Question 1

What are the strategic recommendations for strategic business units categorized under question marks in the Boston Consulting Group (BCG)growth-share matrix?

Accepted Answer

Ideally, corporate executives want to in...

Question 2

Discuss the benefits of taper integration.

Accepted Answer

Taper integration has several benefits:
...

Question 3

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

Accepted Answer

A)   Cost drivers
B)   Value drivers
C)   Specialized assets
D)   Liquid assetsE) A) and B)
F) A) and C)

Question 4

When approaching a bank for a loan, the borrower has better knowledge than the lender about his or her own ability to repay the loan without defaulting.What is this situation referred to as?

Accepted Answer

A)   Principal-agent problem
B)   Information asymmetry
C)   Experience-curve effect
D)   Learning-curve effectE) None of the above
F) B) and D)

Question 5

A primary advantage of organizing economic activity within firms is the:

Accepted Answer

A)   ability to coordinate highly complex tasks to allow for specialized division of labor.
B)   low administrative costs because of reduced bureaucracy.
C)   eradication of the principal-agent problem.
D)   high-powered incentive to work as salaried employees for an existing firm.E) None of the above
F) A) and B)

Question 6

Briefly discuss the two types of long-term contracts.

Accepted Answer

Licensing is a form of long-term contrac...

Question 7

What are the two types of additional costs associated with a related-diversification strategy?

Accepted Answer

A related-diversification strategy entai...

Question 8

In the Boston Consulting Group (BCG) growth-share matrix, strategic business units categorized under dogs:

Accepted Answer

A)   compete in a low-growth market but hold considerable market share.
B)   hold a high market share in a fast-growing market.
C)   compete in a high-growth market but have low and unstable earnings.
D)   hold a small market share in a low-growth market.E) B) and C)
F) A) and B) D

Question 9

_____ are strategic business units that compete in a low-growth market but hold considerable market share.

Accepted Answer

A)   Dogs
B)   Question marks
C)   Cash cows
D)   StarsE) A) and B)
F) A) and C)

Question 10

What do you mean by a lemons problem? Discuss using the market for used cars as an example.

Accepted Answer

Students' values in the example may vary...

Question 11

Which of the following firms is most prone to experiencing a diversification discount?

Accepted Answer

A)   A company that deals in petroleum as well as natural gas
B)   A company that derives its revenues from selling aerated drinks and health drinks
C)   A company that pursues unrelated diversification
D)   A company that pursues related-constrained diversificationE) B) and D)
F) All of the above

Question 12

How is transaction cost economics useful in strategic management?

Accepted Answer

A theoretical framework in strategic man...

Question 13

Discuss the various general diversification strategies available to a firm.

Accepted Answer

There are various general diversificatio...

Question 14

What must executives decide when formulating a corporate strategy?

Accepted Answer

Executives must decide:
1.In what stages...

Question 15

_____ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes.

Accepted Answer

A)   Taper integration
B)   Open innovation
C)   Diversification
D)   DifferentiationE) A) and C)
F) A) and B)

Question 16

Which of the following is an example of an external transaction cost?

Accepted Answer

A)   The cost of setting up a production unit
B)   The cost of searching for a contract manufacturer
C)   The cost of recruiting and retaining employees
D)   The cost of maintaining plant and machineryE) A) and D)
F) A) and C) B

Question 17

White Leo Motors (WLM) Inc.generates a major portion of its revenues by manufacturing luxury sports cars.However, the company also derives an insignificant percent of its annual revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name.Which of the following terms best describes WLM?

Accepted Answer

A)   A conglomerate
B)   A subsidiary
C)   A dominant-business firm
D)   A single-business firmE) A) and D)
F) A) and C) C

Question 18

Investments in specialized assets tend to incur high opportunity costs because the:

Accepted Answer

A)   assets can be profitably used for multiple purposes.
B)   threat of one of the partners pursuing his or her self-interest is high.
C)   social costs associated with these assets are high.
D)   firms can avoid backward integration by investing in these assets.E) A) and B)
F) A) and C)

Question 19

_____ is best described as the process of reorganizing and divesting business units and activities to refocus a company in order to leverage its core competencies more fully.

Accepted Answer

A)   Reverse engineering
B)   Restructuring
C)   Rebooting
D)   Reverse brainstormingE) B) and C)
F) A) and B)

Question 20

Which of the following statements is true of transaction costs?

Accepted Answer

A)   When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate.
B)   When companies transact in the open market, they incur internal transaction costs.
C)   Transaction costs exclusively consist of external costs associated with economic exchanges.
D)   Transaction costs are necessary to explain and predict the boundaries of a firm.E) All of the above
F) B) and C)

Exam 8: Corporate Strategy: Vertical Integration and Diversification

What are the strategic recommendations for strategic business units categorized under question marks in the Boston Consulting Group (BCG)growth-share matrix?

Correct Answer
verified
Ideally, corporate executives want to in...
View Answer

Discuss the benefits of taper integration.

