MGT 491 SB Ch. 8

______ are unique assets with high opportunity cost. Horizontally integrated assets Diversified strategies Equity alliances Specialized assets

Specialized assets

______ costs are all of the costs associated with an economic exchange. Competency Transaction Opportunity Horizontal

Transaction

Firms that pursue an unrelated diversification strategy and are unable to create additional value tend to experience which of the following? vertical market failure the principal-agent problem a diversification discount a diversification premium

a diversification discount

A(n) ______ 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. integration discount diversification discount diversification premium industry value chain

diversification discount

Companies that transact in the open market incur ______. external transaction costs internal transaction costs staffing costs dividends

external transaction costs

In order for a firm to lower costs, it must ______. increase risks grow lower profits lower its expectations

grow

Long-term contracts (such as licensing and franchising), equity alliances, and joint ventures are examples of which of the following? strategic alliances taper integration transaction cost economics offshoring

strategic alliances

The degree of vertical integration corresponds to ______. the number of parent-subsidiary relationships a firm is involved in the number of industry value chain stages in which a firm directly participates the firm's level of integration among the alternative industry types the firm's level of integration with the host country's infrastructure

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

Which of the following is a reason why a firm needs to grow? to reduce risk to increase risk and thus become competitive to increase costs to balance market power

to reduce risk

______ refers to an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes. Strategic outsourcing Taper integration Vertical integration Diversification

Diversification

Which of the following is an example of the principal-agent problem even when the principal's goal is to create shareholder value? a manager receiving generous stock options a manager flying first class on all business trips a manager controlling and limiting business expenses a manager making decisions based on what is best for the company

a manager flying first class on all business trips

Which of the following are types of vertical integration along the industry value chain? (Check all that apply.) backward forward scheduled simultaneous

backward forward

When a business answers the question of where to compete, it is determining ___. a marketing plan business strategy differentiation corporate strategy

corporate strategy

If a company moves ownership of activities closer to the end customer, such as providing after-sales support, it is engaging in ______ vertical integration. full backward scaled forward

forward

Corporate strategy needs to be dynamic over time in order to ______. (Check all that apply.) keep and maintain a competitive advantage avoid paying for coordination and influence costs respond to the ever-changing external environment diversify to capture growth opportunities

keep and maintain a competitive advantage respond to the ever-changing external environment diversify to capture growth opportunities

What are the four quadrants of the core competence-market matrix? (Check all that apply.) new competencies with existing markets existing competencies with simultaneous markets existing competencies with existing markets existing competencies with new markets new competencies with new markets new competencies with related markets

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

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? joint ventures parent-subsidiary relationships short-term contracts franchising

short-term contracts

Which of the following have significantly more value in their intended use than in their next-best use? diversified strategies joint ventures specialized assets backward investments

specialized assets

The two alternatives to vertical integration are which of the following? (Select all that apply.) nominal innovation strategic outsourcing horizontal integration specialized disintegration taper integration

strategic outsourcing taper integration

Why do some firms choose alternatives to vertical integration? to avoid the risks associated with vertical integration to avoid strict financial regulations to control every stage in the industry value chain to avoid the risks associated with diversification

to avoid the risks associated with vertical integration

Which of the following is the term for the costs associated with an economic exchange? economies of scale economies of scope PESTEL costs core competencies diseconomies costs transaction costs

transaction costs

Which of the following are the four underlying strategic management concepts that determine the scope of a firm? transaction costs situational framework economies of scale cost-leadership positioning core competencies economies of scope

transaction costs economies of scale core competencies economies of scope

What happens when the markets along the industry value chain are too risky and alternatives too costly in time or money? unrelated diversification failure horizontal market failure vertical market failure related diversification failure

vertical market failure

__ 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. Transformational Transactional Corporate Administrative

Corporate

A conglomerate fits which type of corporate diversification model? dominant business related diversification unrelated diversification single business

unrelated diversification

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 "buy" choice reflects full integration. "Make" and "buy" are the only two choices in the continuum. Short-term contracts are the most costly option in the continuum.

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

What are the three dimensions along which executives formulate corporate strategy? The size of the top management team The geographic scope The degree of vertical integration The type of diversification

The geographic scope The degree of vertical integration The type of diversification

Zipster is a local manufacturer of athletic shoes. Zipster has decided it wants to expand to global markets and to offer a larger selection of items. It plans to offer not just athletic shoes but also luggage and car accessories. Zipster is engaging in ______. fully vertical integration diversification equity alliances backward integration

diversification

In the ______ quadrant of the core competence--market matrix, the focus is on leveraging current core competencies to improve current market position. new competence--existing market new competence--new market existing competence--existing market existing competence--new market

existing competence--existing market

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. single or dominant related or unrelated single or related dominant or unrelated

related or unrelated

When engaging in __________ _________ _____________ , a firm sends out to potential companies, which initiate competitive bidding for contracts to be awarded with a short duration.

requests for proposal

One way to overcome the principal-agent problem is to ______. offer managers communities of knowledge establish coordination and flexibility specify information symmetries make managers owners through stock options

make managers owners through stock options

True or false: It can be riskier to own parts of the supply chain than to rely on external supply chains. True False

True

Transaction costs include ______ costs associated with an economic exchange. the internal and external only the internal the legal only the external

the internal and external