Business Strategy Chapter 8

Which of the following are types of strategic alliances?

-equity alliances -long-term contracts -joint ventures

The four quadrants of the core cometence market matric are which of the following?

-existing competencies with existing markets -existing competencies with new markets -new competencies wiht new markets -new competencies with existing markets

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

-forward -backwards

Taper integration allows firms to ____________

-gain knowledge from external sources -be more flexible when responding to market changes such as fluctuations in demand

Long term contracts include which of the following forms?

-licensing -franchising

Stages four and five of the industry value chain involve __________

-marketing -after sales service and support -sales

What are the risks of vertical integration?

-reduced quality -reduced flexibility -increased costs

what are the main types of corporate diversification?

-related diversification -single business -dominant business -unrelated diversification

The Boston consulting group growth share matrix locates a firms individual SBU's in which of the following dimensions?

-relative market share -speed of market growth

Which types of diversification tend to have the lowest performances?

-single business -unrelated diversification

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

-transation costs -economies of scale -core competencies -economies of scope

The luxury car division of Tata Group, with the purchase of Jaguar and Land Rover, is pursuing which of the following on the business level?

A focused differentiation strategy.

What is licensing?

A long term contract that enables firms to commercialize intellectual property.

The presons responsible for forming corporate-level strategy are the ___________

Executives

What level of diversification leads to the highest levels of performance?

Moderate

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

Which of the following is not one of the three dimensions along which executives formulate corporate strategy?

The size of the top management team

__________ is a theoretical framework that helps explain and predict the boundaries of the firm.

Transaction cost economics

True or False: A major reason why a firm may choose a related diversification strategy is to take advantage of both economies of scale and of scope.

True

Firms that pursue an unrelated diversification strategy and are unable to create additional value tend to experience which of the following?

a diversification discount

Olivia's, an olive oil company, grows and harvest olives, makes olive oil, and distributes its olive oil to its retail shop. Olivia's is an example of __________.

a fully vertically integrated company

A non diversified company focuses on which fo the following ____________

a single market

In a fully vertically integrated organization, ___________

all stages of the industry value chain are conducted within the firm

What type of arrangements did Coca Cola form with Monster in 2014?

an equity alliance

Transactional cost economics help managers do which of the following?

choose which activities to carry out within the firm

In order to assess whether __________ is working, managers can ask if the individual businesses are worth more under the firms management or if they are worth more under individual management.

diversification

A ____________ 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

In the Boston Consulting Group matrix, _______ hold the small market share in a low growth market.

dogs

Specialized assets have _________.

high opportunity cost

Which of the following is an option for formulating strategy via core competencies?

leverage existing core competencies to improve current market position

Wheels on the go! is a company that manufactures tires for semi trucks. The company is entirely owned by North Amercan Haulers, a large company in the semitruck industry. The two companies have formed a ____________.

parent-subsidiary relationship

In the taper integration system, a firm has _________ reliance on outside markets.

partial

The first stage of the industry value chain is typically which of the following?

raw materials

Which type of diversification is most likely to lead to superior performance?

related diversification

The most integrated alternative to vertical integration is _________

the parent-subsidiary relationship

Why do some firms choose alternatives to veritcal intergration?

to avoid the risks associated with vertical intergration

Advantages of vertical integration include which of the following?

-reducing costs -facilitating scheduling -better quality

Which of the following are characteristic of a joint venture?

-it is a long-term commitment by two or more partners -It facilitates transaction-specific investments

Which of the following is not a dimension along which corporate strategy is assessed?

the size of the company in comparison to its main competitors

what is a related linked diversification strategy?

one in which executives pursue various businesses opportunities that share only a limited number of linkages.

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

specialized assests

A state university hires an outside firm to develop and maintain their human resource system. This is called ___________

strategic outsourcing

The lemons problem suggest that information asymmetries can cause ___________

superior goods to be replaced by inferior ones

Unlike short term contracts, long-term contracts, long term constracts encourage firms to make ___________ investments.

transaction-specefic

_________ costs are all of the costs associated with an economic exchange

transactional

Which of the following behaviors is characterized by self-interest with guille?

opportunism

The forms of specialized assets inclue which of the following?

-site specificity -human-asset specificity -physical-asset specificity

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

Vertical intergration

A benefit of ___________ is that in house suppliers and distributors are subjected to market competition, which allows the firm to assess performance in comparison to others.

taper integration

The Tata group has SBUs in a variety of industries, from automobiles to hospitality. The Tata group is an example of which type of diversification?

unrelated

A conglomerate fits which type of corporate diversification model?

unrelated diversification

Advantages of organizing economic activity at the market level include which of the following?

-increased flexibility -high powered incentives

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

-equity alliance -joint ventures

___________ refers to moving one or more internal value chain activities outside the firsm boundaries to other firms in the industry value chain

Strategic outsourching

Which of the following are the types of general diversification statagies?

-geographic -product market -product

Which of the following are advantages of organizing economic activity OUTSIDE of a firm?

-high powered incentives -lower administrative costs

In general, related diversification leads to high levels of performance because ___________.

it accesses numerous areas of value creation, such as economies of scale and scope.

What are the costs associated with related-diversification strategies?

-coordination costs -influence costs

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

-diversification -vertical intergration

The two alternatives to veritcal intergration are whihc of the following

-taper intergration -strategic outsourcing

Which of the following are among the reasons firms need to grow?

-to increase profits -to motivate management

Why might a firm want to enter into an equity alliance instead of a short or long term contract?

-to make a credible commitment -to get insider information about the parners business -to facilitate transaction-specific investments

Googles choice to hire programmers in-house suggests that the _________ costs associated with this strategy are __________ than the costs associated with contracting in the open market

-transaction -lower

To get the benefits of vertical intergration without the accompanying risks, companies can _____________

-user taper intergration -choose strategic outsourcing

The __________ is a corporate planning tool in which the corporation is viewed as a portfolio of busines units

Boston Consulting Group (BSG) growth share matrix

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

Each stage of the vertical value chain represents a distinct ___________ in which a number of different firms are competing.

Industry

According to the Boston Consulting Group matrix, cash cows are SBUs that do which of the following?

compete in a low growth market but have high market share

Why did Coca Cola enter into a strategic alliance with Monster?

so that it could gain private information to determine whether an acquisition might be beneficial

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

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

The degree of vertical integration

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

What is a major disadvantage of ogranizing economic activity within firms?

the principle-agent problem

A disadvantage of a short-term contract as an alternative on the make or buy continuum is that _________

the supplying firm has little reason to perform transaction-specific investments

What is the purpose of the core competence market matrix?

to provide guidance regarding how to diversify in order to grow the company