Strategic Ch11, 12,13

In order for a manufacturer of consumer goods to maximize responsiveness to changes in consumer demand for its products: A. It depends upon the type of flexibility that is desired. B. It is best to outsource the production of components and materials. C. It is best to be backward integrated into the production of components and materials. D. It is best to be partially backward integrated.

A. It depends upon the type of flexibility that is desired.

The reason that the producers of wood pulp have often forward integrated into the production of paper is: A. To insulate the firm from fluctuations in the price of wood pulp. B. To increase value added by moving closer to the final customer. C. To exploit technical economies of co-locating pulp and paper making plants while avoiding transaction costs caused by transaction-specific investments. D. To be able to respond quicker to demand fluctuations because of superior coordination.

C. To exploit technical economies of co-locating pulp and paper making plants while avoiding transaction costs caused by transaction-specific investments.

The main business of the Coca-Cola company is manufacturing, marketing and distributing concentrate for soda drinks to bottlers in over 200 countries of the world. The corporate scope of the Coca-Cola company is best described a: A. A broad product, driven graphical, and vertical scope. B. A broad product and vertical scope, and a narrow graphical scope. C. A broad geographical scope and narrow product and vertical scope. D. A broad product and geographical scope and narrowed vertical scope.

D. A broad product and geographical scope and narrowed vertical scope.

Corporate strategy decisions are concerned with decisions over: A. product scope B. Geographical scope C. Vertical scope D. All of the above

D. All of the above

Which of the following is not a dimension of national values identified by Green Hofstede? a. Power distance b. Uncertainty avoidance c. Individualism d. Honesty

Honesty

Where do general management capabilities generally reside within the diversified firm? a. At the corporate level b. At the divisional level c. At the operational entity level d. All of the above

a. At the corporate level

Porrter's national diamond identifying four factors that determined a company's competitive advantage within a sector. Which of the filing is not one of the four factors? a. Corporate strategy b. Diamond conditions c. Related and supporting industries d. Strategy, structures, and rivalry

a. Corporate strategy

The value chain for a product will tend to be dispersed across different countries when: a. Different stages of the value chain require different types of resources and capabilities. b. The product is subject to import tariffs and quotas. c. The product is knowledge-intensive. d. The different stages of the value chain need to be closely coordinated

a. Different stages of the value chain require different types of resources and capabilities.

The key difference between economies of scale and economies of scope: a. Economies of scale relate to manufacturing activities; economies of scope relate to a wide range of functions b. Economies of scale relate to expanding the output of a single product; economies of scope relate to expansion across multiple products c. There is no practical difference d. Scale economies are relevant to business strategy; economies of scope to corporate strategy.

b. Economies of scale relate to expanding the output of a single product; economies of scope relate to expansion across multiple

The British fashion company, Burberry, is considering diversifying into the hotel business, it's optimal strategy is to: a. Set up its own luxury hotel chain that way it can appropriate all the profits from the ventures. b. License is brand to an existing hotel operator-that way you can avoid the cost in risk of having to invest all the resources and capabilities required by the hotel business. c. Stay away from hotels altogether since this business is all related to Burberry's core fashion business d. Establish a separate to start-up company, Burberry hotels, and which Burberry group retains a minority equity holding.

b. License is brand to an existing hotel operator-that way you can avoid the cost in risk of having to invest all the resources and capabilities required by the hotel business.

The emergence of "conglomerates"—widely diversified companies—during the 1960s and 1970s was a result of: a. The desire of companies in low growth industries to diversify into higher growth industries b. The belief that the tools of strategic and financial management could be applied to any type of business c. The willingness of some CEOs to ignore shareholder interests and order to build large corporate empires d. Loose monetary policies that increased the availability of corporate finance.

b. The belief that the tools of strategic and financial management could be applied to any type of business

The theory of comparative advantage is concerned with: a. The sources of real income differentials among countries b. The impact of resource availability on national competitiveness in particular industries c. The competitive advantages of low-wage countries d. The determinants of capital flows between countries

b. The impact of resource availability on national competitiveness in particular industries

McDonald's introduction of a greater number of local products on its menus, then transferring these items across national borders points to: a. The tendency for global products to lose their appeal. b. The versatility of the McDonald's business system. c. The potential for localized adaptation within the multinational enterprise to be a source of innovation and strategic renewal. d. Growing competition in the fast food industry as the McDonald's system is increasingly imitated by local rivals.

c. The potential for localized adaptation within the multinational enterprise to be a source of innovation and strategic renewal.

