Bus189 Ch7 FINAL

Coral Corp. is a company that initially used to manufacture handbags. It has now set up a store in which it sells its own products rather than supplying them to different stores. This initiation by Coral Corp. best illustrates _____. A. forward integration B. backward integration C. horizontal diversification D. market penetration

A

Green Solutions Corp. is a washing machine manufacturing company. When it initially started out, it had held contracts with a supplier who provided the company with finished washing machine parts. However, Green Solutions later started manufacturing the parts by itself and assembling its products within the company without having to seek supplier intervention. This scenario best exemplifies _____. A. vertical integration B. market penetration C. task specialization D. horizontal diversification

A

In the context of the primary reasons for vertical integration in companies, which of the following statements is true of coordination? A. The greater the interdependence between activities, the more a company should vertically integrate. B. Activities that require high levels of coordination are known to be modular in nature. C. The greater the interdependence between activities, the more a company should rely on outsourcing. D. Activities that require low levels of coordination are known to be reciprocal in nature.

A

White Flower Corp. and DLG Inc. are competitors in the crockery industry. Claude, the head of operations at White Flower, says that the company is able to undertake its in-house business processes and activities much better than DLG. This, Claude says, helps White Flower produce better quality products that DLG. In the context of vertical integration, Claude's statements refer to the concept of _____. A. coordination B. networking C. priorities D. control

A

Apex Electronics LLC requires many teams to work together intensively and in tandem with each other in order to effectively produce its products. A high level of coordination between the working teams is essential for the company to maintain the high quality of its products. This type of interdependence can be best termed as _____. A. sequential interdependence B. reciprocal interdependence C. limited interdependence D. modular interdependence

B

BHG Corp. is a glass manufacturing company that specializes in float glasses. The company manufactures float glass through various stages of melting and refining, coating, and annealing. It is then inspected and cut according to customer requirements. This manufacturing process performed by BHG Corp. is termed as _____. A. virtuous circle B. value chain C. task specialization D. supply chain

B

Browns Inc., a well-established suitcase brand, started manufacturing its own suitcases. It added new features in its suitcases such as water-resistance and extra storage space. The initiation by Browns Inc. to manufacture its own suitcases best illustrates _____. A. Linked diversification B. Backward integration C. Forward integration D. Assisted development

B

Cygnus Bank is a banking and financial services company. It offered a large sum of money and a chance to receive employment to the programmers who could create a software that would help enhance employee productivity. Which of the following types of crowdsourcing did Cygnus Bank use? A. Crowdvoting B. Crowdinnovation C. Crowdtasking D. Crowdcreating

B

Hydrus Corp. contracted most of its business processes to various other companies. This helped the company generate immediate profits, but Hydrus was losing competitive advantage over its rivals in the long run due to its lack of innovation. Which of the following is a danger of outsourcing that Hydrus Corp. experienced? A. Lack of control B. Loss of capabilities C. Lack of focus D. Loss of technology

B

In this context of the three Cs of vertical integration, which of the following scenarios accurately depicts capabilities? A. BagMore Inc., a handbag company, decides to engage in backward integration and manufacture all of its products and accessories in the company house. B. GoSpeed Corp., an automobile manufacturing company, evaluates itself by asking if it can perform the vertically integrated activity better than its rivals. C. StyleRight LLC, an apparel company, manufactures eco-friendly, organic, and sustainable clothes. D. HDC Inc., an electronics company, decides to effectively regulate its new technologies.

B

The country of Lydania has a complex network of pipelines that transports natural gas for millions of people. These pipelines are specifically designed for the transportation of natural gas and have limited uses outside the natural gas industry because of inherent industry regulations. These pipelines exemplify a(n) _____. A. sunk cost B. transaction-specific asset C. intangible asset D. greenfield entry

B

Vertical integration can be best defined as: A. breaking a large process into smaller tasks that require specialized knowledge. B. bringing business processes or activities previously conducted by outside companies in-house. C. a graphic representation of the relationship between cost per unit of a product and its scale of production. D. the sequence of all activities that are performed by a firm to turn raw materials into a finished product.

