UWL Randika MGT 449 Final Exam Chapters 9 – 12 || A Verified A+ Pass.
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UWL Randika MGT 449
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UWL Randika MGT 449
Corporate Strategy correct answers The decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously
Transaction Cost Economics correct answers A theoretical framework in strategic manageme...
UWL Randika MGT 449 Final Exam Chapters 9 – 12 || A
Verified A+ Pass.
Corporate Strategy correct answers The decisions that senior management makes and the goal-
directed actions it takes to gain and sustain competitive advantage in several industries and
markets simultaneously
Transaction Cost Economics correct answers A theoretical framework in strategic management
to explain and predict the boundaries of the firm, which is central to formulating a corporate
strategy that is more likely to lead to competitive advantage
Transaction Costs correct answers All internal and external costs associated with an economic
exchange, whether within a firm or in markets
External Transaction Costs correct answers Costs of searching for a firm or an individual with
whom to contract, and then negotiating, monitoring, and enforcing the contract
Internal Transaction Costs correct answers Costs pertaining to organizing an economic exchange
within a hierarchy; also called administrative costs
Principal-Agent Problem correct answers Situation in which an agent performing activities on
behalf of a principal pursues his or her own interests
Information Asymmetries correct answers Situations in which one party is more informed than
another, because of the possession of private information
Strategic Alliances correct answers Voluntary arrangements between firms that involve the
sharing of knowledge, resources, and capabilities with the intent of developing processes,
products, or services
Licensing correct answers A form of long-term contracting in the manufacturing sector that
enables firms to commercialize intellectual property
Franchising correct answers A long-term contract in which a franchisor grants a franchisee the
right to use the franchisor's trademark and business processes to offer goods and services that
carry the franchisor's brand name
Credible Commitment correct answers A long-term strategic decision that is both difficult and
costly to reverse
Joint Venture correct answers A stand-alone organization created and jointly owned by two or
more parent companies
Vertical Integration correct answers The firm's ownership of its production of needed inputs or
of the channels by which it distributes its outputs
,Industry Value Chain correct answers Depiction of the transformation of raw materials into
finished goods and services along distinct vertical stages, each of which typically represents a
distinct industry in which a number of different firms are competing
Backward Vertical Integration correct answers Changes in an industry value chain that involve
moving ownership of activities upstream to the originating (inputs) point of the value chain
Forward Vertical Integration correct answers Changes in an industry value chain that involve
moving ownership of activities closer to the end (customer) point of the value chain
Specialized Assets correct answers Unique assets with high opportunity cost: They have
significantly more value in their intended use than in their next- best use. They come in three
types: site specificity, physical- asset specificity, and human-asset specificity
Vertical Market Failure correct answers When the markets along the industry value chain are too
risky, and alternatives too costly in time or money
Taper Integration correct answers A way of orchestrating value activities in which a firm is
backwardly integrated but also relies on outside-market firms for some of its supplies and/or is
forwardly integrated but also relies on outsidemarket firms for some of its distribution
Strategic Outsourcing correct answers Moving one or more internal value chain activities outside
the firm's boundaries to other firms in the industry value chain
Diversification correct answers An increase in the variety of products and services a firm offers
or markets and the geographic regions in which it competes
Product Diversification Strategy correct answers Corporate strategy in which a firm is active in
several different product markets
Geographic Diversification Strategy correct answers Corporate strategy in which a firm is active
in several different countries
Related Diversification Strategy correct answers Corporate strategy in which a firm derives less
than 70 percent of its revenues from a single business activity and obtains revenues from other
lines of business that are linked to the primary business activity
Product-Market Diversification Strategy correct answers Corporate strategy in which a firm is
active in several different product markets and several different countries
Unrelated Diversification Strategy correct answers Corporate Strategy in which a firm derives
less than 70 percent of its revenues comes from a single business and there are few, if any,
linkages among its businesses
,Related-Constrained Diversification Strategy correct answers A kind of related diversification
strategy in which executives pursue only businesses where they can apply the resources and core
competencies already available in the primary business
Related-Linked Diversification Strategy correct answers A kind of related diversification
strategy in which executives pursue various businesses opportunities that share only a limited
number of linkages
Conglomerate correct answers A company that combines two or more strategic business units
under one overarching corporation; follows an unrelated diversification strategy
Core Competence-Market Matrix correct answers A framework to guide corporate
diversification strategy by analyzing possible combinations of existing/new core competencies
and existing/new markets
Diversification Discount correct answers Situation in which the stock price of highly diversified
firms is valued at less than the sum of their individual business units
Diversification Premium correct answers Situation in which the stock price of related-
diversification firms is valued at greater than the sum of their individual business units
Boston Consulting Group (BCG) Growth-Share Matrix correct answers A corporate planning
tool in which the corporation is viewed as a portfolio of business units, which are represented
graphically along relative market share (horizontal axis) and speed of market growth (vertical
axis). SBUs are plotted into four categories (dog, cash cow, star, and question mark), each of
which warrants a different investment strategy
Build-Borrow-or-Buy Framework correct answers Conceptual model that aids firms in deciding
whether to pursue internal development (build), enter a contractual arrangement or strategic
alliance (borrow), or acquire new resources, capabilities, and competencies (buy)
Strategic Alliance correct answers A voluntary arrangement between firms that involves the
sharing of knowledge, resources, and capabilities with the intent of developing processes,
products, or services
Relational View of Competitive Advantage correct answers Strategic management framework
that proposes that critical resources and capabilities frequently are embedded in strategic
alliances that span firm boundaries
Real-Options Perspective correct answers Approach to strategic decision making that breaks
down a larger investment decision into a set of smaller decisions that are staged sequentially over
time
Co-Opetition correct answers Cooperation by competitors to achieve a strategic objective
, Learning Races correct answers Situations in which both partners in a strategic alliance are
motivated to form an alliance for learning, but the rate at which the firms learn may vary
Non-Equity Alliance correct answers Partnership based on contracts between firms
Explicit Knowledge correct answers Knowledge that can be codified; concerns knowing about a
process or product
Equity Alliance correct answers Partnership in which at least one partner takes partial ownership
in the other
Tacit Knowledge correct answers Knowledge that cannot be codified; concerns knowing how to
do a certain task and can be acquired only through active participation in that task
Corporate Venture Capital (CVC) correct answers Equity investments by established firms in
entrepreneurial ventures; CVC falls under the broader rubric of equity alliances
Alliance Management Capability correct answers A firm's ability to effectively manage three
alliance-related tasks concurrently: (1) partner selection and alliance formation, (2) alliance
design and governance, and (3) post-formation alliance management
Merger correct answers The joining of two independent companies to form a combined entity
Acquisition correct answers The purchase or takeover of one company by another; can be
friendly or unfriendly
Hostile Takeover correct answers Acquisition in which the target company does not wish to be
acquired
Horizontal Integration correct answers The process of merging with competitors, leading to
industry consolidation
Managerial Hubris correct answers A form of self-delusion in which managers convince
themselves of their superior skills in the face of clear evidence to the contrary
Globalization correct answers The process of closer integration and exchange between different
countries and peoples worldwide, made possible by falling trade and investment barriers,
advances in telecommunications, and reductions in transportation costs
Multinational Enterprise (MNE) correct answers A company that deploys resources and
capabilities in the procurement, production, and distribution of goods and services in at least two
countries
Foreign Direct Investment (FDI) correct answers A firm's investments in value chain activities
abroad
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