MGMT
Unlike short-term contracts, long-term contracts encourage firms to make ______ investments. a. transaction-specific b. umbrella c. transaction-non-specific d. integrated alternative
transaction-specific
______ refers to an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes. a. Strategic outsourcing b. Taper integration c. Vertical integration d. Diversification
Diversification
How does Lyft benefit from its strategic alliances with GM and Waymo? a. It allows Lyft to more effectively compete against Uber. b. It gives Lyft access to new markets that Uber is unaware of. c. It provides Lyft with shares of GM and unlimited funds. d. It gives Lyft a winner-take-all advantage.
It allows Lyft to more effectively compete against Uber
Which of the following are true of alliance management capability? (select multiple) - Every firm has alliance management capability. - It involves alliance design and governance. - It involves partner selection and alliance formation. - It has little effect on a firm's competitive advantage.
It involves alliance design and governance; It involves partner selection and alliance formation
Which of the following statements about equity alliances is true? a. They are more common than contractual, non-equity alliances. b. They result in weak ties between the partners. c. They are based on full ownership. d. They require larger investments than non-equity alliances.
They require larger investments than non-equity alliances
Which of the following are types of vertical integration along the industry value chain? (select multiple) a. simultaneous b. backward c. scheduled d. forward
backward; forward
When an established firm makes an equity investment in an entrepreneurial venture it is known as a(n) ______ investment. a. incumbent b. corporate venture capital c. limited entrepreneurial d. Einstein-type
corporate venture capital
______ are partnerships in which at least one partner takes partial ownership in the other partner. a. Equity alliances b. Long-term contracts c. Strategic subsidiaries d. Committed complements
equity alliances
What are the three mechanisms that alliances can be governed by? (select multiple) - downstream alliance - upstream alliance - equity alliances - joint ventures - non-equity alliances
equity alliances; joint ventures; non-equity alliances
The persons responsible for forming corporate-level strategy are the ___. a. shareholders b. middle managers c. executives d. consultants
executives
Companies that transact in the open market incur ______. a. staffing costs b. internal transaction costs c. external transaction costs d. dividends
external transaction costs
Kurtis loves Benicio's Burritos and wants to open a branch in his hometown. Benicio's Burritos grants Kurtis the right to use its trademark and name, and Kurtis agrees to follow Benicio's Burritos guidelines. This is an example of Blank______. a. licensing b. franchising c. equity alliance d. short-term contracts
franchising
Horizontal integration can ______. a. help a firm improve its strategic position in an industry b. lower the cost of production through decreased economies of scope c. decrease the geographic scope of a firm
help a firm improve its strategic position in an industry
When two competitors merge, leading to industry consolidation, they are engaging in ______. a. backward integration b. vertical integration c. forward diversification d. horizontal integration
horizontal integration
A firm must decide whether to build, borrow, or buy to answer the question of ______. a. when to start growth b. who must initiate growth c. why it must grow d. how it will achieve growth
how it will achieve growth
Which of the following are among the reasons firms need to grow? (select multiple) a. to increase profits b. to decrease market power c. to increase costs d. to motivate management
increase profits; motivate management
______ is a situation in which one party has more knowledge than another due to the possession of private knowledge. a. Incomplete contracting b. The principal-agent problem c. Information asymmetry d. Transaction costs economics
information asymmetry
Which of the following are the three choices in the build-borrow-or-buy framework? (Check all that apply.) - internal development - acquisition of new resources - elimination of product costs - strategic alliances
internal development; acquisition of new resources; strategic alliances
How does horizontal integration affect Porter's Five Forces for the surviving firms? (select multiple) - It increases the threat of entry. - It weakens bargaining power vis-à-vis buyers. - It reduces rivalry among existing firms. - It reduces the threat of entry. - It increases rivalry among existing firms.
