Deck 23: Managing Vertical Relationships

Question 1

When a supplier becomes more profitable

A) there is increased benefits from acquiring it
B) the benefits from a stronger firm-to-firm relationship are increased
C) the benefits from a stronger firm-to-firm relationship are decreased
D) there is no additional reason to acquire it

Answer 1

D

Question 2

The conditions for unaligned retailer and manufacturer incentives include

A) customers are unfamiliar with the product features before they shop for it
B) retailers have no opportunity to educate consumers
C) manufacturers are more efficient at education consumers
D) demand for the product is decreased with some consumer education

Answer 2

A

Question 3

Mechanisms that manufacturers can use to deal with misaligned retailer incentives include

A) setting a maximum retail price
B) allowing many retailers to sell the product in each market
C) compensating retailers' sales staff for demonstrating the product
D) eliminate manufacturer staff that was demonstrating the product in stores

Answer 3

C

Question 4

Mechanisms that manufacturers can use to deal with misaligned retailer incentives include

A) setting a maximum retail price
B) providing an exclusive contract to a single retailer in a market
C) preventing retailers from compensating sales staff for demonstrating the product
D) eliminate manufacturer staff that was demonstrating the product in stores

Question 5

Vertical relationships can increase profits through

A) preventing firms from evading regulation
B) eliminating a double-markup problem
C) making the incentives of manufacturers and retailers unaligned
D) preventing price discrimination

Question 6

The conditions for unaligned retailer and manufacturer incentives include

A) customers are familiar with the product before they shop for it
B) retailers have can educate consumers at the point of sale
C) manufacturers are more efficient at education consumers
D) demand for the product is decreased with some consumer education

Question 7

Double markup problems arise when

A) upstream firms have market power
B) downstream firms have no market power
C) upstream and downstream products are unrelated in demand
D) upstream and downstream firm's pricing decisions tend to increase the demand for the other product

Question 8

The various ways that vertical relationships can evade regulation include

A) tying the sale of an unregulated good to a customer's choice of a regulated good
B) unbundling regulated and unregulated goods
C) preventing the exclusion of rival unregulated goods
D) insuring tax rates are uniform across jurisdictions

Question 9

Vertical relationships can increase profits through

A) preventing firms from evading regulation
B) creating a double-markup problem
C) making the incentives of manufacturers and retailers unaligned
D) facilitating price discrimination

Question 10

Double markup problems arise because

A) upstream firms have no market power
B) downstream firms have no market power
C) upstream and downstream products are unrelated in demand
D) upstream and downstream firm's pricing decisions tend to decrease the demand for the other product

Question 11

Vertical relationships can increase profits through

A) preventing firms from evading regulation
B) creating a double-markup problem
C) better aligning the incentives of manufacturers and retailers
D) preventing price discrimination

Question 12

The various ways that vertical relationships can evade regulation include

A) tying the sale of a regulated good to a customer's choice of an unregulated good
B) unbundling regulated and unregulated goods
C) excluding sellers of competing unregulated goods
D) insuring tax rates are uniform across jurisdictions

Question 13

The conditions for unaligned retailer and manufacturer incentives include

A) customers are familiar with the product before they shop for it
B) retailers have no opportunity to educate consumers
C) manufacturers are more efficient at education consumers
D) demand for the product is increased with some consumer education

Question 14

The conditions for unaligned retailer and manufacturer incentives include

A) customers are familiar with the product before they shop for it
B) retailers have no opportunity to educate consumers
C) manufacturers have little scope for educating consumers
D) demand for the product is decreased with some consumer education

Question 15

The various ways that vertical relationships can evade regulation include

A) tying the sale of a regulated good to a customer's choice of an unregulated good
B) unbundling regulated and unregulated goods
C) preventing the exclusion of rival unregulated goods
D) exploiting differences in tax rates across jurisdictions

Question 16

Double markup problems arise when

A) upstream firms have no market power
B) downstream firms have market power
C) upstream and downstream products are unrelated in demand
D) upstream and downstream firm's pricing decisions tend to increase the demand for the other product

