Question 1

For what critical aspect of drug development has research (Azoulay & Henderson)shown that major drug houses have chosen tapered integration?

Accepted Answer

A) Clinical Research 
B) Drug Development 
C) Marketing 
D) Sales 
E) Manufacturing 
A) Clinical Research 
B) Drug Development 
C) Marketing 
D) Sales 
E) Manufacturing A

Question 2

What term describes when a firm has minimized the extent to which the exchange of goods and services in the vertical chain has been organized to minimize coordination,agency and transaction costs?

Accepted Answer

A) Agency efficiency 
B) Technical efficiency 
C) Lean compliant 
D) Economizing 
E) Six sigma compliant 
A) Agency efficiency 
B) Technical efficiency 
C) Lean compliant 
D) Economizing 
E) Six sigma compliant A

Question 3

What concept describes the situation where the owner of an asset grants another party the right to use that asset,but the owner retains all controlling rights that are not explicitly stipulated in the contract?

Accepted Answer

A) Asset specificity 
B) Non-contract rights of ownership 
C) Control rights agreement 
D) Residual rights of control 
E) Coordination 
A) Asset specificity 
B) Non-contract rights of ownership 
C) Control rights agreement 
D) Residual rights of control 
E) Coordination D

Question 4

Which of the following is a characteristic of an implicit contract?

Accepted Answer

A) It is an understanding between parties in a business relationship 
B) It is generally enforceable in court 
C) The threat of losing future business makes implicit contracts not viable 
D) They are typically used in firms that have little relationship with one another 
E) It is an alternative agreement method to the Keiretsu understandings between members 
A) It is an understanding between parties in a business relationship 
B) It is generally enforceable in court 
C) The threat of losing future business makes implicit contracts not viable 
D) They are typically used in firms that have little relationship with one another 
E) It is an alternative agreement method to the Keiretsu understandings between members

Question 5

What happens when the process by which governance develops exhibits path dependence?

Accepted Answer

A) Governance arrangements split decision rights and controls between two related firms 
B) Governance arrangements are optimal 
C) Past circumstances could exclude certain possible governance arrangements in the future 
D) The firm will split into two entities to reduce the governance issues created 
E) The governance will form effectively 
A) Governance arrangements split decision rights and controls between two related firms 
B) Governance arrangements are optimal 
C) Past circumstances could exclude certain possible governance arrangements in the future 
D) The firm will split into two entities to reduce the governance issues created 
E) The governance will form effectively

Question 6

Which of the following is true with regard to the difference in production costs between an item produced in a vertically integrated firm and an item exchanged through an arm's length market transaction as the level of asset specificity increases?

Accepted Answer

A) The cost difference increases with greater asset specificity 
B) Scale-based advantages of outside suppliers are likely to be stronger with greater asset specificity 
C) The cost difference declines with greater asset specificity 
D) Scope-based advantages of outside suppliers are likely to be stronger with greater asset specificity 
E) The costs are negative for all levels of asset specificity 
A) The cost difference increases with greater asset specificity 
B) Scale-based advantages of outside suppliers are likely to be stronger with greater asset specificity 
C) The cost difference declines with greater asset specificity 
D) Scope-based advantages of outside suppliers are likely to be stronger with greater asset specificity 
E) The costs are negative for all levels of asset specificity

Question 7

The reduction of co-ordination and hold-up problems depends on:

Accepted Answer

A) Governance arrangements 
B) Manager contracts 
C) Required quality of finished product 
D) Cost of upstream vertical supplies 
E) None of the above 
A) Governance arrangements 
B) Manager contracts 
C) Required quality of finished product 
D) Cost of upstream vertical supplies 
E) None of the above

Question 8

Which of the following is not a benefit of tapered integration?

Accepted Answer

A) It expands the firm's input and/or output channels without requiring substantial capital outlays 
B) Allows the firm to use information about the cost and profitability of its internal channels to help negotiate contracts with independent channels 
C) Lets the firm motivate its internal channels by threatening to expand outsourcing and,at the same time,motivate its external channels by threatening to produce more in-house. 
D) Allows the firm to produce most efficiently in all circumstances 
E) Helps the firm protect itself against holdup by independent input suppliers 
A) It expands the firm's input and/or output channels without requiring substantial capital outlays 
B) Allows the firm to use information about the cost and profitability of its internal channels to help negotiate contracts with independent channels 
C) Lets the firm motivate its internal channels by threatening to expand outsourcing and,at the same time,motivate its external channels by threatening to produce more in-house. 
D) Allows the firm to produce most efficiently in all circumstances 
E) Helps the firm protect itself against holdup by independent input suppliers

Question 9

Which of the following would reduce co-ordination and hold-up problems?