B

Which of the following best illustrates a vertically integrated company with control? A. Runners Corp., a shoe manufacturing company, which has a say in how much of its assets are divided among the company's shareholders B. Blueberry Inc., a confectionery company, which has a stronghold over an important resource of the company that helps in differentiating its final product C. Trendsetters LLC, an apparel manufacturing company, which has a stronghold over the number of employees that the company can afford to recruit, train, and retain D. Coders Corp., a software development company, which successfully deflects any possibilities of hostile takeovers

B

Which of the following companies is most likely to experience the benefits of outsourcing? A. Pulsar Corp., a shoe manufacturer, which has invested huge an amount of capital in order to afford its suppliers B. Black Inc., a consumer electronics company, which has been importing its supplies from other companies and focuses only on the critical aspects of its work C. Carbon LLC, an automobile manufacturer, which has the capability to produce more of its raw materials in house D. Beta Corp., a computer manufacturer, which has been trying hard to adapt new technologies in order to gain competitive edge in the industry

B

Which of the following scenarios best illustrates the concept of vertical integration? A. NZB Corp., a company that sells all its assets to another company B. Hues Inc., a company that owns its supply chain for its raw materials and processes C. Scorpio LLC, a company that buys raw materials from a supplier company D. Blue Corp., a company that makes raw materials and supplies them to a different company

B

3. Which of the following scenarios illustrates the concept of outsourcing? A. TechOn Inc., a company that buys raw materials from a supplier company B. BNX Corp., a company that procures raw materials and supplies them to a different company C. Virgo Corp., a company that contracts out a business activity to another company D. Red Inc., a company that sells all its assets to another company

C

A supplier that is contracted to create and provide a customized input to a local firm is called a(n) _____. A. acquirer B. coordinator C. subcontractor D. advocate

C

Activities closer to the beginning of the industry value chain are referred to as _____. A. middle activities B. forward activities C. upstream activities D. downstream activities

C

DHC Inc. is a television manufacturing company. The components of the televisions are manufactured separately by different companies around the globe. Later, these components are tested and then assembled to get the finished products in house by DHC Inc. In the context of the degree of coordination, this scenario best illustrates _____. A. sequential interdependence B. reciprocal interdependence C. modular interdependence D. extensive interdependence

C

Pulse Corp., a vertically integrated company, is finding it difficult to adapt to current technology that is capable of speeding up its manufacturing process. The company is used to performing work in a specific manner using the old technology. However, in order to maintain competitive advantage, it has to upgrade itself to the current technology. This scenario is an example of _____ that is one of the disadvantages of vertical integration. A. loss of frequency B. loss of focus C. loss of flexibility D. loss of facility

C

Saturn LLC., a computer manufacturer, uses outdated technology to build specialized graphic cards for its computers. The company finds it difficult to upgrade its graphic card building technology to a newer version. However, Sun Products Inc., one of its competitors, upgrades itself to the new version with lesser difficulty. In this scenario, Saturn LLC is facing a _____. A. loss of frequency B. loss of focus C. loss of flexibility D. loss of facility

C

The chief executive officer (CEO) of Ecos Inc., a well-established firm in the real estate industry states that the firm has the resources to outperform its competitors. In the context of reasons for vertical integration, the CEO is referring to the firm's _____. A. control B. priorities C. capabilities D. coordination

C

Which of the following examples correctly depicts a company that uses a transaction-specific asset? A. Indigo Inc., a company that manufactures faucets B. Eclipse Corp., a company that manufactures pens and sells them through distributors C. BLC Corp., a company that uses heavily customized software to manufacture airplane seats D. Vertigo LLC, a company that sources raw material from suppliers to manufacture dinnerware

C

Which of the following scenarios supports the view that a company should engage in outsourcing? A. Zenith Corp., a publishing house, which needed a high capital investment to grow because it contracted most of its peripheral activities to other companies B. FRC Inc., an apparel company, which fears the loss of a strong hold over its prime activities if it does not perform them in house C. AutoLuxe LLC, an automobile company, which has the flexibility to contract processes to another company at a fast rate D. Innovator Inc., a software company, which foresees that its employees will have less work and more time under their disposal for leisure activities if it lets other suppliers help perform its activities

C

Which of the following is a primary characteristic of a transaction-specific asset? A. It has the ability to generate value only when used for several purposes together. B. It is an intangible asset whose value is very hard to evaluate. C. It is an asset that can be transported or transferred with ease. D. It can generate maximum value only when used for a particular purpose.

D

Which of the following statements is a characteristic of subcontractors? A. They are responsible for bringing in key functions to regulate a company. B. They have to assign and coordinate various projects of a company. C. They have 10 percent share in the profits accrued by a company. D. They create made-to-order contributions for a company.

