Question 1

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 2

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 3

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 4

Under what circumstance would it be logical to leave contracts vague and open-ended?

Accepted Answer

A) When performance may be ambiguous or difficult to measure. 
B) When one of the firms in the contract is much larger than the other firm 
C) If there are many other firms that can provide the same service or product 
D) When the cost of writing the contract is too high 
E) If the smaller of the two contracting firms is the upstream firm 
A) When performance may be ambiguous or difficult to measure. 
B) When one of the firms in the contract is much larger than the other firm 
C) If there are many other firms that can provide the same service or product 
D) When the cost of writing the contract is too high 
E) If the smaller of the two contracting firms is the upstream firm

Question 5

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 6

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 upstream 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 upstream 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 7

What is an independent outsourcing partner often called?

Accepted Answer

A) Downstream firm 
B) Financial firm 
C) Partner firm 
D) Market firm 
E) Co-firm 
A) Downstream firm 
B) Financial firm 
C) Partner firm 
D) Market firm 
E) Co-firm

Question 8

Long term contracts with suppliers can help a firm with which of the following?

Accepted Answer

A) Manufacture all needed inputs internally 
B) Acquire upstream firms in the vertical chain 
C) Acquire downstream firms in the vertical chain 
D) Counteract raw material price fluctuations and eliminate income risk 
E) None of the above 
A) Manufacture all needed inputs internally 
B) Acquire upstream firms in the vertical chain 
C) Acquire downstream firms in the vertical chain 
D) Counteract raw material price fluctuations and eliminate income risk 
E) None of the above

Question 9

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 10

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 11

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 12

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) 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

What do the vertical boundaries of a firm refer to?

Accepted Answer

A) The activities the firm itself performs versus purchases from independent firms 
B) The level of expertise of the firm's workforce 
C) The breadth of products a firm produces 
D) The production output level for a firm 
E) The chain of production processes from raw materials to finished good 
A) The activities the firm itself performs versus purchases from independent firms 
B) The level of expertise of the firm's workforce 
C) The breadth of products a firm produces 
D) The production output level for a firm 
E) The chain of production processes from raw materials to finished good

Question 14

Which of the following is a reason for a firm to Buy rather than make?

Accepted Answer

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 
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

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?

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

Under what circumstance would it be logical to leave contracts vague and open-ended?

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

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

What is an independent outsourcing partner often called?

Long term contracts with suppliers can help a firm with which of the following?

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

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

What do the vertical boundaries of a firm refer to?

Which of the following is a reason for a firm to Buy rather than make?

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 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?

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

Under what circumstance would it be logical to leave contracts vague and open-ended?

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

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

What is an independent outsourcing partner often called?

Long term contracts with suppliers can help a firm with which of the following?

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

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

What do the vertical boundaries of a firm refer to?

Which of the following is a reason for a firm to Buy rather than make?

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