it reduces rivalry among existing firms; it reduces the threat of entry
A(n) __ is a standalone organization created and jointly owned by two or more parent companies. a. equity alliance b. standalone subsidiary c. joint venture d. strategic alliance
joint venture
Which of the following are types of strategic alliances? (select multiple) - long-term contracts - equity alliances - joint ventures - mergers - parent-subsidiary relationship
long-term contracts; equity alliances; joint ventures
One way to overcome the principal-agent problem is to ______. a. offer managers communities of knowledge b. make managers owners through stock options c. establish coordination and flexibility d. specify information symmetries
make managers owners through stock options
A partnership that is based on contracts between companies is referred to as a(n) _____. a. non-equity alliance b. allowance alliance c. wholly owned subsidiary d. diversification
non-equity alliance
When a company makes incremental investments as part of a larger investment and takes the time to analyze the information gained following each incremental investment, the company is taking a ______. a. tradable position b. non-equity approach c. real-options perspective d. co-opetition perspective
real-options perspective
______ are unique assets with high opportunity cost. a. Diversified strategies b. Specialized assets c. Equity alliances d. Horizontally integrated assets
specialized assets
In order for an alliance to qualify as ______, it must have the potential to alter a company's competitive advantage. a. a partnership b. a merger c. tradable d. strategic
strategic
The two alternatives to vertical integration are which of the following? - specialized disintegration - horizontal integration - strategic outsourcing - taper integration - nominal innovation
strategic outsourcing; taper integration
Which type of knowledge cannot be codified and can only be gained through active participation in the task? a. explicit knowledge b. perceptual knowledge c. strategic knowledge d. tacit knowledge
tacit knowledge
______ 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. a. Vertical integration b. Horizontal integration c. Strategic outsourcing d. Taper integration
taper integration
The partners in non-equity alliances can have weak ties because such alliances are often ______ in nature, which can cause lack of trust and commitment. a. temporary b. intangible c. permanent d. sufficient
temporary
Which of the following statements about the make-or-buy continuum is true? a. The "buy" choice reflects full integration. b. "Make" and "buy" are the only two choices in the continuum. c. The "make" and "buy" choices anchor each end of the continuum. d. Short-term contracts are the most costly option in the continuum.
the "make" and "buy" choices anchor each end of the continuum.
The degree of vertical integration corresponds to ______. a. the firm's level of integration with the host country's infrastructure b. the firm's level of integration among the alternative industry types c. the number of industry value chain stages in which a firm directly participates d. the number of parent-subsidiary relationships a firm is involved in
the number of industry value chain stages in which a firm directly participates
What is a major disadvantage of organizing economic activity within firms? a. enforcement of contracts b. transaction-specific investments c. the principal-agent problem d. search costs
the principal-agent problem
A disadvantage of a short-term contract as an alternative on the make-or-buy continuum is that ______. a. the supplying firm has little reason to perform transaction-specific investments b. the supplying firm has a shorter planning period than it has for individual transactions c. the buying firm can get a lower price for the work because of the competitive bidding process d. the supplying firm has a longer planning period in comparison to individual market transactions
the supplying firm has little reason to perform transaction-specific
Firms can use strategic alliances to strengthen their competitive advantage when competing in battles to control industry standards. a. true b. false
true
It can be riskier to own parts of the supply chain than to rely on external supply chains. a. true b. false
true
A conglomerate fits which type of corporate diversification model? a. single business b. related diversification c. unrelated diversification d. dominant business
unrelated diversification
Amazon's explosive success is largely due to which of the following? (select multiple) a. information asymmetry b. vertical integration c. single business focus d. diversification
vertical integration; diversification
Which of the following are reasons why firms enter into strategic alliances? (select multiple) - to enter new markets - to decrease economies of scale - to increase outsourcing - to learn new capabilities - to strengthen their competitive position
to enter new markets; to learn new capabilities; to strengthen their competitive position
Peter's Pans makes cast-iron cookware. It decides to acquire another similar-sized cast-iron cookware company in the hope that its larger size will enable it to snag some market share away from Iron Maiden, the industry leader. What is Peter's Pans strategy? a. Peter's Pans is experiencing principal-agent problems. b. Peter's Pans is positioning itself for a merger. c. Peter's Pans is trying to overcome competitive disadvantage. d. Peter's Pans has superior acquisition and integration capability.
Peter's Pans is trying to overcome competitive disadvantage
______ refers to the assets whose physical and engineering properties are designed to satisfy a particular customer. a. Human asset specificity b. Physical-asset specificity c. Site specificity d. Backward integration specificity
Physical-asset specificity
Which of the following are benefits of a horizontal integration? (select multiple) - increased rivalry - increased differentiation - integration failure - reduced competition
increased differentiation; reduced competition
Why might a firm create a joint venture when entering a new geographic market? (select multiple) - to adhere to domestic law - to access local contacts - to access local expertise - to adhere to local law
to access local contacts; to access local expertise; to adhere to local law
Which of the following is the term for the costs associated with an economic exchange? a. economies of scale b. economies of scope c. core competencies d. PESTEL costs e. diseconomies costs f. transaction costs
transaction costs
When a firm is more efficient in organizing economic activity than markets are, the firm should ______. a. horizontally integrate b. merge with another firm c. vertically integrate d. pursue a cost-leadership strategy
vertically integrate