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WPC 480 Chae Final Questions With Complete Solutions $17.99
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WPC 480 Chae Final Questions With Complete Solutions
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WPC 480 Chae Final Questions With Complete Solutions What is Vertical integration? Process where several steps in production are controlled and owned by a single company Forward Integration ex) pepsi concentrate controls bottlers Backwards integration ex) manufacturer controls design process...

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  • October 23, 2024
  • 29
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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WPC 480 Chae Final Questions With
Complete Solutions

What is Vertical integration? Process where several steps in production are controlled and

owned by a single company




Forward Integration ex) pepsi concentrate controls bottlers




Backwards integration ex) manufacturer controls design process/area




Transaction Costs costs associated with economic change




Internal vs external




employees pay, benefit, office space vs. contract, supervising performance, negotiating




Opportunism Willingly taking adv of others (dishonesty)




threat of opp. is highest when paired with asset specificity problem

, WPC 480 Chae Final Questions With
Complete Solutions

Asset specificity Unique assets with high opportunity cost,


most value in first use than next best use.




Should a firm make or buy? C in house < C market= vertical integrate


Make > Buy =vertical integrate, no = outsource




Which is an example of internal trans. cost?




a. pertaining to setting up a floor

b. searching for suitable manufacturer

c. negotiating prices with business consultant

d. outsourcing papyroll maintenance


e. backward vertical integration A




T/F Threat of opportunism is the least when a party to an exchange has made transaction-specific

investments F

, WPC 480 Chae Final Questions With
Complete Solutions
T/F Flexibility is most valuable when the decision-making setting faced by a firm is uncertain.

T




T/F When depending largely on an input that is valueable, rare and costly to imitate, it is optimal

to carry out the exchange on the open market F




T/F MAKE> BUY = vertically integrate T




Levels of strategy 1. Corporate (where to compete)


2. Business (how to compete)

3. Functional (how to execute)




Diversification Range of products and service a firm should offer




Types of diversification -Single business. 95, A


-Dominant business. 70-95, AB

-Related constrained. <70 ABC

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