MGMT 4860 ch. 8

high powered incentives and lower administration costs

2 advantages of organizing economic activity OUTSIDE of a firm

taper integration and strategic outsourcing

2 alternatives of vertical integration

1. to facilitate transaction-specific investments 2. to get insider info about the partners business 3. to make a credible commitment

3 reasons why a firm would want to enter into an equity alliance instead of a short or long term contract

Boston Consulting (BCG) growth-share matrix

a corporate planning tool in which the corporation is viewed as a portfolio of business units

licensing

a form of long-term contracting that enables firms to commercialize intellectual property

joint ventures and equity alliances

alternatives in the make-or-buy continuum

transaction-specific investments

an advantage of a firm in organizing economic activity

transaction costs

costs associated with an economic exchange

industry value chain

depicts the transformation of raw materials into finished goods and services along distinct vertical stages.

core competencies

describes the strengths that allow a firm to distinguish itself from the competition

equity alliances

partnerships in which at least one partner takes partial ownership in the other partner

sales, after sales service and support, and marketing

stages four and five of the industry value chain

unrelated

the Tata group has SBU's operating in a variety of industries, from automobiles to hospitality. The Tata Group is an example of which type of diversification?

1. core competencies 2. transaction costs 3. economies of scope 4. economies of scale

the four underlying strategic management concepts that determine the scope of a firm

a focused differentiation strategy

the luxury car division of tata group, with the purchase of jaguar and land rover, is pursuing which of the following strategies on the business level?

transaction cost economies

theoretical framework that helps explain and predict the boundaries of the firm

licensing and franchising

two types of long-term contracts

specialized assets

unique assets that have significantly more value in their intended use in next-base use

parent-subsidiary relationship

what kind of relationship is the most integrated alternative to vertical integration?

equity alliance

what type of arrangement did Coke form with Monster in 2014?

1. dominant business 2. related diversification 3. unrelated diversification 4. single business

4 main types of business diversification

vertically integrate

when a firm is more efficient in organizing economic activity than markets, should they integrate vertically or horizontally?

to avoid the risks associated with vertical integration

why do some firms choose alternatives to vertical integration?