Question 1

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 E

Question 2

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 B

Question 3

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 4

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 5

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 6

Which of the following is not a characteristic of a complete contract?

Accepted Answer

A)  The contract allows for a party to exploit weaknesses in another party's position as the transaction unfolds 
B)  Elimination of opportunistic behaviors 
C)  Stipulation of each party's responsibilities and rights 
D)  Binding instruction for each party on courses of action as the transaction unfolds 
E)  Must be enforceable 
A)  The contract allows for a party to exploit weaknesses in another party's position as the transaction unfolds 
B)  Elimination of opportunistic behaviors 
C)  Stipulation of each party's responsibilities and rights 
D)  Binding instruction for each party on courses of action as the transaction unfolds 
E)  Must be enforceable

Question 7

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 8

What problem preventing complete contracts refers to the limits on the capacity of individuals to process information,deal with complexity and pursue rational aims?

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 9

Which of the following is not a method a firm could use to force vertical foreclosure?

Accepted Answer

A)  Downstream monopolist acquires upsteam supplier and refuses to buy from other suppliers 
B)  Upsteam monopolist acquires downstream firm and refuses to sell to other downstream firms 
C)  Competitive downstream firm acquires upstream monopolist and refuses to sell to downstream firms 
D)  Upstream competitor acquires downstream competitor and refuses to buy from other suppliers 
E)  Competitive upstream firm acquires downstream monopolist and refuses to buy from other suppliers 
A)  Downstream monopolist acquires upsteam supplier and refuses to buy from other suppliers 
B)  Upsteam monopolist acquires downstream firm and refuses to sell to other downstream firms 
C)  Competitive downstream firm acquires upstream monopolist and refuses to sell to downstream firms 
D)  Upstream competitor acquires downstream competitor and refuses to buy from other suppliers 
E)  Competitive upstream firm acquires downstream monopolist and refuses to buy from other suppliers

Question 10

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

Question 11

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 12

Which of the following is not a method to protect intellectual property?

Accepted Answer

A)  Patents that are specific and complete 
B)  Complete contracts regarding IP with all suppliers 
C)  Non-disclosure agreements for employees 
D)  Limiting access to IP to a few key employees 
E)  Charging higher prices to limit access to IP 
A)  Patents that are specific and complete 
B)  Complete contracts regarding IP with all suppliers 
C)  Non-disclosure agreements for employees 
D)  Limiting access to IP to a few key employees 
E)  Charging higher prices to limit access to IP

Question 13

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 14

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 15

What are agency costs?

Accepted Answer

A)  Costs of the sales force 
B)  Costs associated with slack effort and with the administrative controls to deter it 
C)  Costs related to general and administrative expenses 
D)  Costs associated with outsourcing of firm functions 
E)  Costs attributed to the use of professional service firms 
A)  Costs of the sales force 
B)  Costs associated with slack effort and with the administrative controls to deter it 
C)  Costs related to general and administrative expenses 
D)  Costs associated with outsourcing of firm functions 
E)  Costs attributed to the use of professional service firms

Question 16

Which of the following is a reason for a firm to Buy rather than make?
a) To eliminate competition among upstream suppliers
b) Upstream firms aggregate the demands of many buyers and provide economies of scale.
c) To prevent downstream competitors from reducing their prices
d) Tax advantages for purchasing upstream rather than making internally
e) None of the above

Accepted Answer

The answer of Which of the following is a reason...

Question 17

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 18

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...

Question 19

Which of the following is a method firms can use to counteract price fluctuations and eliminate income risk?

Accepted Answer

A)  Manufacture all needed inputs internally 
B)  Acquire upsteam firms in the vertical chain 
C)  Enter into futures contracts to hedge the price of raw materials 
D)  Eliminate competitors by under-cutting their price 
E)  None of the above 
A)  Manufacture all needed inputs internally 
B)  Acquire upsteam firms in the vertical chain 
C)  Enter into futures contracts to hedge the price of raw materials 
D)  Eliminate competitors by under-cutting their price 
E)  None of the above

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 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...

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?

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

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 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?

Which of the following is not a characteristic of a complete contract?

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

What problem preventing complete contracts refers to the limits on the capacity of individuals to process information,deal with complexity and pursue rational aims?

Which of the following is not a method a firm could use to force vertical foreclosure?

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

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

Which of the following is not a method to protect intellectual property?

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

What are agency costs?

Which of the following is a method firms can use to counteract price fluctuations and eliminate income risk?

The Power of Principles: an Historical Perspective

Economies of Scale and Scope

Integration and Its Alternatives

Competitors and Competition

Entry and Exit

The Dynamics Competing Across Time

Industry Analysis

Strategic Positioning for Competitive Advantage

Information and Value Creation

Sustaining Competitive Advantage

Performance Measurement and Incentives

Strategy and Structure

Environment, power, and Culture

Filters

Exam 3: The Vertical Boundaries of the Firm

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?

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

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 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?

Which of the following is not a characteristic of a complete contract?

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

What problem preventing complete contracts refers to the limits on the capacity of individuals to process information,deal with complexity and pursue rational aims?

Which of the following is not a method a firm could use to force vertical foreclosure?

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

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

Which of the following is not a method to protect intellectual property?

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

What are agency costs?

Which of the following is a method firms can use to counteract price fluctuations and eliminate income risk?

The Power of Principles: an Historical Perspective

Economies of Scale and Scope

Integration and Its Alternatives

Competitors and Competition

Entry and Exit

The Dynamics Competing Across Time

Industry Analysis

Strategic Positioning for Competitive Advantage

Information and Value Creation

Sustaining Competitive Advantage

Performance Measurement and Incentives

Strategy and Structure

Environment, power, and Culture

Filters