Chapter 8 - 4394
the supplying firm has little reason to perform transaction-specific investments
A disadvantage of a short-term contract as an alternative on the make-or-buy continuum is that _____
a diversification discount
Firms that pursue an unrelated diversification strategy and are unable to create additional value tend to experience which of the following?
1 year or more
Long term contracts typically last
high opportunity cost
Specialized assets have
share & growth
The BCG growth-share matrix requires manager to view their SBUs in terms of relative market ____ and speed of market _____
industry value chain
The _____ depicts the transformation of raw materials into finished goods and services along distinct vertical stages, each of which represents a distinct industry in which a number of different firms are competing
superior goods to be replaced by inferior ones
The lemons problem suggests that information asymmetries can cause
executives
The people responsible for forming corporate-level strategy are the
taper integration & strategic outsourcing
Two alternatives to vertical integration are
transaction-specific
Unlike short-term contracts, long-term contracts encourage firms to make _____ investments
the principal-agent problem
What is a major disadvantage of organizing economic activity within firms
a long-term contract that enables firms to commercialize intellectual property
What is licensing?
backward
When a manufacturer of computers starts to product its own computer components, the manufacturer engages in _______ vertical integration
information asymmetry
____ is a situation in which one party has more knowledge than another due to the possession of private knowledge
strategic outsourcing
____ refers to moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain
Corporate
____ 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
specialized assets
_____ are unique assets with high opportunity cost
Transaction
_____ costs are all of the costs associated with an economic exchange
transaction cost economies
_____ is a theoretical framework that helps explain and predict the boundaries of the firm
equity alliances
______ are partnerships in which at least on partner takes partial ownership in the other partner
physical-asset specifcity
_____ refers to the assets whose physical and engineering properties are designed to satisfy a particular customer
diversification
______ refers to an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes
offshoring
_____ refers to the act of outsourcing some of the firms activities outside of the home country to another nation
Coordination
_______ costs refer to the costs that arise from managing the linked business in a related or related-linked diversification scenario
related
A firm follows ______ diversification strategy when it derives less than 70% of its revenues from a single business activity and obtains revenues from other lines of business that are linked to the primary business activity
geographic
A firm that is active in several different countries is pursing a ____ diversification strategy
partial
In the taper integration system, a firm has _____ reliance on outside markets
strategic alliance
A _______ is a voluntary arrangement between firms that involves sharing of resources and capabilities with the intent of developing processes, products, or services.
joint venture
A _____ is a standalone organization created and jointly owned by 2 or more parent companies
diversification discount
A _______ is a situation in which the stock price of a highly diversified firm is valued as less than the sum of their individual business units