Chapter 8: Corporate Strategy Terms and Questions

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

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

some

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

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

What are the four quadrants of the core competence-market matrix?

the principal-agent problem

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

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.

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.

Equity alliances

____________ are partnerships in which at least one partner takes partial ownership in the other partner.

related

a firm follows a(n) _____________ 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.

What is licensing?

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

Franchising

Kanye loves Benicio's Burritos and wants to open a branch in his hometown. Benicio's Burritos grants Kanye the right to use its trademark and name, and Kanye agrees to follow Benicio's Burritos guidelines. This is an example of ___________.

a joint venture

Kava Botanicals, a boutique retailer that sells high-end makeup and accessories, is owned by two makeup manufactures. Kava Botanicals is an example of which type of strategic alliance?

-Licensing -franchising

Long-term contracts include which of the following forms?

diversification discount

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%.

-relative market share -speed of market growth

The Boston Consulting Group growth-share matrix locates a firm's individual SBUs in which of the following dimensions?

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

The forms of specialized assets include which of the following?

superior goods to be replaced by inferior ones

The lemons problems suggests that information asymmetries can cause __________.

-strategic outsourcing -taper integration

The two alternatives to vertical integration are which of the following?

related or unrelated

To figure out if a firm's type of diversification is ______, one can ask questions about the degree to which the corporation's business units share core competencies.

False

True or False: The industry value chain is also called the horizontal value chain.

transaction-specific

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

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

What are the main types of corporate diversification?

-the type of diversification -the geographic scope -the degree of vertical integration

What are the three dimensions along which executives formulate corporate strategy?

-equity alliances -joint ventures

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

-economies of scope -core competencies -transaction costs -economics of scale

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

short-term contracts

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?

-single business -unrelated diversification

Which types of diversification tend to have the lowest performances?

Transaction

_______ costs are all of the costs associated with an economic exchange.

-backward -forward

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