D

Yellow Express LLC is a company in the computer hardware industry that solely manufactures microchips. Yellow Express LLC is _____. A. diagonally integrated B. vertically integrated C. horizontally diversified D. vertically specialized

D

A production house called Script Creations Inc. initiated a strategy for making its next movie. It invited a mass of people to create short documentaries on a social theme. As per the terms and conditions, Script Creations would select top three short stories to create an overall complete movie. This initiation by Script Creations Inc. is an example of _____. A. crowdsourcing B. insourcing C. offshoring D. benchmarking

A

Nate, the managing director of Juniper Inc., believes that instead of making auto parts on its own, it should rather outsource these tasks to other companies so that the company can focus only on the critical aspects of the final product. His colleague, Salma, believes that the company would have more competitive advantage if it made its own auto parts. Which of the following statements strengthens Nate's belief? A. Outsourcing will minimize the capital investment Juniper Inc. requires to grow. B. Outsourcing will lessen the pressure of crowdsourcing so that lesser and more stable options are sought. C. Outsourcing will help minimize Juniper Inc.'s need to innovate its assets or activities. D. Outsourcing will minimize suppliers' bargaining power as Juniper Inc. chooses its suppliers.

A

Sport Soles Inc., a sports footwear manufacturing company, makes athletic shoes with rubber soles. In order to maximize its value and profit, Sport Soles sets up its operations right next to rubber tree fields. This way, the company gets easy access to its main raw material. In the context of vertical integration, this scenario illustrates that Sport Soles Inc. is exercising _____. A. control B. coordination C. extensive focus D. modular interdependence

A

The process where a firm contracts out a business process or activity to an external supplier is known as _____. A. outsourcing B. vertical integration C. horizontal diversification D. market penetration

A

A car has to go through several different levels of manufacturing processes before it can be painted. The painting process cannot be initiated until a car is externally assembled and then inspected. This type of interdependence can be best termed as _____. A. extensive interdependence B. modular interdependence C. reciprocal interdependence D. sequential interdependence

D

Adia, the chief executive officer (CEO) of Touch Works Corp., believes that outsourcing would be a disadvantage to her company. She states that she would not be able to control the finances and assets of her company if work gets outsourced. Which of the following statements strengthens Adia's belief? A. Outsourcing would maximize the capital investment that Touch Works Corp. would require to grow. B. Outsourcing would prevent Touch Works Corp. from contracting out activities to industry specialists. C. Touch Works Corp. would be forced to focus on a wide range of activities. D. Touch Works Corp. would lose the ability to innovate and create competitive advantage.

D

Having more flexibility, or being less vertically integrated, is more valuable when: A. a firm can create its own raw materials. B. technology used is outdated. C. the cost to perform an activity remains the same. D. new technologies are innovated.

D

In the context of the primary reasons for vertical integration in companies, what do capabilities refer to? A. Whether a company has the finances to handle and overcome organizational criticism B. Whether a company knows when it should establish and exercise strict rules and regulations C. Whether a company can economize on scarce inputs in order to reduce transaction costs D. Whether a company has the right resources to perform an activity better than other firms

D

Lupus LLC is a company that sells personalized gift items. It reduces the cost of employing professional artists, designers, photographers, salespeople, and retailers by letting its members and other people submit their ideas for designs, quotes, and phrases on its e-commerce website. Which of the following types of crowdsourcing does Lupus LLC use? A. Crowdvoting B. Crowdinnovation C. Crowdtasking D. Crowdcreating

D

North Road LLC, an apparel company, found that its fashion supplies and accessories section was not generating much profit. Thus, the company contracted this section of its business to another company that designs and manufactures these products in a better way. The management of North Road realized that the employees of North Road could use the time to focus on other aspects that bring profit to the company. This scenario best illustrates _____. A. market penetration B. vertical integration C. horizontal diversification D. outsourcing

D

Teal Motors Inc., an automobile company, outsources the manufacturing of most of the automobile parts to several other companies that specialize in making parts such as ignition boxes, coil wires, and grills. Teal Motors makes sure to get these parts manufactured at a much lesser rate than it would if it manufactures its own parts. In this scenario, Teal Motors Inc. is effectively avoiding a _____. A. loss of identity B. loss of frequency C. loss of facility D. loss of focus

D

The sequence of all activities that are performed by a firm to turn raw materials into a finished product that is sold to a buyer best describes the term _____. A. product line B. task specialization C. virtuous circle D. value chain

D