What does the expression "conglomerate discount" mean? a. The ability of a widely diversified firm to exploit economies of scope to reduce its overall costs b. The willingness of stock exchanges to offer discounted listing fees in order to attract highly diversified firms c. The stock market tends to value diversified companies at less than their break-up value d. The lower rates of return that highly diversified companies offer to their shareholders.

c. The stock market tends to value diversified companies at less than their break-up value

To determine whether a firm's diversification is related or unrelated, we need to consider: a. Whether the businesses are within the same two-digit class of the Standard Industrial Classification b. Whether the two businesses have either common customers or utilize a common technology c. Whether the two businesses share some of the same resources and capabilities d. Whether the two businesses are in the same stages of their industry life cycles.

c. Whether the two businesses share some of the same resources and capabilities

Which of the following factors is not an explanation for the lack of vertical integration between steel producers and shipbuilders? A. The world's biggest shipbuilding countries (South Korea, Japan, and China) are also among the leading steel producing countries B. Steel is a commodity product available in standardized grades C. Steel production and shipbuilding are strategically very different industries D. The market for steel has many suppliers and buyers, good information flows, and little need for transaction-specific investments

A. The world's biggest shipbuilding countries (South Korea, Japan, and China) are also among the leading steel producing countries

Corporate strategy decisions are concerned with: A. Where a firm chooses to compete i.e. in which industries B. How a firm chooses to compete in a specific industry C. Why a firm chooses to compete or not D. a. and b.

A. Where a firm chooses to compete i.e. in which industries

The corporate scope of Walt Disney Company may be described as follows: A. A broad vertical and geographical scope but narrow product scope B. A broad product, geographical and vertical scope. C. A broad product and vertical scope, but a narrow geographical scope D. A broad product and geographical scope, but narrow vertical scope

B. A broad product, geographical and vertical scope.

The main cause of downsizing, refocusing, and outsourcing during the latter part of the 20th century was: A. The size of the firm B. A greater turbulence in the environment and also developments in IT—especially the advent of the internet C. All of the above D. None of the above

B. A greater turbulence in the environment and also developments in IT—especially the advent of the internet

Which of the following factors is not conducive to vertical integration between two adjacent stages of production? A. Similarity of the optimum scale of production between the two stages B. Different organizational capabilities are required at each stage C. Stability in the technologies used at each stage D. Few companies at each of the two stages

B. Different organizational capabilities are required at each stage

Starbucks owns and operates most of its retail outlets; McDonalds franchises most of its retail outlets. An advantage of franchising over vertical integration is: A. Franchising is always more profitable than vertical integration because the franchisor does not bear the costs of owning the retail outlets and paying their staff. B. Franchising subjects the operators of retail outlets being subject to "high-powered" incentives. C. Franchising permits more effective quality control of the retail outlet. D. Franchising permits superior coordination of retail activities with upstream activities.

B. Franchising subjects the operators of retail outlets being subject to "high-powered" incentives.

Vertical integration by Zara, the main division and brand of the Spanish clothing firm Inditex, illustrates: A. The potential of vertical integration to offer flexibility in responding to seasonal fluctuations in demand. B. The potential for vertical integration to offer flexibility in responding to rapid changes in customer product preferences. C. The potential for vertical integration to overcome problems arising from the need for transaction-specific investments by garment manufacturers. D. The potential for vertical integration to exploit technical economies from co-locating adjacent processes.

B. The potential for vertical integration to offer flexibility in responding to rapid changes in customer product preferences.

The vertical scope of a firm relates to: A. The proportion of the firm's inputs that are produced in-house. B. The number of hierarchical layers of the firm's management structure. C. The extent to which a firm owns adjacent stages of the industry value chain. D. The size of the firm's value added.

