Wk 4 - Practice: Ch. 8, Corporate Strategy: Vertical [due Day 5]

A conglomerate fits which type of corporate diversification model?

unrelated diversification

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

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

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

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

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

What are the four quadrants of the core competence-market matrix?

existing competencies with new markets. new competencies with existing markets. existing competencies with existing markets. new competencies with new markets.

______ are unique assets with high opportunity cost.

Specialized assets

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

True

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

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

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

Vertical integration

Companies that transact in the open market incur ______.

external transaction costs

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

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

backward

What are the main types of corporate diversification?

dominant business diversification. unrelated diversification. single business diversification. related diversification.

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

grow

Specialized assets have ______.

high opportunity cost

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

innovation

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

Transaction

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

vertical integration diversification

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 are types of vertical integration along the industry value chain?

backward forward

_____ 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 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

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

core competencies

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

core competencies economies of scope transaction costs economies of scale

The key question of where to compete is addressed by ___. corporate strategy. differentiation. business strategy. a marketing plan.

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

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

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 ___.

executives

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

make managers owners through stock options.

The degree of vertical integration corresponds to ______.

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

To get the benefits of vertical integration without the accompanying risks, companies can ______.

choose strategic outsourcing. use taper integration.

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

vertical market failure