Quiz 4- vertical integration and outsourcing

In the strategic sourcing framework, firms should outsource when the strategic importance of the activity is ______(a)______ and the firm's competence to perform the activity is _______(b)________.

(a) low; (b) low

A firm is said to be vertically integrated when:

All of the above

Which of the following is true about corporate strategy? I. While business-level strategy focuses on how to compete in individual businesses, corporate-level strategy deals with the question of where to compete as the firm competes in multiple industries and markets simultaneously. II. The three dimensions that form the question of where to compete are the industry supply chain, the range of products / services, and geographic markets. III. A single corporate strategy decision can represent multiple strategic dimensions, such as vertical integration, diversification, and international expansion.

All of the above

What is NOT a benefit of vertically integrating?

Higher operational efficiency through economies of scale

Which of the following is NOT true about the efficient boundaries model?

It suggests that firms should consider coordination and production costs and use the higher of the two to determine whether to vertically integrate or outsource

The employment relationship differs from supplier relationships because:

The employment relationship differs from supplier relationships because: employees are obliged to give up control (to their employers) over aspects of work that cannot be specified in advance

Vertical integration and outsourcing decision refer to choices about the firm's

activities

According to the property rights theory of vertical integration, the company that internalizes an activity (e.g. by acquiring another firm) is the one that:

gains the most from the control benefits of performing the activity internally

According to transaction cost theory, vertical integration occurs under two conditions:

high uncertainty and high supplier asset specialization

A firm should consider vertically integrating an activity in all of the following situations EXCEPT:

the firm's competence to perform the activity is high and the activity's strategic value is low