C. The extent to which a firm owns adjacent stages of the industry value chain.

Vertical integration is: A. A firm establishing close relationships with its suppliers and its buyers B. A firm's acquisition of a supplier or one of its buyers C. A firm's control over its input sources and the distribution of its output D. A firm's ownership of vertically related activities

D. A firm's ownership of vertically related activities

The main concepts that assist us to analyze the scope of a firm's activities are: A. Economics of scope B. Transaction cost C. Corporate complexity D. All of the above

D. All of the above

Vertical integration by industrial firms during the major part of the 20th century was motivated primarily by firms' desire for: A. Reducing costs B. Increasing speed C. Securing scare inputs D. Reducing risk and improving coordination

D. Reducing risk and improving coordination

Corporate strategy decisions are concerned with: A. Establishing competitive advantage B. Diversification and vertical integration C. The geographical boundaries of the firm D. The scope of the firm's activities

D. The scope of the firm's activities

In Porter's national diamond framework, Porter emphasizes that encouraging mergers in an industry in order to form a "national champion": a. Eliminates the pressure of domestic competition to drive innovation, quality, and efficiency b. Creates the skill that I essential to compete in global markets. c. Is an effective means for government to channel support to the domestic industry. d. Provides a focal point for building a cluster of related and supporting industries.

a. Eliminates the pressure of domestic competition to drive innovation, quality, and efficiency

Empirical studies of the outcomes of corporate refocusing initiatives show that divesting diversified businesses - a. Increases probability and generates positive returns for shareholders. b. Decreases probability and generates negative returns for shareholders. c. Has no effect on probability or shareholder returns. d. None of the above.

a. Increases probability and generates positive returns for shareholders.

Diversification decisions by firms involve the following key issues: a. The attractiveness of the industry to be entered and the potential for competitive advantage b. The potential for the diversification to increase growth and reduce risk c. The opportunities for exploiting economies of scope in resources and capabilities d. The benefits of synergy relative to the costs or coordination.

a. The attractiveness of the industry to be entered and the potential for competitive advantage

The statement: "Economies of scope in shared resources do not provide a sufficient justification for diversification" is: a. Correct: Cost savings form shared resources are of little value unless there are also organizational capabilities that can be transferred between the businesses b. Correct: to justify diversification economies of scope need to be supported by transactions costs in the market for the particular resources c. Incorrect: economies of scope are sufficient grounds for diversification on their own d. Incorrect: the benefits from economies of scope need to exceed the administrative costs of the corporate HQ.

b. Correct: to justify diversification economies of scope need to be supported by transactions costs in the market for the particular resources

A common approach to reconciling the benefits of global scale with the need for national differentiation is to: a. Develop a global brand but rely on local promotional activities. b. Create standard product platforms in terms of design and components, then adapting product features, complementary services, and marketing approaches. c. Allow major national subsidiaries to develop new products, then encouraging other national subsidiaries to adopt them. d. Develop globally standardized products but sell them under local brand names.

b. Create standard product platforms in terms of design and components, then adapting product features, complementary services, and marketing approaches.

An alternative approach to Porter's "three essential tests" in evaluating the value-adding potential of diversification is: a. The Boston Consulting Group growth-share matrix b. Goold, Campbell and Alexander's "corporate parenting" framework c. The Ansoff matrix d. Porter's value chain analysis.

b. Goold, Campbell and Alexander's "corporate parenting" framework

The continuing prominence of large, highly diversified business groups in many emerging market countries (e.g. Tata Group in India) is mainly the result of: a. The political connections of a few leading business leaders b. High transaction costs in capital and labor markets in these countries which favor the deployment of resources within large diversified corporations c. Barriers to direct investment which protect these companies from overseas competition d. The failure of emerging market business leaders to appreciate the benefits of refocusing.

b. High transaction costs in capital and labor markets in these countries which favor the deployment of resources within large diversified corporations

Despite the heterogeneity of the goods and services supplied by General Electric (e.g. locomotives and consumer credit), we can consider GE's diversification to be into strategically related industries because: a. Most products are supplied under the GE brand b. It applies similar general management capabilities across all its businesses c. It operates a balanced portfolio of cash generating and cash using businesses d. It is continually looking for opportunities to generate additional revenues from cross-selling and product bundling.

