Question 1

Which of the following processes is most representative of a less integrated firm on the "buy" end of the make-or-buy continuum?

Accepted Answer

A) Arm's length market transactions 
B) Long-term contracts 
C) Strategic alliances and joint ventures 
D) Parent/subsidiary relationships 
E) Parent/subsidiary relationships. 
A) Arm's length market transactions 
B) Long-term contracts 
C) Strategic alliances and joint ventures 
D) Parent/subsidiary relationships 
E) Parent/subsidiary relationships. A

Question 2

Which of the following has a downstream relationship with a Toyota Motor Corporation?

Accepted Answer

A) Steel manufacturers 
B) Tire companies 
C) Dealerships 
D) Paint producer 
E) Car parts manufacturer 
A) Steel manufacturers 
B) Tire companies 
C) Dealerships 
D) Paint producer 
E) Car parts manufacturer C

Question 3

The biotechnology industry is seeing a broad pattern of disintegration due to the fact that big pharma companies are less and less doing which of the following core functions?

Accepted Answer

A) Infrastructure 
B) Product innovation 
C) Obtaining regulatory approval 
D) Customer relationship 
E) Manufacturing and communications 
A) Infrastructure 
B) Product innovation 
C) Obtaining regulatory approval 
D) Customer relationship 
E) Manufacturing and communications B

Question 4

Which of the following is not a result of the holdup problem?

Accepted Answer

A) More difficult contract negotiations and more frequent renegotiations 
B) Investments to improve ex post bargaining positions 
C) Reduction in the transaction costs of arm's length market exchanges 
D) Distrust 
E) Reduced investment in relationship-specific investments 
A) More difficult contract negotiations and more frequent renegotiations 
B) Investments to improve ex post bargaining positions 
C) Reduction in the transaction costs of arm's length market exchanges 
D) Distrust 
E) Reduced investment in relationship-specific investments

Question 5

What is a reason that companies might want to "buy" instead of "make" talent from the market when looking to acquire employees with a particular skill set?

Accepted Answer

A) External training methods are better than internal ones 
B) Companies are always willing to pay more for external employees 
C) External training is more advanced (up-to-date)than internal 
D) Scale economies can result in fixed education costs while in house education methods may be more expensive 
E) Externally trained employees are more likely to become better business leaders 
A) External training methods are better than internal ones 
B) Companies are always willing to pay more for external employees 
C) External training is more advanced (up-to-date)than internal 
D) Scale economies can result in fixed education costs while in house education methods may be more expensive 
E) Externally trained employees are more likely to become better business leaders

Question 6

What problem preventing complete contracts refers to a lack of transparency/equal access to the details surrounding a contract?

Accepted Answer

A) Agency costs 
B) Bounded rationality 
C) Performance measurement difficulties 
D) Asymmetric information 
E) Contract body of law 
A) Agency costs 
B) Bounded rationality 
C) Performance measurement difficulties 
D) Asymmetric information 
E) Contract body of law

Question 7

What is a market firm?

Accepted Answer

A) Firm representing a particular industry 
B) Financial firm 
C) Subsidiary of the larger parent firm 
D) Large scale firm 
E) An independent outsourcing partner 
A) Firm representing a particular industry 
B) Financial firm 
C) Subsidiary of the larger parent firm 
D) Large scale firm 
E) An independent outsourcing partner

Question 8

Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers.Suppose your average variable cost C=$20/unit,annualized cost of investment to build a hard drive factory I=$30 million,and the market price (bailout market price in the event Dell does not buy)Pm=$22/unit.If Dell agrees to purchase the 10 million hard drives at a price P*=$25/unit and subsequently renegotiates to only purchase for $22.50/unit,what has Dell increased its own profits by?

Accepted Answer

The answer of Suppose you manufacture 10 million hard drives...

Question 9

Which of the following asset specificity forms describes why glass container production requires molds custom tailored to particular container shapes and glass making machines?

Accepted Answer

A) Site specificity 
B) Physical asset specificity 
C) Dedicated assets 
D) Human asset specificity 
E) The fundamental transformation 
A) Site specificity 
B) Physical asset specificity 
C) Dedicated assets 
D) Human asset specificity 
E) The fundamental transformation

Question 10

Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers.If your average variable cost C=$20/unit,annualized cost of investment to build a hard drive factory I=$30 million,and market price (bailout market price in the event Dell does not buy)Pm=$22/unit,what is your company's RSI (relationship specific investment)?

Accepted Answer

The answer of Suppose you manufacture 10 million hard drives...

Question 11

When contracts are incomplete,what must be well defined and enforceable to allow for smooth transactions to occur?