Accepted Answer

A) Cost of upstream vertical supplies 
B) Manager contracts 
C) Required quality of finished product 
D) Governance 
E) None of the above 
A) Cost of upstream vertical supplies 
B) Manager contracts 
C) Required quality of finished product 
D) Governance 
E) None of the above

Question 10

Which of the following in the late 19ᵗʰ century was predicted by the asset-specificity hypothesis?

Accepted Answer

A) Forward integration was most likely to occur for products that require specialized investments in human capital 
B) Increases in the size of manufacturing firms led to independent wholesale and marketing agents losing scale/scope cost advantages and in turn led to manufacturers forward integrating into marketing and distribution 
C) Forward integration was most likely to occur for products that do not require specialized investments in equipment and facilities 
D) For industries with small manufacturers,marketing relied on specialized assets 
E) For industries with small manufacturers,distribution relied on specialized assets 
A) Forward integration was most likely to occur for products that require specialized investments in human capital 
B) Increases in the size of manufacturing firms led to independent wholesale and marketing agents losing scale/scope cost advantages and in turn led to manufacturers forward integrating into marketing and distribution 
C) Forward integration was most likely to occur for products that do not require specialized investments in equipment and facilities 
D) For industries with small manufacturers,marketing relied on specialized assets 
E) For industries with small manufacturers,distribution relied on specialized assets

Question 11

Which of the following features of transactions make those transactions excellent candidates for alliances?

Accepted Answer

A) The transaction involves impediments to comprehensive contracting 
B) The transaction is complex,not routine. 
C) The transaction involves the creation of relationship-specific assets by both parties in the relationship,and each party to the transaction could hold up the other 
D) It is excessively costly for one party to develop all the necessary expertise to carry out all the activities itself 
E) All of the above 
A) The transaction involves impediments to comprehensive contracting 
B) The transaction is complex,not routine. 
C) The transaction involves the creation of relationship-specific assets by both parties in the relationship,and each party to the transaction could hold up the other 
D) It is excessively costly for one party to develop all the necessary expertise to carry out all the activities itself 
E) All of the above

Question 12

The process by which governance develops is known as:

Accepted Answer

A) Vertical decision making (VDM) 
B) Path Dependence 
C) Internal design 
D) Management evolution 
E) Institutional learning 
A) Vertical decision making (VDM) 
B) Path Dependence 
C) Internal design 
D) Management evolution 
E) Institutional learning

Question 13

Which of the following conclusions can we make about vertical integration with regard to product market share and scope?

Accepted Answer

A) If asset specificity is significant enough,vertical integration will be more profitable than arm's-length market purchases,even when production of the input is characterized by strong scale economies or when the firm's product market scale is small. 
B) A firm gains more from vertical integration when outside market specialists are better able to take advantage of economies of scale and scope 
C) A firm with a larger share of the product market will benefit more from vertical integration than a firm with a smaller share of the product market 
D) The more a firm produces,the greater its input and this ultimately decreases the likelihood that in-house production can take as much advantage of economies of scale and scope as an outside market specialist 
E) If a firm is considering whether to make or buy an input requiring significant up-front setup costs,and there is a large market outside the firm for the input,then the firm should buy the input from outside market specialists 
A) If asset specificity is significant enough,vertical integration will be more profitable than arm's-length market purchases,even when production of the input is characterized by strong scale economies or when the firm's product market scale is small. 
B) A firm gains more from vertical integration when outside market specialists are better able to take advantage of economies of scale and scope 
C) A firm with a larger share of the product market will benefit more from vertical integration than a firm with a smaller share of the product market 
D) The more a firm produces,the greater its input and this ultimately decreases the likelihood that in-house production can take as much advantage of economies of scale and scope as an outside market specialist 
E) If a firm is considering whether to make or buy an input requiring significant up-front setup costs,and there is a large market outside the firm for the input,then the firm should buy the input from outside market specialists

Question 14

Which of the following conclusions can we make about vertical integration with regard to scale and scope economies?