Question 17

The various ways that vertical relationships can evade regulation include

A) tying the sale of a regulated good to a customer's choice of an unregulated good
B) bundling regulated and unregulated goods
C) preventing the exclusion of rival unregulated goods
D) insuring tax rates are uniform across jurisdictions

Question 18

Double markup problems arise because

A) upstream firms have no market power
B) downstream firms have no market power
C) upstream and downstream products are complementary in demand
D) upstream and downstream firm's pricing decisions tend to increase the demand for the other product

Question 19

Mechanisms that manufacturers can use to deal with misaligned retailer incentives include

A) setting a minimum retail price
B) allowing many retailers to sell the product in each market
C) preventing retailers from compensating sales staff for demonstrating the product
D) eliminate manufacturer staff that was demonstrating the product in stores

Question 20

Vertical relationships can increase profits through

A) providing a mechanism for firms from evading regulation
B) creating a double-markup problem
C) making the incentives of manufacturers and retailers unaligned
D) preventing price discrimination

Question 21

A characteristic of outsourcing is

A) completely unrelated to vertical integration
B) likely to be profitable exactly when vertical integration is profitable
C) it prevents a firm from focusing on its core competencies
D) can allow for the exploitation of differing degrees of economies of scale at different points in the supply chain

Question 22

if your supplier becomes more profitable

A) you become more profitable by acquiring it
B) you become less profitable by acquiring it
C) acquiring it will make you more profitable if there are no synergies to exploit
D) unless there are no synergies to exploit through acquisition, acquiring it will not make you more profitable

Question 23

Mechanisms that manufacturers can use to deal with misaligned retailer incentives include

A) setting a maximum retail price
B) allowing many retailers to sell the product in each market
C) preventing retailers from compensating sales staff for demonstrating the product
D) providing manufacturer staff to demonstrate the product in stores

Question 24

The conditions in which vertical relationships can enhance a firm's ability to price discriminate include

A) the manufacturer's product is of value to just one type of customer
B) the costs of arbitraging the price differences across markets is large
C) the manufacturer acquires the distributer in the lower priced market
D) competition provide little ability for the manufacturer has to price above marginal cost

Question 25

Acquiring a supplier because it becomes more profitable

A) will raise the asking price to offset any increase in cash flow over time
B) will increase your profits
C) will decrease your profits
D) will make you alter operations

Question 26

The conditions in which vertical relationships can enhance a firm's ability to price discriminate include

A) the manufacturer's product is of value to just one type of customer
B) the costs of arbitraging the price differences across markets is large
C) the manufacturer acquires the distributer in the higher priced market
D) lack of competition provide the manufacturer with the ability to price above marginal cost

Question 27

The conditions in which vertical relationships can enhance a firm's ability to price discriminate include

A) the manufacturer's product is of value to multiple types of customers
B) the costs of arbitraging the price differences across markets is large
C) the manufacturer acquires the distributer in the higher priced market
D) competition provide little ability for the manufacturer has to price above marginal cost

Question 28

The conditions in which vertical relationships can enhance a firm's ability to price discriminate include

A) the manufacturer's product is of value to just one type of customer
B) the costs of arbitraging the price differences across markets is small
C) the manufacturer acquires the distributer in the higher priced market
D) competition provide little ability for the manufacturer has to price above marginal cost

Question 29

A characteristic of outsourcing is

A) essentially the opposite of vertical integration
B) likely to be profitable exactly when vertical integration is profitable
C) it prevents a firm from focusing on its core competencies
D) it prevents the exploitation of differing degrees of economies of scale at different points in the supply chain

Question 30

A characteristic of outsourcing is

A) completely unrelated to vertical integration
B) likely to be profitable exactly when vertical integration is profitable
C) can allow a firm to focus on its core competencies
D) it prevents the exploitation of differing degrees of economies of scale at different points in the supply chain

Question 31

A requirement for acquiring a related firm to generate value is

A) it be profitable
B) you be profitable
C) you will alter operations because of the acquisition
D) all synergies between the firms were exploited before the acquisition

Question 32

A characteristic of outsourcing is

A) completely unrelated to vertical integration
B) likely to be profitable exactly when vertical integration is unprofitable
C) it prevents a firm from focusing on its core competencies
D) it prevents the exploitation of differing degrees of economies of scale at different points in the supply chain