Product diversification. - has decided to enter the college bookstore market. The goal of "amazon campus" is to offer co-branded university-specific web sites that offer textbooks and paraphernalia, such as logo sweaters and baseball hats. This development shows amazon's relentless pursuit of
A....
STRATEGIC MGMT CHAPTER 8 (tb)
Product diversification. - answer-amazon.com has decided to enter the college bookstore market. The
goal of "amazon campus" is to offer co-branded university-specific web sites that offer textbooks and
paraphernalia, such as logo sweaters and baseball hats. This development shows amazon's relentless
pursuit of
A.
Geographic diversification.
B.
Product diversification.
C.
Vertical integration.
D.
Horizontal integration.
Vertical integration. - answer-decisions relating to "what stages of the industry value chain to participate
in" determine a firm's
A.
Level of diversification.
B.
Geographic scope.
C.
Vertical integration.
D.
Absorptive capacity.
The chief executive officer - answer-which of the following stakeholders of a company would most likely
be responsible for formulating a corporate strategy?
A.
The first-line employees
B.
The creditors
C.
The chief executive officer
D.
The middle manager
,Transaction costs are necessary to explain and predict the boundaries of a firm. - answer-which of the
following statements is true of transaction costs?
A.
When the costs of pursuing an activity in-house are more than the costs of transacting for that activity in
the market, then the concerned firm should vertically integrate.
B.
When companies transact in the open market, they incur internal transaction costs.
C.
Transaction costs exclusively consist of external costs associated with economic exchanges.
D.
Transaction costs are necessary to explain and predict the boundaries of a firm.
The cost of searching for a contract manufacturer - answer-which of the following is an example of an
external transaction cost?
A.
The cost of setting up a production unit
B.
The cost of searching for a contract manufacturer
C.
The cost of recruiting and retaining employees
D.
The cost of maintaining plant and machinery
The cost of maintaining a production unit - answer-which of the following is an example of an internal
transaction cost?
A.
The cost of searching for a contract manufacturer
B.
The cost of signing a contract with a supplier
C.
The cost of buying raw materials
D.
The cost of maintaining a production unit
Internal transaction costs tend to increase with organizational size and complexity. - answer-which of
the following statements is true of internal transaction costs?
A.
Internal transaction costs arise when companies transact in the open market.
,B.
When the internal costs involved in pursuing an activity in-house are more than the costs of transacting,
then the concerned firm should vertically integrate.
C.
Internal transaction costs tend to increase with organizational size and complexity.
D.
It is beneficial to "buy" goods or services rather than "make" when internal transaction costs are low.
Ability to coordinate highly complex tasks to allow for specialized division of labor. - answer-a primary
advantage of organizing economic activity within firms is the
A.
Ability to coordinate highly complex tasks to allow for specialized division of labor.
B.
Low administrative costs because of reduced bureaucracy.
C.
Eradication of the principal-agent problem.
D.
High-powered incentive to work as salaried employees for an existing firm.
The firm will have more flexibility in purchasing and comparing prices of goods and services. - answer-
grace apparel inc. Has decided to procure fabrics required for its garments from external suppliers
instead of maintaining its own dyeing and weaving facilities. How will this decision affect the firm?
A.
The firm will be protected against the principal-agent problem.
B.
The firm's administrative costs will be low because of necessary bureaucracy.
C.
The firm will have more flexibility in purchasing and comparing prices of goods and services.
D.
The firm will have high-powered incentives, such as hourly wages and salaries.
Principal-agent problem - answer-managers in a firm hired to improve the firm's profitability and
ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests.
What does this best illustrate?
A.
Diseconomies of scale
B.
Principal-agent problem
, C.
Experience-curve effects
D.
Information asymmetries
Provide stock options to managers. - answer-the most efficient way to overcome the principal-agent
problem in a firm is to
A.
Increase the level of vertical integration within the firm.
B.
Provide stock options to managers.
C.
Downsize the existing workforce.
D.
Organize economic activities within the firm.
Information asymmetry - answer-_____ is best described as a situation in which one party is more
informed than another, because of the possession of private information.
A.
Information governance
B.
Information asymmetry
C.
Information deregulation
D.
Information piracy
Information asymmetry - answer-in the market for used cars, which of the following is a reason behind
the crowding out of desirable cars by lemons or inferior ones?
A.
Experience-curve effects
B.
Time compression diseconomies
C.
Principal-agent problem
D.
Information asymmetry
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