Accepted Answer

A) If asset specificity is significant enough,vertical integration will be more profitable than arm's-length market purchases,even when production of the input is characterized by strong scale economies or when the firm's product market scale is small. 
B) A firm gains more from vertical integration when outside market specialists are better able to take advantage of economies of scale and scope 
C) A firm with a larger share of the product market will benefit more from vertical integration than a firm with a smaller share of the product market 
D) The more a firm produces,the greater its input and this ultimately decreases the likelihood that in-house production can take as much advantage of economies of scale and scope as an outside market specialist 
E) If a firm is considering whether to make or buy an input requiring significant up-front setup costs,and there is a large market outside the firm for the input,then the firm should buy the input from outside market specialists 
A) If asset specificity is significant enough,vertical integration will be more profitable than arm's-length market purchases,even when production of the input is characterized by strong scale economies or when the firm's product market scale is small. 
B) A firm gains more from vertical integration when outside market specialists are better able to take advantage of economies of scale and scope 
C) A firm with a larger share of the product market will benefit more from vertical integration than a firm with a smaller share of the product market 
D) The more a firm produces,the greater its input and this ultimately decreases the likelihood that in-house production can take as much advantage of economies of scale and scope as an outside market specialist 
E) If a firm is considering whether to make or buy an input requiring significant up-front setup costs,and there is a large market outside the firm for the input,then the firm should buy the input from outside market specialists

Question 15

What term describes when a firm is using the least-cost production process?

Accepted Answer

A) Agency efficiency 
B) Technical efficiency 
C) Lean compliant 
D) Economizing 
E) Six sigma compliant 
A) Agency efficiency 
B) Technical efficiency 
C) Lean compliant 
D) Economizing 
E) Six sigma compliant

Question 16

Suppose we have two firms (Firm 1 & Firm 2)enter into a transaction where Firm 1 is upstream of firm 2 in a vertical chain.What term best describes the organization of the transaction where Firm 2 owns the assets of Firm 1?

Accepted Answer

A) Backward Integration 
B) Forward integration 
C) Nonintegration 
D) Contractually unbound 
E) Contractually bound 
A) Backward Integration 
B) Forward integration 
C) Nonintegration 
D) Contractually unbound 
E) Contractually bound

Question 17

Suppose we have two firms (Firm 1 & Firm 2)enter into a transaction where Firm 1 is upstream of firm 2 in a vertical chain.What term best describes the organization of the transaction where the two firms are independent,each with control over its own assets?

Accepted Answer

A) Backward Integration 
B) Forward integration 
C) Nonintegration 
D) Contractually unbound 
E) Contractually bound 
A) Backward Integration 
B) Forward integration 
C) Nonintegration 
D) Contractually unbound 
E) Contractually bound

Question 18

Which of the following conclusions can we make about vertical integration with regards to product market share and scope?

Accepted Answer

A) If asset specificity is significant enough,vertical integration will be more profitable than arm's-length market purchases,even when production of the input is characterized by strong scale economies or when the firm's product market scale is small. 
B) A firm gains more from vertical integration when outside market specialists are better able to take advantage of economies of scale and scope 
C) A firm with multiple product lines will benefit more from being vertically integrated in the production of components for those products in which it can achieve significant market scale 
D) The more a firm produces,the greater its input and this ultimately decreases the likelihood that in-house production can take as much advantage of economies of scale and scope as an outside market specialist 
E) If a firm is considering whether to make or buy an input requiring significant up-front setup costs,and there is a large market outside the firm for the input,then the firm should buy the input from outside market specialists 
A) If asset specificity is significant enough,vertical integration will be more profitable than arm's-length market purchases,even when production of the input is characterized by strong scale economies or when the firm's product market scale is small. 
B) A firm gains more from vertical integration when outside market specialists are better able to take advantage of economies of scale and scope 
C) A firm with multiple product lines will benefit more from being vertically integrated in the production of components for those products in which it can achieve significant market scale 
D) The more a firm produces,the greater its input and this ultimately decreases the likelihood that in-house production can take as much advantage of economies of scale and scope as an outside market specialist 
E) If a firm is considering whether to make or buy an input requiring significant up-front setup costs,and there is a large market outside the firm for the input,then the firm should buy the input from outside market specialists

Question 19

Which of the following describes when a manufacturer produces some of an input quantity itself and purchases the remaining portion from independent firms?

Accepted Answer

A) Forward Integration 
B) Tapered integration 
C) Backward Integration 
D) Balanced integration 
E) Combined integration 
A) Forward Integration 
B) Tapered integration 
C) Backward Integration 
D) Balanced integration 
E) Combined integration

Question 20

Which of the following best describes tapered integration?