Accepted Answer

A) Contract performance measures 
B) Contract roles 
C) Contract costs 
D) Contract triggers 
E) Contract law 
A) Contract performance measures 
B) Contract roles 
C) Contract costs 
D) Contract triggers 
E) Contract law

Question 12

Which of the following issues makes it difficult for to managers to reign in dedicated "cost centers" in a firm?

Accepted Answer

A) Cost centers have no dedicated "customer" 
B) Cost centers are easy to judge against market counterparts performing similar functions 
C) Firms are unwilling to endure the ill will generated by firing unproductive elements in an organization 
D) Firms are always looking to cut costs when they retain an advantage insulting it from the market 
E) Managers of costs centers have significant latitude to complete their jobs 
A) Cost centers have no dedicated "customer" 
B) Cost centers are easy to judge against market counterparts performing similar functions 
C) Firms are unwilling to endure the ill will generated by firing unproductive elements in an organization 
D) Firms are always looking to cut costs when they retain an advantage insulting it from the market 
E) Managers of costs centers have significant latitude to complete their jobs

Question 13

Which of the following types of fit (used to aide in coordination along all dimensions of production)explains a situation where the steps of a particular process must occur in a particular order?

Accepted Answer

A) Timing fit 
B) Size fit 
C) Color fit 
D) Sequence fit 
E) Price fit 
A) Timing fit 
B) Size fit 
C) Color fit 
D) Sequence fit 
E) Price fit

Question 14

Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers.Suppose your average variable cost C=$20/unit,annualized cost of investment to build a hard drive factory I=$30 million,and the market price (bailout market price in the event Dell does not buy)Pm=$22/unit.If Dell agrees to purchase the 10 million hard drives at a price P*=$25/unit and subsequently renegotiates to only purchase for $22.50/unit,what is your company's new "rent"?

Accepted Answer

The answer of Suppose you manufacture 10 million hard drives...

Question 15

Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers.Suppose your average variable cost C=$20/unit and annualized cost of investment to build a hard drive factory I=$30 million.If Dell agrees to purchase the 10 million hard drives at a price P*=$25/unit,what is your company's "rent?

Accepted Answer

The answer of Suppose you manufacture 10 million hard drives...

Question 16

What term describes features that need to relate to each other in a precise fashion otherwise they lose a significant portion of their economic value?

Accepted Answer

A) Design attributes 
B) Critical components 
C) Contract factors 
D) Coordination factors 
E) Relationship attributes 
A) Design attributes 
B) Critical components 
C) Contract factors 
D) Coordination factors 
E) Relationship attributes

Question 17

What primary agency cost problem plagued the partnership between Sony's hardware and software from 1998-2008 with regards to digital music?

Accepted Answer

A) High infrastructure costs 
B) Contract disputes 
C) High transaction costs 
D) Overlapping distribution channels 
E) Manager/worker slacking 
A) High infrastructure costs 
B) Contract disputes 
C) High transaction costs 
D) Overlapping distribution channels 
E) Manager/worker slacking

Question 18

Which of the following processes is most representative of a vertically integrated firm on the "make" end of the make-or-buy continuum?

Accepted Answer

A) Arm's length market transactions 
B) Long-term contracts 
C) Strategic alliances and joint ventures 
D) Parent/subsidiary relationships 
E) Perform activity internally 
A) Arm's length market transactions 
B) Long-term contracts 
C) Strategic alliances and joint ventures 
D) Parent/subsidiary relationships 
E) Perform activity internally

Question 19

Which of the following is a true argument regarding the make-or-buy decision process?

Accepted Answer

A) Firms should make an asset, rather than buy it, if that asset is a source of competitive advantage for the firm 
B) Firms should buy, rather than make, to avoid the costs of making the product 
C) Firms should make, rather than buy, to avoid paying a profit margin to independent firms 
D) Firms should buy, rather than make, in general, because market firms are subject to the discipline of the market and must be efficient and innovative to survive 
E) Firms should make, rather than buy, because a vertically integrated producer will be able to avoid paying high market prices for the input during periods of peak demand or scarce supply 
A) Firms should make an asset, rather than buy it, if that asset is a source of competitive advantage for the firm 
B) Firms should buy, rather than make, to avoid the costs of making the product 
C) Firms should make, rather than buy, to avoid paying a profit margin to independent firms 
D) Firms should buy, rather than make, in general, because market firms are subject to the discipline of the market and must be efficient and innovative to survive 
E) Firms should make, rather than buy, because a vertically integrated producer will be able to avoid paying high market prices for the input during periods of peak demand or scarce supply

Question 20

Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers.Suppose your average variable cost C=$20/unit,annualized cost of investment to build a hard drive factory I=$30 million,and the market price (bailout market price in the event Dell does not buy)Pm=$22/unit.If Dell agrees to purchase the 10 million hard drives at a price P*=$25/unit and the deal subsequently falls apart,what is your company's "quasi-rent"?

