Question 1

In the Boston Consulting Group (BCG)growth-share matrix, strategic business units categorized under dogs:

Accepted Answer

A)  compete in a low-growth market but hold considerable market share. 
B)  hold a high market share in a fast-growing market. 
C)  compete in a high-growth market but have low and unstable earnings. 
D)  hold a small market share in a low-growth market. 
A)  compete in a low-growth market but hold considerable market share. 
B)  hold a high market share in a fast-growing market. 
C)  compete in a high-growth market but have low and unstable earnings. 
D)  hold a small market share in a low-growth market. D

Question 2

Which of the following is an example of an external transaction cost?

Accepted Answer

A)  The cost of setting up a production unit 
B)  The cost of searching for a contract manufacturer 
C)  The cost of recruiting and retaining employees 
D)  The cost of maintaining plant and machinery 
A)  The cost of setting up a production unit 
B)  The cost of searching for a contract manufacturer 
C)  The cost of recruiting and retaining employees 
D)  The cost of maintaining plant and machinery B

Question 3

White Leo Motors (WLM)Inc.generates a major portion of its revenues by manufacturing luxury sports cars.However, the company also derives an insignificant percent of its annual revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name.Which of the following terms best describes WLM?

Accepted Answer

A)  A conglomerate 
B)  A subsidiary 
C)  A dominant-business firm 
D)  A single-business firm 
A)  A conglomerate 
B)  A subsidiary 
C)  A dominant-business firm 
D)  A single-business firm C

Question 4

_____ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes.

Accepted Answer

A)  Taper integration 
B)  Open innovation 
C)  Diversification 
D)  Differentiation 
A)  Taper integration 
B)  Open innovation 
C)  Diversification 
D)  Differentiation

Question 5

What are the strategic recommendations for strategic business units categorized under question marks in the Boston Consulting Group (BCG)growth-share matrix?

Accepted Answer

Ideally, corporate executives want to in

Question 6

When approaching a bank for a loan, the borrower has better knowledge than the lender about his or her own ability to repay the loan without defaulting.What is this situation referred to as?

Accepted Answer

A)  Principal-agent problem 
B)  Information asymmetry 
C)  Experience-curve effect 
D)  Learning-curve effect 
A)  Principal-agent problem 
B)  Information asymmetry 
C)  Experience-curve effect 
D)  Learning-curve effect

Question 7

Investments in specialized assets tend to incur high opportunity costs because the:

Accepted Answer

A)  assets can be profitably used for multiple purposes. 
B)  threat of one of the partners pursuing his or her self-interest is high. 
C)  social costs associated with these assets are high. 
D)  firms can avoid backward integration by investing in these assets. 
A)  assets can be profitably used for multiple purposes. 
B)  threat of one of the partners pursuing his or her self-interest is high. 
C)  social costs associated with these assets are high. 
D)  firms can avoid backward integration by investing in these assets.

Question 8

_____ are strategic business units that compete in a low-growth market but hold considerable market share.

Accepted Answer

A)  Dogs 
B)  Question marks 
C)  Cash cows 
D)  Stars 
A)  Dogs 
B)  Question marks 
C)  Cash cows 
D)  Stars

Question 9

What must executives decide when formulating a corporate strategy?

Accepted Answer

Executives must decide:
1.In what stages

Question 10

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

Accepted Answer

A)  Cost drivers 
B)  Value drivers 
C)  Specialized assets 
D)  Liquid assets 
A)  Cost drivers 
B)  Value drivers 
C)  Specialized assets 
D)  Liquid assets

Question 11

What do you mean by a lemons problem? Discuss using the market for used cars as an example.

Accepted Answer

Students' values in the example may vary

Question 12

How is transaction cost economics useful in strategic management?

Accepted Answer

A theoretical framework in strategic man

Question 13

What are the two types of additional costs associated with a related-diversification strategy?

Accepted Answer

A related-diversification strategy entai

Question 14

A primary advantage of organizing economic activity within firms is the:

Accepted Answer

A)  ability to coordinate highly complex tasks to allow for specialized division of labor. 
B)  low administrative costs because of reduced bureaucracy. 
C)  eradication of the principal-agent problem. 
D)  high-powered incentive to work as salaried employees for an existing firm. 
A)  ability to coordinate highly complex tasks to allow for specialized division of labor. 
B)  low administrative costs because of reduced bureaucracy. 
C)  eradication of the principal-agent problem. 
D)  high-powered incentive to work as salaried employees for an existing firm.

