Chapter 5 strategic management smartbook
Which of the following describes economies of scope? a. the savings from producing two or more outputs at less cost than producing each output individually b. costs associated with economic exchange c. the unique strengths embedded deep within a firm d. the average cost per unit decreasing as output increases
the savings from producing two or more outputs at less cost than producing each output individually
Which of the following is NOT a dimension along which corporate strategy is assessed? a. the range of products and services the business offers b. the size of the company in comparison to its main competitors c. the stages of the industry value chain in which the business participates d. where (geographically) to compete
the size of the company in comparison to its main competitors
Which of the following is a reason why a firm needs to grow? a. to increase costs b. to reduce risk c. to balance market power d. to increase risk and thus become competitive
to reduce risk
____ costs are all of the costs associated with an economic exchange.
transaction
_____ is a theoretical framework that helps explain and predict the boundaries of the firm.
transaction cost economics
What is an advantage of a firm in organizing economic activity?
transaction-specific investments
Google's choice to hire programmers in-house suggests that they decided that the _________ costs associated with this strategy are _________ than the costs associated with contracting in the open market.
transaction; lower
When a firm is more efficient in organizing economic activity than markets are, the firm should ______.
vertically integrate
Which of the following is a fundamental corporate-level strategic decision? a. What products and services should the firm offer? b. How will the firm recruit and select employees? c. Where should the firm get supplies from? d. What distribution network should the firm use?
What products and services should the firm offer?
Transaction cost economics help managers do which of the following?
choose which activities to carry out within the firm
Which of the following terms describes the strengths that allow a firm to distinguish itself from the competition? a. core competencies b. PESTEL strengths c. economies of scope d. porters five forces e. transaction costs f. economies of scale
core competencies
"Which national markets should the firm compete in?" is an example of a ______ -level strategic question. a. regional b. local c. national d. corporate
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
corporate
Amazon's explosive success is largely due to which of the following? (Check all that apply.) a. diversification b. information asymmetry c. vertical integration d. single business focus
diversification vertical integration
Firms are motivated to grow so that they achieve ________ of _________ , which is when their average costs decrease as their output increases.
economies of scale
One reason why firms pursue growth is to lower their costs, which they achieve through ______, which drives down average costs as output increases.
economies of scale
The persons responsible for forming corporate-level strategy are the _______
executives
In order for a firm to lower costs, it must ______.
grow
Amazon's continued focus on ______ is a key to its ongoing success.
innovation
One way to overcome the principal-agent problem is to
make managers owners through stock options
What are the three dimensions along which executives formulate corporate strategy?
the degree of vertical integration the geographic scope the type of diversification
Transaction costs include ______ costs associated with an economic exchange.
the internal and external
firms need to grow for several reasons:
- to increase profitability - to lower costs - to increase market power - to reduce risk - to motivate management and employees
