Wk 4 - Practice: Ch. 8, Corporate Strategy

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.

Blank 1: requests or request Blank 2: for Blank 3: proposals or proposal

__________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

______ 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

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

______ are unique assets with high opportunity cost.

Specialized assets

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

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

True or false: According to the make-or-buy continuum, strategic alliances are more integrated than short-term contracts.

True

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

Vertical integration

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

a single market

When a manufacturer of computers starts to produce its own computer components, the manufacturer engages in ______ vertical integration.

backward

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

corporate strategy

Amazon's explosive success is largely due to which of the following?

diversification vertical integration

A(n) ______ is a situation in which the stock price of a highly diversified firms is valued as less than the sum of their individual business units.

diversification discount

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

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

economies of scale economies of scope core competencies transaction costs

Which of the following are alternatives on the make-or-buy continuum?

equity alliances joint ventures

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

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

existing core competence--existing market

Companies that transact in the open market incur ______.

external transaction costs

Which of the following are types of vertical integration along the industry value chain?

forward backward

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

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

specialized assets

Transaction costs include ______ costs associated with an economic exchange.

the internal and external

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 are among the reasons firms need to grow?

to increase profits to motivate management

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

to reduce risk

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

true

A conglomerate fits which type of corporate diversification model?

unrelated diversification

Which of the following are types of strategic alliances?

long-term contracts equity alliances joint ventures

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

make managers owners through stock options

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 ______.

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

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

transaction costs

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

vertical market failure

The two alternatives to vertical integration are which of the following?

strategic outsourcing taper integration

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

innovation

Corporate strategy needs to be dynamic over time in order to ______?

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