Question 1

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 A

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

What are influence costs?

Accepted Answer

A) Costs associated with slack effort and with the administrative controls to deter it 
B) The cost of activities aimed at affecting the distribution of benefits in an organization 
C) Costs related to the negotiation of external contracts 
D) Costs of recruiting ("buying")outside employees with a particular skill set 
E) The costs of advertising to customers 
A) Costs associated with slack effort and with the administrative controls to deter it 
B) The cost of activities aimed at affecting the distribution of benefits in an organization 
C) Costs related to the negotiation of external contracts 
D) Costs of recruiting ("buying")outside employees with a particular skill set 
E) The costs of advertising to customers B

Question 4

Strong contract law aids the most in which of the following?

Accepted Answer

A) Incomplete contracts 
B) Complete contracts 
C) Negotiated contracts 
D) Dual contracts 
E) None of the above 
A) Incomplete contracts 
B) Complete contracts 
C) Negotiated contracts 
D) Dual contracts 
E) None of the above

Question 5

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 6

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 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 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 9

Which of the following are the costs associated with slack effort and with the administrative controls to deter it?

Accepted Answer

A) Administrative costs 
B) Coordination costs 
C) Agency Costs 
D) Overhead costs 
E) Market costs 
A) Administrative costs 
B) Coordination costs 
C) Agency Costs 
D) Overhead costs 
E) Market costs

Question 10

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 11

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 12

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 13

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

Question 14

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

Accepted Answer

A) Downstream monopolist acquires upstream supplier and refuses to buy from other suppliers 
B) Upstream 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 upstream supplier and refuses to buy from other suppliers 
B) Upstream 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 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 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 17

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 18

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 19

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 20

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

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?

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

What are influence costs?

Strong contract law aids the most in which of the following?

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

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

What is a market firm?

Which of the following are the costs associated with slack effort and with the administrative controls to deter it?

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

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

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 method a firm could use to force vertical foreclosure?

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

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

What are agency costs?

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?

The Power of Principles: A Historical Perspective

The Horizontal Boundaries of the Firm

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

Economics Primer

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Exam 3: The Vertical Boundaries of the Firm

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?

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

What are influence costs?

Strong contract law aids the most in which of the following?

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

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

What is a market firm?

Which of the following are the costs associated with slack effort and with the administrative controls to deter it?

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

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

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 method a firm could use to force vertical foreclosure?

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

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

What are agency costs?

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?

The Power of Principles: A Historical Perspective

The Horizontal Boundaries of the Firm

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

Economics Primer

Filters