corporate strategy - Answer-The decisions & actions taken to gain & sustain competitive advantage in several industries and markets simultaneously
addresses where to compete along 3 dimensions (industry value chain, products/services, geography)
vertical integration - Answer-the process in wh...
WPC 480 Final Exam Questions with
Correct Answers
corporate strategy - Answer-The decisions & actions taken to gain & sustain competitive
advantage in several industries and markets simultaneously
addresses where to compete along 3 dimensions (industry value chain,
products/services, geography)
vertical integration - Answer-the process in which several steps in the product and/or
distribution of product are controlled and owned by a single company or entity, in order
to increase that company's power in the marketplace
-expanding into other activities within the same value chain
forward integration - Answer-internalizing and owning some activities that are closer to
the end customer in the value chain
ex.: concentrate producers owning bottlers
backward integration - Answer-internalizing activities backwards farther from end
customers
ex.: hermes purses owning the leather suppliers
transaction cost economics - Answer-a theoretical framework that helps explain and
predict boundaries of the firm
transaction costs - Answer-costs associated with an economic exchange
the costs associated with activities that are not directly productive but are engaged in
only as a consequence of the need to coordinate exchange among the parties in the
transaction
internal transaction costs - Answer--Recruiting and retaining employees
-Paying salaries and benefits
-Setting up a shop floor
-Providing office space and computers, etc.
external transaction costs - Answer--Searching for a firm individual to contract with
-bargaining, negotiating, haggling cost
-monitoring, measuring, supervising, enforcing or policing performance
opportunism - Answer-willingness of at least some people to take advantage of others;
dishonesty
, causes external transactions costs to arise
greatest with there is an asset specificity problem
asset specificity - Answer-unique assets with ing opportunity costs: they have
significantly more value in their intended use than in their next-best use
site, physical, and human
causes external transactions costs to arise
ex: oil pipeline example
corporate strategy - Answer-where to compete
1. what mix of business to operate in?
2. determining the boundaries of the firm (scope of firm)
business strategy - Answer-how to compete
1. how to position the business? (cost leadership/differentiation)
2. insistency in actions across activities
functional strategy - Answer-how to execute
1. what actions to take in each activity/function
diversification - Answer-what range of products/services should the firm offer and what
geographic markets should the firm target?
single business - Answer-TYPES OF DIVERSIFICATION
ex.: Coca-Cola, Facebook
leverages its competencies
revenue is >95% of primary business
A
dominant business - Answer-TYPES OF DIVERSIFICATION
has a primary and a minor business - shares competencies
ex.: Harley Davidson
motorcycles (primary)
accessories/loan services (minor)
A<-->b
R-constrained diversification - Answer-TYPES OF DIVERSIFICATION
business generally share competencies
ex.: Nike & ExxonMobil
A<-->C<-->B<-->A
r-linked diversification - Answer-TYPES OF DIVERSIFICATION
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