b. It applies similar general management capabilities across all its businesses

The "centralized hub" strategy that Japanese multinationals pursued during the 1970s and 1980s is likely to be most successful in industries with: a. Innovation as the primary source of competitive advantage b. Large economies of scale and limited need for national differentiation c. Substantial opportunities for transfer of learning among countries d. Rapid rates of technological change

b. Large economies of scale and limited need for national differentiation

Which of the following is not an example of an economy of scope from diversification? a. Samsung Group applying its Samsung brand name across a wide range of products b. Royal Dutch Shell engaging in forest development in order to offset some of the carbon dioxide produced by its petroleum business c. Amazon using its website and distribution system to supply not only books and music but a wide array of other consumer products d. Fuji Film applying its thin-film, coatings, and polymer technologies not only to photographic film, but also to cosmetics.

b. Royal Dutch Shell engaging in forest development in order to offset some of the carbon dioxide produced by its petroleum business

Saudi Aramco and Statoil are both major oil producers. Saudi Aramco's competitive advantage is based on its access to low-cost domestic oil reserves; Statoil's competitive advantage is its capability in offshore exploration and production. The implications for the internationalization strategies of the two companies are: a. Both companies should focus on exporting from their own countries b. Saudi Aramco should focus on exporting; Statoil should pursue direct foreign investment c. Saudi Aramco should pursue direct foreign investment; Statoil should focus on exporting d. Both companies should use a mixture of exporting and direct investment depending upon the nature of the foreign opportunity

b. Saudi Aramco should focus on exporting; Statoil should pursue direct foreign investment

Tyco International's decision to split into three separate companies was motivated by: a. The scandal involving its former CEO b. The belief that Tyco's businesses could achieve greater flexibility and growth as independent companies than as subsidiaries of Tyco c. The belief that the synergies among Tyco's businesses were outweighed by the costs of Tyco's corporate HQ d. The recognition that Tyco was subject to a "conglomerate discount."

b. The belief that Tyco's businesses could achieve greater flexibility and growth as independent companies than as subsidiaries of Tyco

Porters "three essential tests" help to determine: a. The likely impact of diversification upon risk. b. The potential for diversification to create shareholders value. c. The impact of diversification on stakeholders. d. How the financial markets will react to a diversification.

b. The potential for diversification to create shareholders value.

Porter's three tests help to determine: a. The likely impact of diversification upon risk b. The potential for diversification would create shareholder value c. The impact of diversification on stakeholders d. How the financial markets would react to a diversification.

b. The potential for diversification would create shareholder value

The key drivers of diversification during the period 1950-80 were: a. Shareholder value maximization b. The quest for growth and risk reduction c. The desire to enter new, technology-based industries d. The desire to exploit economies of scope

b. The quest for growth and risk reduction

Internationalization among New York-based law firms is the result of: a. The US possessing a comparative advantage in legal services. b. US law firms following the opportunity to provide global service to their multinational clients. c. US law firms seeking to benefit from knowledge transfer between different legal systems. d. US law firms seeking to exploit economies of scale in human capital and IT systems.

b. US law firms following the opportunity to provide global service to their multinational clients.

The Dutch-based electrical and consumer electronics multinational, Philips, has transferred the headquarters for several of its global business away from the Netherlands. In terms of Bartlett and Ghoshal's typology of multinational strategies, this represents a transition from: a. A "centralized hub" to a "decentralized federation" b. A "centralized hub" to a "transnational" c. A "decentralized federation" to a "transnational" d. A "coordinated federation" to a "decentralized federation"

c. A "decentralized federation" to a "transnational"

Large countries have an advantage over small countries in technology-intensive and capital-intensive industries, because a. They can influence the rest of the world's technical standards b. Small markets discourage ambition among the firms that serve them c. A large home market allows exploitation of scale economies in facilities and product development d. Large countries tend to have superior educational systems

c. A large home market allows exploitation of scale economies in facilities and product development

With internationalization, the threat of new entry into domestic industries is increases because: a. Customer preferences for imported products b. The World Trade Organization (WTO) prevents governments protecting their domestic industries through subsidies and import restrictions c. Barriers to entry that would deter domestic firms may be easily overcome by large firms from other countries d. Foreign-based, state-owned enterprises are not deterred by losses earned in overseas markets

c. Barriers to entry that would deter domestic firms may be easily overcome by large firms from other countries

