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