BUS 189 CH8

Which of the following statements is true of transactions costs? a) transaction costs exclusively consist of external costs associated with economic exchanges b) transaction costs are necessary to explain and predict the boundaries of a firm c) when companies transact in the open market, they incur internal transaction costs d) when the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate

Transaction costs are necessary to explain and predict the boundaries of a firm

In the market for used cars, which of the following is a reason behind the crowing out of desirable cars by lemons or inferior ones? a) time compression diseconomies b) information asymmetry c) experience-curve effects d) principal-agent problem

information asymmetry

______ is best described as a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property. a) bootlegging b) crowdsourcing c) licensing d) lean manufacturing

licensing

Which of the following alternatives on the make-or-buy continuum allows for most integration? a) licensing b) joint ventures c) parent-subsidiary relationship d) short-term contracting

parent-subsidiary relationship

______ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage a) corporate acquisitions b) embargos c) strategic alliances d) cartel agreements

strategic alliances

A ______ is best defined as a company that combines two or more strategic business units under one overarching corporation and follows an unrelated diversification strategy. a) single-business firm b) parent company c) conglomerate d) subsidiary

conglomerate

______ is best described as changes in an industry value chain that involve moving ownership of activities closer to the end (customer) point of the value chain a) reverse engineering b) corporate divestiture c) forward vertical integration d) closed innovation

forward vertical integration

The most efficient way to overcome the principal-agent problem in a firm is to a) increase the level of vertical integration within the firm b) downsize the existing workforce c) organize economic activities within the firm d) provide stock options to managers

provide stock options to managers

When a firm is said to be pursuing a geographic diversification strategy, it means that the firm will a) operate from multiple headquarters across the globe b) introduce different products and services in an existing single market c) sell its products in several different regional, national, and international markets d) depend solely on its in-house facilities for all its production purposes

sell its products in several different regional, national, and international markets

Apple and Nike have their own retail outlets and also use other independent retailers, both the brick-and-mortar type and online, to sell their products. This is an example of a) geographic diversification b) taper integration c) monopsony d) crowdsourcing

taper integration