The international firms competitive advantage depends on: a. resources and capabilities b. The national environments in which it operates c. Both a and b d. Neither a nor be

c. Both a and b

Internalization has: a. Increased global efficiency but reduces consumer choice b. 2) Increased global efficiency and growth options for lager and small firms c. Increase global efficiency and growth options, and widen consumer choice d. Increase global efficiency and growth options, but reduced consumer choice

c. Increase global efficiency and growth options, and widen consumer choice

Which aspect of internationalization by companies does not increase the intensity of competition within national markets? a. Internationalization increases the diversity of firms competing in each national market b. Internationalization increases the number of firms in each national market c. Internationalization stimulates mergers and acquisitions within an industry d. Internationalization increases investment in new capacity

c. Internationalization stimulates mergers and acquisitions within an industry

Several decades of empirical evidence indicates that the relationship between diversification and performance: a. Varies between countries b. Is mainly positive c. Is neither consistent nor systematic d. Is negative unless it is diversification between closely related industries

c. Is neither consistent nor systematic

Several decades of empirical evidence indicates that the relationship between diversification and performance: a. Still appears mixed b. Has been proved as fully positive c. Is not consistent, nor is it systematic d. Still does not make sense

c. Is not consistent, nor is it systematic

What are "strategic relatedness" (as distinct from "operational relatedness") in diversification refers to: a. The ability to use very different marketing strategies that fit with different countries b. The ability to sell similar products c. The ability to apply similar strategies, resource allocation procedures, and control systems across the businesses d. The ability to maximize the allocation of financial resources across the businesses

c. The ability to apply similar strategies, resource allocation procedures, and control systems across the businesses

According to Porter's "national diamond" analysis, the competitive advantage of Swiss firms in watches, German firms in luxury cars, and Japanese firms in cameras is a result of: a. The availability of highly skilled workers in each of these countries b. The lack of natural resources in each of these countries c. The characteristics of local demand in each of these countries d. High levels of domestic competition

c. The characteristics of local demand in each of these countries

When a company in industry A makes a diversifying acquisition of a company in industry B, Porter's better-off test is met when: a. The competitive advantage of the business B is increased b. The competitive advantage of business A is increased c. The competitive advantage of either or both businesses in increased d. There are shared resources and capabilities between the two businesses that offer economies of scope.

c. The competitive advantage of either or both businesses in increased

The costs of national differentiation can be low if: a. A firm does not differentiate its products very much b. The firm has a strong brand c. A "global customer" exists d. A common basic design and common components are used

d. A common basic design and common components are used

The internal labor market provides a large, diverse firm with the chance to make savings, by: a. Developing senior managers with wide experience b. Relying less on external recruitment consultants c. Having first-hand knowledge of a large pool of internal recruits for transfer between businesses d. All of the above

d. All of the above

The failure of empirical research to find unambiguous evidence that related diversification outperforms unrelated evidence points to: a. The fact that firm performance is the outcome of many factors of which diversification strategy is only one b. Reverse causation: it may be that poorly performing firms are more likely to take the risk of unrelated diversification c. Difficulties in determining whether diversification is related or unrelated d. All the above.

d. All the above.

Which of the following is not included in Ghemawat's AAA framework? a. Aggregation b. Adaptation c. Arbitrage d. Association

d. Association

Global industries are those where: a. International trade (imports and exports) are high in relation to industry sales b. Technology transfers are high c. Foreign direct investment is high d. Both trade and direct investment are high

d. Both trade and direct investment are high

When diversification combines two businesses in different industrial sectors, the key determinant of whether the diversification creates value is whether the diversification: 'a. Change the debt/equity ratio of the combined company b. Is between culturally-compatible businesses c. Causes management to lose its focus on its core business d. Enhances the competitive advantage of either or both of the two businesses.

d. Enhances the competitive advantage of either or both of the two businesses.

