Corporate strategy correct answers a quest for competitive advantage when competing in multiple areas
Corporate strategy concerns the scope of the firm in terms of correct answers - Industry value chain
- Products and services
- Geography
The scope of the firm determines _________ along the...
MGT 499 Exam 3 UKY(100% Everfree answers)
Corporate strategy correct answers a quest for competitive advantage when competing in multiple areas
Corporate strategy concerns the scope of the firm in terms of correct answers - Industry value chain
- Products and services
- Geography
The scope of the firm determines _________ along the three dimensions correct answers boundaries
What are the three dimensions? correct answers - Horizontal Integration
- Geographic Scope
- Vertical Integration
Transaction cost correct answers all internal and external costs associated with an economic exchange
External transaction costs correct answers costs of searching for a firm/individual with whom to contract,
and then negotiating, monitoring, and enforcing the contract
Internal transaction cost correct answers cost associated with organizing an economic exchange within a
firm; administrative costs and etc.
Who produces external transaction costs? correct answers The market
If In-House Cost > Market Cost, correct answers the firm should outsource
If In-House Cost < Market Cost, correct answers the firm should make internally (vertical integrate)
Vertical Integration correct answers Ownership of its inputs, production, or outputs in the value chain
Advantages of in-house production correct answers - The ability to make command and control decisions
by fiat along clear hierarchical lines of authority
, - Coordination of high complex tasks to allow for specialized division of labor
- Investment for specialized assets
- Creation of a community of knowledge
Advantages to use market correct answers - Increased flexibility (to compare prices and services among
many different providers)
- Useful options for small-medium size firms or those with no expertise
Disadvantages of in-house production correct answers - Can take longer time
- High investment
- Need expertise
- Administrative costs because of necessary bureaucracy
Disadvantages to use market correct answers - Search costs
- Incomplete contracting (specifying & measuring performance)
- Enforcement of contracts for potential opportunistic behaviors by other parties
Benefits of Vertical Integration correct answers - Securing critical supplies
- Facilitating scheduling and planning
- Facilitating investments in specialized assets
Specialized Assets correct answers Unique assets that are highly valuable within a focal firm, but of little
value or no use in the external market
Forms of Specialized Assets correct answers - site specificity
- physical asset specificity
- human asset specificity
Risks of Vertical Integration correct answers - Increasing costs
- Internal suppliers may lose the incentives to increase quality or come up with innovative new products
over time compared to external suppliers
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