Question 1

The main business of the Coca-Cola Company is manufacturing,marketing and distributing concentrate for soda drinks to bottlers in over 200 countries of the world.The corporate scope of the Coca-Cola Company is best described as:

Accepted Answer

A) A broad product,geographical,and vertical scope 
B) A broad product and vertical scope,and a narrow geographical scope 
C) A broad geographical scope and narrow product and vertical scope 
D) A broad product and geographical scope and narrow vertical scope.

Question 2

By offering the possibility of repeat business,the suppliers and buyers can avoid the problems of opportunism that give rise to transaction costs.

Accepted Answer

A) True 
 B)False

Question 3

The main reason that the producers of wood pulp have often forward integrated into the production of paper is:

Accepted Answer

A) To increase value added by moving closer to the final customer 
B) To exploit technical economies of co-locating pulp and paper making plants while avoiding transaction costs caused by transaction-specific investments 
C) To reduce inventories and improve quality 
D) To insulate the firm from fluctuations in the price of wood pulp.

Exam 10: Vertical Integration and the Scope of the Firm

The main business of the Coca-Cola Company is manufacturing,marketing and distributing concentrate for soda drinks to bottlers in over 200 countries of the world.The corporate scope of the Coca-Cola Company is best described as:

By offering the possibility of repeat business,the suppliers and buyers can avoid the problems of opportunism that give rise to transaction costs.

The main reason that the producers of wood pulp have often forward integrated into the production of paper is: