MGT 498: Strategic Management

Firms that pursue an unrelated diversification strategy and are unable to create additional value tend to experience which of the following?

a diversification discount

Select all that apply Which of the following are types of vertical integration along the industry value chain?

backward forward

What happens when the markets along the industry value chain are too risky and alternatives too costly in time or money?

vertical market failure

A conglomerate fits which type of corporate diversification model?

unrelated diversification

If a company moves ownership of activities closer to the end customer, such as providing after-sales support, it is engaging in Blank______ vertical integration.

forward

Specialized assets have Blank______.

high opportunity cost

______ 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

Select all that apply What are the two main motivations behind restructuring?

It enables the firm to spin out underperforming units. It allows higher-performing units to be more agile and pursue growth opportunities.

Select all that apply What are the three dimensions along which executives formulate corporate strategy?

The geographic scope The degree of vertical integration The type of horizontal diversification

______ costs are all of the costs associated with an economic exchange.

Transaction

It can be riskier to own parts of the supply chain than to rely on external supply chains.

True

A non-diversified company focuses on which of the following?

a single market

The key question of where to compete is addressed by Blank______.

corporate strategy

Select all that apply Which of the following are the four underlying strategic management concepts that determine the scope of a firm?

economies of scale transaction costs economies of scope core competencies

Select all that apply Which of the following are alternatives on the make-or-buy continuum?

equity alliances joint ventures

The persons responsible for forming corporate-level strategy are the Blank______.

executives

In the Blank______ quadrant of the core competence--market matrix, the focus is on leveraging current core competencies to improve current market position.

existing competence--existing market

Select all that apply Corporate strategy needs to be dynamic over time in order to allow firms to do which of the following?

keep and maintain a competitive advantage diversify to capture growth opportunities respond to the ever-changing external environment

One way to overcome the principal-agent problem is to Blank______.

make managers owners through stock options

What term refers to the process of reorganizing and divesting business units and activities to refocus a firm to leverage its core competencies?

restructuring

Which type of alternative on the make-or-buy continuum involves competitive bidding by external companies hoping to acquire a temporary arrangement with a firm?

short-term contracts

Long-term contracts (such as licensing and franchising), equity alliances, and joint ventures are examples of which of the following?

strategic alliances

The degree of vertical integration corresponds to Blank______.

the number of industry value chain stages in which a firm directly participates

What is a major disadvantage of organizing economic activity within firms?

the principal-agent problem

Why do some firms choose alternatives to vertical integration?

to avoid the risks associated with vertical integration

Which of the following is a reason why a firm needs to grow?

to reduce risk

Which of the following is the term for the costs associated with an economic exchange?

transaction costs

Select all that apply What are the main types of corporate diversification?

unrelated diversification single business diversification related diversification dominant business diversification

Select all that apply What can companies do to get the benefits of vertical integration without the accompanying risks?

use taper integration choose strategic outsourcing

What term refers to the firms' ownership of the inputs it needs for production or of the channels by which it distributes its outputs?

vertical integration

Select all that apply Amazon's explosive success is largely due to which of the following?

vertical integration diversification

TWN, a large multinational corporation, chose to spin off one of its SBUs that was unrelated to TWN's core business in order to avoid the Blank______. When they announced the spin-off, the stock price of TWN went up by 5%.

diversification discount

Companies that transact in the open market incur Blank______.

external transaction costs

Amazon's continued focus on Blank______ is key to its ongoing success.

innovation

In the Blank______ quadrant of the core competence--market matrix, a firm combines existing core competencies with existing markets.

existing core competence--existing market

When engaging in short-term contracting, a firm sends out _______ _______ _______ (RFPs) to potential companies, which initiate competitive bidding for contracts to be awarded with a short duration.

requests for proposal

Which of the following have significantly more value in their intended use than in their next-best use?

specialized assets

A disadvantage of a short-term contract as an alternative on the make-or-buy continuum is that Blank______.

the supplying firm has little reason to perform transaction-specific investments

In order for a firm to lower costs, it must Blank______.

grow