Question 1

Outsourcing occurs when:

Accepted Answer

A)  activities that were previously undertaken by the firm are moved to outside suppliers 
B)  firms take over sourcing things themselves that they previously bought 
C)  a firm undergoes innovation 
D)  none of the above

Question 2

TCE postulates that human actors are characterized by ______, ______ and ______.

Accepted Answer

A)  creativity/opportunism/strategic foresight 
B)  bounded rationality/bounded business units/unbounded energy 
C)  bounded rationality/opportunistic behaviour/feasible foresight 
D)  none of these

Question 3

According to Adam Smith, ______.

Accepted Answer

A)  TCE developed out of markets 
B)  markets developed out of monopolies 
C)  monopolies developed TCE 
D)  none of these

Question 4

Outsourcing is an example of ______.

Accepted Answer

A)  coercive isomorphism 
B)  normative isomorphism 
C)  mimetic isomorphism 
D)  all of these

Question 5

Problems in evaluating performance according to the terms of contracted outcomes are called ______ by TCE.

Accepted Answer

A)  technological uncertainty 
B)  volume uncertainty 
C)  behavioural uncertainty 
D)  radical uncertainty

Question 6

Transaction frequency refers to ______.

Accepted Answer

A)  the rate at which funds are transferred after completion of a contract 
B)  the number of people employed to negotiate a contract 
C)  the number of products being transferred within a single contract 
D)  none of these

Question 7

Which of the following promoted outsourcing as a strategy?

Accepted Answer

A)  Marxism 
B)  liberalism 
C)  shareholder value 
D)  stakeholder activism

Question 8

The 'father' of TCE is:

Accepted Answer

A)  Karl Marx 
B)  Hamish McTaggart 
C)  Ronald Coase 
D)  Henry Mintzberg

Question 9

Which of the following are benefits of horizontal integration?

Accepted Answer

A)  reduced competitive intensity 
B)  lower production costs through economies of scale 
C)  increased differentiation by eliminating similar products or services in the market 
D)  all of these

Question 10

"Nikefication" is a strategy for ______.

Accepted Answer

A)  building global supply chains 
B)  making products from sub-components sourced from different suppliers 
C)  separating design and production 
D)  managing complex projects

Question 11

According to TCE, the boundary of the firm is ______.

Accepted Answer

A)  defined by real estate 
B)  defined by geography 
C)  defined by economic considerations concerning make or buy, internalizing or externalizing activities 
D)  none of these

Question 12

According to van Marrewijk, ______ is largely a matter of ______.

Accepted Answer

A)  acquisition/money 
B)  vertical integration/strategy 
C)  culture/horizontal integration 
D)  horizontal integration/culture

Question 13

Vertical integration occurs:

Accepted Answer

A)  when a firm competes with another 
B)  when a firm outsources to another 
C)  when a firm moves into activities that were previously undertaken by a supplier or a customer 
D)  when a firm acquires or merges with another

Question 14

Which of the following have been levied as criticisms of TCE?

Accepted Answer

A)  TCE focuses on cost minimization. 
B)  TCE understates the cost of organizing. 
C)  TCE neglects the role of social relationships in economic transactions. 
D)  all of these

Question 15

Institutional theory suggests that firms choose hierarchy over markets because ______.

Accepted Answer

A)  it is more efficient 
B)  it is functionally necessary 
C)  it is culturally familiar 
D)  it is easier

Question 16

According to van Marrewijk's study, the lesson for M&A's is:

Accepted Answer

A)  getting the right deal at the negotiating stage is crucial 
B)  managing the integration of it systems is crucial 
C)  managing the clash of cultures is crucial 
D)  integrating the two organizational cultures destroys the very reason for the strategic decision to merge in the first place

Question 17

In TCE uncertainty means:

Accepted Answer

A)  being lost in the detail 
B)  not being able to control the contingencies of contracts 
C)  being irrational in planning 
D)  none of these

Question 18

Horizontal integration occurs:

Accepted Answer

A)  when a firm competes with another 
B)  when a firm outsources to another 
C)  when a firm is dissolved 
D)  when a firm acquires or merges with another

Exam 5: Strategy Make or Buy