Strategic Management Chapter 8

______ are unique assets with high opportunity cost.

Specialized assets

Which of the following statements about the make-or-buy continuum is true?

The "make" and "buy" choices anchor each end of the continuum.

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

Transaction

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

True

______ refers to the firms' ownership of its production of needed inputs or of the channels by which it distributes its outputs.

Vertical integration

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

a diversification discount

Which of the following is an example of the principal-agent problem even when the principal's goal is to create shareholder value?

a manager flying first class on all business trips

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

a single market

Which of the following terms describes the strengths that allow a firm to distinguish itself from the competition?

core competencies

When a business answers the question of where to compete, it is determining ___.

corporate strategy

Zipster is a local manufacturer of athletic shoes. Zipster has decided it wants to expand to global markets and to offer a larger selection of items. It plans to offer not just athletic shoes but also luggage and car accessories. Zipster is engaging in ______.

diversification

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

existing competence--existing market

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

forward

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

innovation

To figure out if a firm's type of diversification is ______, one can ask questions about the degree to which the corporation's business units share core competencies.

related or unrelated

Transaction costs include ______ costs associated with an economic exchange.

the internal and external

The degree of vertical integration corresponds to ______.

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

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

A conglomerate fits which type of corporate diversification model?

unrelated diversification

What are the three dimensions along which executives formulate corporate strategy?

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

Corporate strategy needs to be dynamic over time in order to ______. (Check all that apply.)

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

Which of the following are among the reasons firms need to grow? (Check all that apply.)

- to motivate management - to increase profits

Which of the following are the four underlying strategic management concepts that determine the scope of a firm? (Check all that apply.)

- transaction costs - economies of scale - economies of scope - core competencies

Amazon's explosive success is largely due to which of the following? (Check all that apply.)

- diversification - vertical integration

What are the four quadrants of the core competence-market matrix? (Check all that apply.)

- Existing competencies with new markets - Existing competencies with existing markets - New competencies with new markets - New competencies with existing markets

Which of the following are types of vertical integration along the industry value chain? (Check all that apply.)

- forward - backward

__ strategy involves the decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously.

Corporate

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 ______. When they announced the spin-off, the stock price of TWN went up by 5%.

diversification discount

Specialized assets have ______.

high opportunity cost

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

strategic alliances

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

the principal-agent problem

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

vertical market failure

To get the benefits of vertical integration without the accompanying risks, companies can ______. (Check all that apply.)

- use taper integration - choose strategic outsourcing