The creation of "shared service organizations" is an example of diversified firms creating value by: a. Transferring best practices between their businesses b. Economizing on transaction costs by providing business services internally rather than relying on third-party suppliers c. Reducing risk by ensuring that key business services are controlled by the corporate HQ d. Exploiting economies of scope in business services.

d. Exploiting economies of scope in business services.

Diversification whose sole impact is to reduce the variability of profits does not create value for shareholders because: a. Shareholders are interested in return more than in risk b. The most important risks (such as a global financial crisis or the collapse of the Euro) are systemic in nature, against which diversification offers little protection c. The risk which is relevant to stock market valuations is perceived risk--this bears little relationship to profit variability d. If investors can spread risk by diversifying their portfolios, diversification adds no additional value in terms of risk spreading.

d. If investors can spread risk by diversifying their portfolios, diversification adds no additional value in terms of risk spreading.

Diversification whose sole impact is to reduce the variability of profits does not create value for shareholders because: a. Shareholders are interested and return more than in risk b. The most important risk (such as global financial crisis or the collapse of the euro) are systematic in nature, against which diversification offers little protection. c. The risk which is relevant to stock market valuation is perceived risk--this bears little relationship to profit variability. d. If investors can spread risk by diversifying their portfolios, diversification adds no additional value in terms of spreading.

d. If investors can spread risk by diversifying their portfolios, diversification adds no additional value in terms of spreading

Which is a more efficient mechanism for allocating capital among different businesses: the internal capital allocation of diversified firms or the external capital market? a. The internal capital allocation process of diversified firms b. The external capital market c. It depends on the effectiveness of the specific firm's capital allocation process d. It depends on the effectiveness of the specific firm's capital allocation process and the efficiency of the capital market in the country where the firm is located.

d. It depends on the effectiveness of the specific firm's capital allocation process and the efficiency of the capital market in the country where the firm is located.

A start-up company based in Canada and led by an academic microbiologist has patented genetically-modified, drought-resistant maize particularly suitable to arid regions of Africa. The firm has been unable to attract significant venture capital investment. How should the firm exploit commercial opportunities for its product in Africa? a. It should form a joint venture with a multinational agricultural seed company b. It should establish seed production in Canada and set up sales offices in African countries c. It should establish seed production in Canada and appoint sales agents in different African countries d. It should license its patent to a multinational agricultural seed company and continue research on other projects for the genetic modification of agricultural crops

d. It should license its patent to a multinational agricultural seed company and continue research on other projects for the genetic modification of agricultural crops

Each other seem to comprise independent business with few relationships with one another: the Tata Group, the Virgin Group, and Berkshire Hathaway. However, which of these lack a strategic logic? a. Tata Group b. Virgin Group c. Berkshire Hathaway d. None of the above

d. None of the above

Many retailers that have been outstandingly successful in their how markets have experienced much poorer performance when they have entered overseas markets. These include: Tesco, Marks& Spencer, Laura Ashley, and Body Shop in the UK); Best Buy, Sears, Macy's, and Wal-Mart in the US. This reflects: a. The lack of major efficiency benefits from international scope in retailing. b. The lack of scale economies in retailing. c. Limited opportunities for exploiting learning benefits in retailing (e.g. by transferring best practices). d. The lack of major efficiency benefits from international scope combined with the need for national differentiation.

d. The lack of major efficiency benefits from international scope combined with the need for national differentiation.

Toyota operates automobile assembly plants in all five continents of the worlds. This reflects: a. The widespread availability of the resources needed for automobile production. b. The high costs of transporting automobiles between countries. c. The need to adapt products to the requirements of local markets. d. Toyota's ability to transfer its production capabilities worldwide.

d. Toyota's ability to transfer its production capabilities worldwide.

Firms internationalize through two mechanisms: a. Exports and imports. b. Trade in goods (visible trade) and trade in services (invisible trade). c. Direct and indirect investment. d. Trade and direct investment.

d. Trade and direct investment.