Accepted Answer

The answer of Suppose you manufacture 10 million hard drives...

Which of the following processes is most representative of a less integrated firm on the "buy" end of the make-or-buy continuum?

Which of the following has a downstream relationship with a Toyota Motor Corporation?

The biotechnology industry is seeing a broad pattern of disintegration due to the fact that big pharma companies are less and less doing which of the following core functions?

Which of the following is not a result of the holdup problem?

What is a reason that companies might want to "buy" instead of "make" talent from the market when looking to acquire employees with a particular skill set?

What problem preventing complete contracts refers to a lack of transparency/equal access to the details surrounding a contract?

What is a market firm?

Which of the following asset specificity forms describes why glass container production requires molds custom tailored to particular container shapes and glass making machines?

When contracts are incomplete,what must be well defined and enforceable to allow for smooth transactions to occur?

Which of the following issues makes it difficult for to managers to reign in dedicated "cost centers" in a firm?

Which of the following types of fit (used to aide in coordination along all dimensions of production)explains a situation where the steps of a particular process must occur in a particular order?

What term describes features that need to relate to each other in a precise fashion otherwise they lose a significant portion of their economic value?

What primary agency cost problem plagued the partnership between Sony's hardware and software from 1998-2008 with regards to digital music?

Which of the following processes is most representative of a vertically integrated firm on the "make" end of the make-or-buy continuum?

Which of the following is a true argument regarding the make-or-buy decision process?

Basic Microeconomic Principles

Economies of Scale and Scope

Agency and Coordination

The Power of Principles - an Historical Perspective

Organizing Vertical Boundariesvertical Integration and Its Alternatives

Diversificationpart Threemarket and Competitive Analysis

Competitors and Competition

Strategic Commitment

The Dynamics of Pricing Rivalry

Entry and Exit

Industry Analysispart Fourstrategic Position and Dynamics

Strategic Positioning for Competitive Advantage

Sustaining Competitive Advantage

The Origins of Competitive Advantage, innovation, evolution, and Environment part Five internal Organization

Performance Measurement and Incentives in Firms

Strategy and Structure

Environment, power, and Culture

Filters

Exam 5: The Vertical Boundaries of the Firm

Which of the following processes is most representative of a less integrated firm on the "buy" end of the make-or-buy continuum?

Which of the following has a downstream relationship with a Toyota Motor Corporation?

The biotechnology industry is seeing a broad pattern of disintegration due to the fact that big pharma companies are less and less doing which of the following core functions?

Which of the following is not a result of the holdup problem?

What is a reason that companies might want to "buy" instead of "make" talent from the market when looking to acquire employees with a particular skill set?

What problem preventing complete contracts refers to a lack of transparency/equal access to the details surrounding a contract?

What is a market firm?

Which of the following asset specificity forms describes why glass container production requires molds custom tailored to particular container shapes and glass making machines?

When contracts are incomplete,what must be well defined and enforceable to allow for smooth transactions to occur?

Which of the following issues makes it difficult for to managers to reign in dedicated "cost centers" in a firm?

Which of the following types of fit (used to aide in coordination along all dimensions of production)explains a situation where the steps of a particular process must occur in a particular order?

What term describes features that need to relate to each other in a precise fashion otherwise they lose a significant portion of their economic value?

What primary agency cost problem plagued the partnership between Sony's hardware and software from 1998-2008 with regards to digital music?

Which of the following processes is most representative of a vertically integrated firm on the "make" end of the make-or-buy continuum?

Which of the following is a true argument regarding the make-or-buy decision process?

Basic Microeconomic Principles

Economies of Scale and Scope

Agency and Coordination

The Power of Principles - an Historical Perspective

Organizing Vertical Boundariesvertical Integration and Its Alternatives

Diversificationpart Threemarket and Competitive Analysis

Competitors and Competition

Strategic Commitment

The Dynamics of Pricing Rivalry

Entry and Exit

Industry Analysispart Fourstrategic Position and Dynamics

Strategic Positioning for Competitive Advantage

Sustaining Competitive Advantage

The Origins of Competitive Advantage, innovation, evolution, and Environment part Five internal Organization

Performance Measurement and Incentives in Firms

Strategy and Structure

Environment, power, and Culture

Filters