Accepted Answer

A) A manufacturer produces some of all input quantity itself 
B) A manufacturer purchases all input quantity from independent firms 
C) A manufacturer produces some of an input quantity itself and purchases the remaining portion from independent firms 
D) A manufacturer produces some of all input quantity from its competitors 
E) None of the above 
A) A manufacturer produces some of all input quantity itself 
B) A manufacturer purchases all input quantity from independent firms 
C) A manufacturer produces some of an input quantity itself and purchases the remaining portion from independent firms 
D) A manufacturer produces some of all input quantity from its competitors 
E) None of the above

For what critical aspect of drug development has research (Azoulay & Henderson)shown that major drug houses have chosen tapered integration?

What term describes when a firm has minimized the extent to which the exchange of goods and services in the vertical chain has been organized to minimize coordination,agency and transaction costs?

What concept describes the situation where the owner of an asset grants another party the right to use that asset,but the owner retains all controlling rights that are not explicitly stipulated in the contract?

Which of the following is a characteristic of an implicit contract?

What happens when the process by which governance develops exhibits path dependence?

Which of the following is true with regard to the difference in production costs between an item produced in a vertically integrated firm and an item exchanged through an arm's length market transaction as the level of asset specificity increases?

The reduction of co-ordination and hold-up problems depends on:

Which of the following is not a benefit of tapered integration?

Which of the following would reduce co-ordination and hold-up problems?

Which of the following in the late 19ᵗʰ century was predicted by the asset-specificity hypothesis?

Which of the following features of transactions make those transactions excellent candidates for alliances?

The process by which governance develops is known as:

Which of the following conclusions can we make about vertical integration with regard to product market share and scope?

Which of the following conclusions can we make about vertical integration with regard to scale and scope economies?

What term describes when a firm is using the least-cost production process?

Suppose we have two firms (Firm 1 & Firm 2)enter into a transaction where Firm 1 is upstream of firm 2 in a vertical chain.What term best describes the organization of the transaction where Firm 2 owns the assets of Firm 1?

Suppose we have two firms (Firm 1 & Firm 2)enter into a transaction where Firm 1 is upstream of firm 2 in a vertical chain.What term best describes the organization of the transaction where the two firms are independent,each with control over its own assets?

Which of the following conclusions can we make about vertical integration with regards to product market share and scope?

Which of the following describes when a manufacturer produces some of an input quantity itself and purchases the remaining portion from independent firms?

Which of the following best describes tapered integration?

The Power of Principles: A Historical Perspective

The Horizontal Boundaries of the Firm

The Vertical Boundaries of the Firm

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

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Exam 4: Integration and Its Alternatives

For what critical aspect of drug development has research (Azoulay & Henderson)shown that major drug houses have chosen tapered integration?

What term describes when a firm has minimized the extent to which the exchange of goods and services in the vertical chain has been organized to minimize coordination,agency and transaction costs?

What concept describes the situation where the owner of an asset grants another party the right to use that asset,but the owner retains all controlling rights that are not explicitly stipulated in the contract?

Which of the following is a characteristic of an implicit contract?

What happens when the process by which governance develops exhibits path dependence?

Which of the following is true with regard to the difference in production costs between an item produced in a vertically integrated firm and an item exchanged through an arm's length market transaction as the level of asset specificity increases?

The reduction of co-ordination and hold-up problems depends on:

Which of the following is not a benefit of tapered integration?

Which of the following would reduce co-ordination and hold-up problems?

Which of the following in the late 19ᵗʰ century was predicted by the asset-specificity hypothesis?

Which of the following features of transactions make those transactions excellent candidates for alliances?

The process by which governance develops is known as:

Which of the following conclusions can we make about vertical integration with regard to product market share and scope?

Which of the following conclusions can we make about vertical integration with regard to scale and scope economies?

What term describes when a firm is using the least-cost production process?

Suppose we have two firms (Firm 1 & Firm 2)enter into a transaction where Firm 1 is upstream of firm 2 in a vertical chain.What term best describes the organization of the transaction where Firm 2 owns the assets of Firm 1?

Suppose we have two firms (Firm 1 & Firm 2)enter into a transaction where Firm 1 is upstream of firm 2 in a vertical chain.What term best describes the organization of the transaction where the two firms are independent,each with control over its own assets?

Which of the following conclusions can we make about vertical integration with regards to product market share and scope?

Which of the following describes when a manufacturer produces some of an input quantity itself and purchases the remaining portion from independent firms?

Which of the following best describes tapered integration?

The Power of Principles: A Historical Perspective

The Horizontal Boundaries of the Firm

The Vertical Boundaries of the Firm

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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