The growth in the scope of business enterprises for most of the 19th and 20th centuries can be attributed to a drop in administrative costs of firms relative to the transaction costs of market. This resulted from: A. Innovation in information and communications technology and in management B. Globalization C. The growing transaction costs of markets as a result of taxes, regulation, and litigationD. The monopolistic power of large firms to raise prices and push down wages

A. Innovation in information and communications technology and in management

The main lesson to be drawn from the delays to the launch of Boeing's 787 Dreamliner is that, when developing complex products that embody diverse new technologies: A. The principal firm must possess well-developed integration capabilities. B. A competitor such as Airbus Industries which began as an alliance among a number of separate companies will always have an advantage. C. It is best to do it in-house without heavy reliance on external suppliers. D. Extensive outsourcing is inevitable as no single company has sufficient technological capabilities in-house.

A. The principal firm must possess well-developed integration capabilities.

The opening quotation from Tom Peters states that as "yesterday's highly integrated giants" de-integrate, their vertical relationships are taking the form of: A. Long-term contracts B. All of the above C. Alliances and partnerships D. Market contracts

C. Alliances and partnerships

The opening quotation concerning Bath Fitter illustrates the following benefits of vertical integration: A. None of the aboveB. Economies of scale C. Avoiding the transactions costs involved monitoring and enforcing contracts with external suppliers. D. Technical economies from the physical integration of processes

C. Avoiding the transactions costs involved monitoring and enforcing contracts with external suppliers.

The main cause of downsizing, refocusing, and outsourcing during the latter part of the 20th century was: A. Developments in IT—especially the advent of the internet B. A greater turbulence in the environment C. Both (a) and (b) D. Neither (a) and (b)

C. Both (a) and (b)

The reason that most food processing farms I do not backward integrate into farming is that: A. Most food products are suppliers through competitive markets were transactions cost are low. B. Farming in food processing are strategically dissimilar business C. Both of these D. Neither of these

C. Both of these

When a winery opens a tasting room through which it sells its wine to visitors, this represents: A. Partial integration B. Backward integration C. Forward integration D. Diversification

C. Forward integration

Which of the following factors has not contributed to the trend towards outsourcing in recent decades? A. Increasing turbulence of the business environment B. Increasing emphases on the need for competitive advantage based upon superior capabilities C. Increasing emphasis of the need for speed D. The advent of the internet

C. Increasing emphasis of the need for speed

The capitalist economy comprises two forms of economic organization, the market mechanism operated by prices and the administrative mechanism of firms. A. The notion of the capitalist economy as governed by market processes is a myth. In reality the global capitalist economy is controlled by large corporations. B. The market mechanism is referred to as the "invisible hand" while the administrative mechanism of firms is referred to as the "visible hand". C. The market mechanism is referred to as the "visible hand" while the administrative mechanism of firms is referred to as the "invisible hand". D. The simultaneous operation of both "hands" means that the capitalist system is often referred to as an "ambidextrous organization".

C. The market mechanism is referred to as the "invisible hand" while the administrative mechanism of firms is referred to as the "visible hand".

Uber"s distribution of ice cream in over 38 counties of the world are on July 17, 2014, exemplifies the following feature of international business: A. The demand for ice cream is global B. US companies have mastered international expansion more effectively than those from any other country. C. The pace of transition from being a domestic to a global competitor is much faster in e-commerce, than introduction of business sector D. Once a company has built a network, that network can be used to distribute a wider range of offerings.

C. The pace of transition from being a domestic to a global competitor is much faster in e-commerce, than introduction of business sector

Which of the following factors is not an explanation for the lack of vertical integration between steel products in shipbuilders? A. The market for steel has many suppliers and buyers, good information flows, and little need for transaction specific investments. B. Still is a commodity product available in standardize grades. C. The world's biggest ship building countries (South Korea, Japan, and China) are also among the leading still producing countries. D. Steel production and shipbuilding are strategically very different industries.

C. The world's biggest ship building countries (South Korea, Japan, and China) are also among the leading still producing countries.

Vendor partnerships based on relational contacts—such as the relationships between Toyota and its major component suppliers—are more successful than either pure market contracts or vertical integration because: A. They offer similar benefits of high-powered incentives and flexibility that market contracts. B. They give the buyer immense bargaining power over its suppliers. C. They combine the coordination benefits of vertical integration with the incentive and flexibility benefits of market contracts. D. They offer similar coordination benefits as vertical integration.

C. They combine the coordination benefits of vertical integration with the incentive and flexibility benefits of market contracts.