Question 15

Discuss the various general diversification strategies available to a firm.

Accepted Answer

There are various general diversificatio

Question 16

_____ is best described as the process of reorganizing and divesting business units and activities to refocus a company in order to leverage its core competencies more fully.

Accepted Answer

A)  Reverse engineering 
B)  Restructuring 
C)  Rebooting 
D)  Reverse brainstorming 
A)  Reverse engineering 
B)  Restructuring 
C)  Rebooting 
D)  Reverse brainstorming

Question 17

Which of the following firms is most prone to experiencing a diversification discount?

Accepted Answer

A)  A company that deals in petroleum as well as natural gas 
B)  A company that derives its revenues from selling aerated drinks and health drinks 
C)  A company that pursues unrelated diversification 
D)  A company that pursues related-constrained diversification 
A)  A company that deals in petroleum as well as natural gas 
B)  A company that derives its revenues from selling aerated drinks and health drinks 
C)  A company that pursues unrelated diversification 
D)  A company that pursues related-constrained diversification

Question 18

Which of the following statements is true of transaction costs?

Accepted Answer

A)  When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate. 
B)  When companies transact in the open market, they incur internal transaction costs. 
C)  Transaction costs exclusively consist of external costs associated with economic exchanges. 
D)  Transaction costs are necessary to explain and predict the boundaries of a firm. 
A)  When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in the market, then the concerned firm should vertically integrate. 
B)  When companies transact in the open market, they incur internal transaction costs. 
C)  Transaction costs exclusively consist of external costs associated with economic exchanges. 
D)  Transaction costs are necessary to explain and predict the boundaries of a firm.

Question 19

Briefly discuss the two types of long-term contracts.

Accepted Answer

Licensing is a form of long-term contrac

Question 20

Discuss the benefits of taper integration.

Accepted Answer

Taper integration has several benefits:

In the Boston Consulting Group (BCG)growth-share matrix, strategic business units categorized under dogs:

Which of the following is an example of an external transaction cost?

_____ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes.

What are the strategic recommendations for strategic business units categorized under question marks in the Boston Consulting Group (BCG)growth-share matrix?

When approaching a bank for a loan, the borrower has better knowledge than the lender about his or her own ability to repay the loan without defaulting.What is this situation referred to as?

Investments in specialized assets tend to incur high opportunity costs because the:

_____ are strategic business units that compete in a low-growth market but hold considerable market share.

What must executives decide when formulating a corporate strategy?

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

What do you mean by a lemons problem? Discuss using the market for used cars as an example.

How is transaction cost economics useful in strategic management?

What are the two types of additional costs associated with a related-diversification strategy?

A primary advantage of organizing economic activity within firms is the:

Discuss the various general diversification strategies available to a firm.

_____ is best described as the process of reorganizing and divesting business units and activities to refocus a company in order to leverage its core competencies more fully.

Which of the following firms is most prone to experiencing a diversification discount?

Which of the following statements is true of transaction costs?

Briefly discuss the two types of long-term contracts.

Discuss the benefits of taper integration.

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Strategic Alliances, Mergers and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters

Exam 8: Corporate Strategy: Vertical Integration and Diversification

In the Boston Consulting Group (BCG)growth-share matrix, strategic business units categorized under dogs:

Which of the following is an example of an external transaction cost?

_____ is best described as an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes.

What are the strategic recommendations for strategic business units categorized under question marks in the Boston Consulting Group (BCG)growth-share matrix?

When approaching a bank for a loan, the borrower has better knowledge than the lender about his or her own ability to repay the loan without defaulting.What is this situation referred to as?

Investments in specialized assets tend to incur high opportunity costs because the:

_____ are strategic business units that compete in a low-growth market but hold considerable market share.

What must executives decide when formulating a corporate strategy?

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

What do you mean by a lemons problem? Discuss using the market for used cars as an example.

How is transaction cost economics useful in strategic management?

What are the two types of additional costs associated with a related-diversification strategy?

A primary advantage of organizing economic activity within firms is the:

Discuss the various general diversification strategies available to a firm.

_____ is best described as the process of reorganizing and divesting business units and activities to refocus a company in order to leverage its core competencies more fully.

Which of the following firms is most prone to experiencing a diversification discount?

Which of the following statements is true of transaction costs?

Briefly discuss the two types of long-term contracts.

Discuss the benefits of taper integration.

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Strategic Alliances, Mergers and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters