did Coke enter a strategic alliance with Monster
so that they could gain private info to determine whether an acquisition might be smart
________ assets are unique assets that have significantly more value in their intended use than in next-best use
specialized
Long-term contracts (licensing and franchising), equity alliances, and joint ventures are examples of
strategic alliances
two alternatives to vertical integration
strategic outsourcing and taper integration
________ is a way of orchestrating value activities in which a firm is backwardly or forwardly integrated and relies on outside-market firms for supplies or distribution
taper integration
Transaction costs include ______ costs associated with an economic exchange
the internal and external
What is a major disadvantage of organizing economic activity within firms
the principal-agent problem
What is the purpose of the core competence-market matrix
to provide guidance reguarding how to diversify in order to grow the company
_______ is a theoretical framework that helps explain and predict the boundaries of the firm
transaction cost economies
unlike short-term contracts, long-term contracts encourage firms to make _______ investments
transaction specific
How long do long-term contracts typically last
1 or more year
Advantages of vertical integration include which of the following
reducing costs, facilitating scheduling, better quality
When a manufacturer of computer starts to produce computer components, the manufacturer engages in _______ vertical integration
backward
In order to assess whether______is working, managers can ask if the individual businesses are worth more under the firm's management or if they are worth more under individual management
diversification
The stock price of such highly diversified firms is valued at less than the sum of their individual business units.65 For the last decade or so, GE experienced a diversification discount, as its capital unit contributed 50 percent of profits on one-third of the conglomerate's revenues
diversification discount
Main types of business diversification
dominant business, related diversification, singles business, unrelated diversification
4 underlying strategic-management concepts that determine the scope of a firm
economies of scale, core competenices, economies of scopr, transaction costs
________ are partnerships in which at least one partner takes partial ownership in the other partner
equity alliances
Alternatives in the make-or-buy continuum include which of the following
equity alliances and join ventures
The most integrated alternative to vertical integration is
parent-subsidiary relationship
_______assets are unique assets that have significantly more value in their intended use than in next-best use
specialized
A benefit of______ is that in-house suppliers and distributer are subjected to market which allows the firm to assess performance in comparison to others
taper integration
Operating in a variety of industries from cars to hospitality. What kind of diversification is this
unrelated