Chapter 8 - 4394

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

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

a diversification discount

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

1 year or more

Long term contracts typically last

high opportunity cost

Specialized assets have

share & growth

The BCG growth-share matrix requires manager to view their SBUs in terms of relative market ____ and speed of market _____

industry value chain

The _____ depicts the transformation of raw materials into finished goods and services along distinct vertical stages, each of which represents a distinct industry in which a number of different firms are competing

superior goods to be replaced by inferior ones

The lemons problem suggests that information asymmetries can cause

executives

The people responsible for forming corporate-level strategy are the

taper integration & strategic outsourcing

Two alternatives to vertical integration are

transaction-specific

Unlike short-term contracts, long-term contracts encourage firms to make _____ investments

the principal-agent problem

What is a major disadvantage of organizing economic activity within firms

a long-term contract that enables firms to commercialize intellectual property

What is licensing?

backward

When a manufacturer of computers starts to product its own computer components, the manufacturer engages in _______ vertical integration

information asymmetry

____ is a situation in which one party has more knowledge than another due to the possession of private knowledge

strategic outsourcing

____ refers to moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain

Corporate

____ 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

specialized assets

_____ are unique assets with high opportunity cost

Transaction

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

transaction cost economies

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

equity alliances

______ are partnerships in which at least on partner takes partial ownership in the other partner

physical-asset specifcity

_____ refers to the assets whose physical and engineering properties are designed to satisfy a particular customer

diversification

______ refers to an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes

offshoring

_____ refers to the act of outsourcing some of the firms activities outside of the home country to another nation

Coordination

_______ costs refer to the costs that arise from managing the linked business in a related or related-linked diversification scenario

related

A firm follows ______ diversification strategy when it derives less than 70% of its revenues from a single business activity and obtains revenues from other lines of business that are linked to the primary business activity

geographic

A firm that is active in several different countries is pursing a ____ diversification strategy

partial

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

strategic alliance

A _______ is a voluntary arrangement between firms that involves sharing of resources and capabilities with the intent of developing processes, products, or services.

joint venture

A _____ is a standalone organization created and jointly owned by 2 or more parent companies

diversification discount

A _______ is a situation in which the stock price of a highly diversified firm is valued as less than the sum of their individual business units