Correct Answer
verified
Taper integration has several benefits:
...
View Answer

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

Correct Answer
verified

When approaching a bank for a loan, the borrower has better knowledge than the lender about his or her own ability to repay the loan without defaulting.What is this situation referred to as?

Correct Answer
verified

A primary advantage of organizing economic activity within firms is the:

Correct Answer
verified

Briefly discuss the two types of long-term contracts.

Correct Answer
verified
Licensing is a form of long-term contrac...
View Answer

What are the two types of additional costs associated with a related-diversification strategy?

Correct Answer
verified
A related-diversification strategy entai...
View Answer

In the Boston Consulting Group (BCG) growth-share matrix, strategic business units categorized under dogs:

Correct Answer
verified
D

_____ are strategic business units that compete in a low-growth market but hold considerable market share.

Correct Answer
verified

What do you mean by a lemons problem? Discuss using the market for used cars as an example.

Correct Answer
verified
Students' values in the example may vary...
View Answer

Which of the following firms is most prone to experiencing a diversification discount?

Correct Answer
verified

How is transaction cost economics useful in strategic management?

Correct Answer
verified
A theoretical framework in strategic man...
View Answer

Discuss the various general diversification strategies available to a firm.

Correct Answer
verified
There are various general diversificatio...
View Answer

What must executives decide when formulating a corporate strategy?

Correct Answer
verified
Executives must decide:
1.In what stages...
View Answer

_____ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes.

Correct Answer
verified

Which of the following is an example of an external transaction cost?

Correct Answer
verified
B

Correct Answer
verified
C

Investments in specialized assets tend to incur high opportunity costs because the:

Correct Answer
verified

_____ is best described as the process of reorganizing and divesting business units and activities to refocus a company in order to leverage its core competencies more fully.

Correct Answer
verified

Which of the following statements is true of transaction costs?

Correct Answer
verified

Exam 8: Corporate Strategy: Vertical Integration and Diversification

What are the strategic recommendations for strategic business units categorized under question marks in the Boston Consulting Group (BCG)growth-share matrix?

Correct AnswerverifiedIdeally, corporate executives want to in...View AnswerShow Answer

Discuss the benefits of taper integration.

Correct AnswerverifiedTaper integration has several benefits:...View AnswerShow Answer

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

Correct AnswerverifiedShow Answer

When approaching a bank for a loan, the borrower has better knowledge than the lender about his or her own ability to repay the loan without defaulting.What is this situation referred to as?

Correct AnswerverifiedShow Answer

A primary advantage of organizing economic activity within firms is the:

Correct AnswerverifiedShow Answer

Briefly discuss the two types of long-term contracts.

Correct AnswerverifiedLicensing is a form of long-term contrac...View AnswerShow Answer

What are the two types of additional costs associated with a related-diversification strategy?

Correct AnswerverifiedA related-diversification strategy entai...View AnswerShow Answer

In the Boston Consulting Group (BCG) growth-share matrix, strategic business units categorized under dogs:

Correct AnswerverifiedD

_____ are strategic business units that compete in a low-growth market but hold considerable market share.

Correct AnswerverifiedShow Answer

What do you mean by a lemons problem? Discuss using the market for used cars as an example.

Correct AnswerverifiedStudents' values in the example may vary...View AnswerShow Answer

Which of the following firms is most prone to experiencing a diversification discount?

Correct AnswerverifiedShow Answer

How is transaction cost economics useful in strategic management?

Correct AnswerverifiedA theoretical framework in strategic man...View AnswerShow Answer

Discuss the various general diversification strategies available to a firm.

Correct AnswerverifiedThere are various general diversificatio...View AnswerShow Answer

What must executives decide when formulating a corporate strategy?

Correct AnswerverifiedExecutives must decide:1.In what stages...View AnswerShow Answer

_____ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes.

Correct AnswerverifiedShow Answer

Which of the following is an example of an external transaction cost?

Correct AnswerverifiedB

Correct AnswerverifiedC

Investments in specialized assets tend to incur high opportunity costs because the:

Correct AnswerverifiedShow Answer

_____ is best described as the process of reorganizing and divesting business units and activities to refocus a company in order to leverage its core competencies more fully.

Correct AnswerverifiedShow Answer

Which of the following statements is true of transaction costs?

Correct AnswerverifiedShow Answer

Correct Answer
verified
Ideally, corporate executives want to in...
View Answer

Correct Answer
verified
Taper integration has several benefits:
...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Licensing is a form of long-term contrac...
View Answer

Correct Answer
verified
A related-diversification strategy entai...
View Answer

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified
Students' values in the example may vary...
View Answer

Correct Answer
verified

Correct Answer
verified
A theoretical framework in strategic man...
View Answer

Correct Answer
verified
There are various general diversificatio...
View Answer

Correct Answer
verified
Executives must decide:
1.In what stages...
View Answer

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified