MGMT 4860 ch. 8
high powered incentives and lower administration costs
2 advantages of organizing economic activity OUTSIDE of a firm
taper integration and strategic outsourcing
2 alternatives of vertical integration
1. to facilitate transaction-specific investments 2. to get insider info about the partners business 3. to make a credible commitment
3 reasons why a firm would want to enter into an equity alliance instead of a short or long term contract
Boston Consulting (BCG) growth-share matrix
a corporate planning tool in which the corporation is viewed as a portfolio of business units
licensing
a form of long-term contracting that enables firms to commercialize intellectual property
joint ventures and equity alliances
alternatives in the make-or-buy continuum
transaction-specific investments
an advantage of a firm in organizing economic activity
transaction costs
costs associated with an economic exchange
industry value chain
depicts the transformation of raw materials into finished goods and services along distinct vertical stages.
core competencies
describes the strengths that allow a firm to distinguish itself from the competition
equity alliances
partnerships in which at least one partner takes partial ownership in the other partner
sales, after sales service and support, and marketing
stages four and five of the industry value chain
unrelated
the Tata group has SBU's operating in a variety of industries, from automobiles to hospitality. The Tata Group is an example of which type of diversification?
1. core competencies 2. transaction costs 3. economies of scope 4. economies of scale
the four underlying strategic management concepts that determine the scope of a firm
a focused differentiation strategy
the luxury car division of tata group, with the purchase of jaguar and land rover, is pursuing which of the following strategies on the business level?
transaction cost economies
theoretical framework that helps explain and predict the boundaries of the firm
licensing and franchising
two types of long-term contracts
specialized assets
unique assets that have significantly more value in their intended use in next-base use
parent-subsidiary relationship
what kind of relationship is the most integrated alternative to vertical integration?
equity alliance
what type of arrangement did Coke form with Monster in 2014?
1. dominant business 2. related diversification 3. unrelated diversification 4. single business
4 main types of business diversification
vertically integrate
when a firm is more efficient in organizing economic activity than markets, should they integrate vertically or horizontally?
to avoid the risks associated with vertical integration
why do some firms choose alternatives to vertical integration?