A 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 - answer-product diversificati...
BUSINESS POLICY 4900 CHAPTER 8 EXAM
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 - answer-product
diversification
Chao is in an interview for a sales job that requires no experience. He is trying to portray himself as a
highly enthusiastic, energetic person with high-level communication and interpersonal skills. The
interviewer is convinced that Chao should be hired as a salesperson in the company. However, in his
resume, Chao had not mentioned his previous work experience as he was fired from that job because he
used illegal drugs. Which of the following does this scenario best illustrate? - answer-information
asymmetry
which of the following statements is true of transaction costs? - answer-Transaction costs are necessary
to explain and predict the boundaries of a firm
Which of the following is an example of an external transaction cost? - answer-The cost of searching for
a contract manufacturer
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? -
answer-The firm will have more flexibility in purchasing and comparing prices of goods and services.
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? - answer-
principal-agent problem
_____ are best described as voluntary arrangements between firms that involve the sharing of
knowledge, resources, and capabilities with the intent of developing processes, products, or services to
lead to competitive advantage. - answer-strategic alliances
Hitoro Inc. developed a superior touch screen technology for tablet computers that enabled multiple
users to operate the screen at the same time. The technology was leased to Revox Inc., a consumer
electronics company, for five years. Which of the following alternatives to integration does this best
illustrate? - answer-Licensing
Silver Weave Inc., an apparel company, operates through a business model in which individuals can buy
the rights to set up Silver Weave stores and sell the company's merchandise in return for a lump sum fee
at the beginning of the contract and a percentage of revenues every month. The owners of the stores
have to stock the collection approved from the company's headquarters and also maintain consistent
customer service as expected in its flagship store. Which of the following alternatives to integration does
this best illustrate? - answer-franchising
GreenCure Pharma Inc. wanted its research partner, an R&D company, to develop a cancer vaccine.
However, the project required huge capital investments, and its research partner was not ready to solely
face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, GreenCure
, Pharma invested $100 million in the project. This investment made by GreenCure Pharma will result in a
- answer-Credible commitment
When Toyota wanted to secure a long-term supply of lithium, it had to create a bond of trust with an
Australian company, Orocobre Ltd. Orocobre wanted to establish the bond of trust before making huge
investments in specialized equipment required to extract the high-quality lithium. What did Toyota do to
instill this trust? - answer-It made a credible commitment by taking an equity stake in Orocobre.
Divina Pharma Inc. and MF Electronics Inc. have together invested and created a new organization,
FirstHealth Inc., to focus on developing diagnostic devices. Through this new firm, both companies are
attempting to combine their core competencies to innovate and reduce their risks associated with
transaction-specific investments. However, the new organization operates independent of Divina
Pharma and MF Electronics. Which of the following alternatives to integration does this scenario best
illustrate? - answer-a joint venture
Which of the following alternatives on the make-or-buy continuum allows for most integration? -
answer-parent-subsidiary relationship
Stellar Products Inc. is a U.S.-based consumer electronics company. It owns smaller firms in Japan and
Taiwan where most of its cell phone technology is developed and manufactured before being released
worldwide. Which of the following alternatives to integration does this best illustrate? - answer-parent-
subsidiary relationship
_____ is best described as a firm's ownership of its production of needed inputs or of the channels by
which it distributes its outputs - answer-vertical intergration
A(n) _____ is best used to depict the transformation of raw materials into finished goods and services
along distinct vertical stages. - answer-industry value chain
_____ is best described as changes in an industry value chain that involve moving ownership of activities
closer to the end (customer) point of the value chain. - answer-Forward vertical integration
Neon Electronics Inc. sourced touch screens required for its tablet computers, cell phones, and
televisions from a manufacturer in China. But the demand for such components was high globally, and
the supplier could not meet the quality standards of Neon Electronics. Thus, Neon Electronics decided to
set up its own unit to develop and manufacture the required touch screens. What does this scenario
best illustrate? - answer-backward vertical integration
Virtue Products Inc., a large conglomerate, procures a few component parts from external suppliers and
also manufactures some of the key raw materials in its own subsidiaries. This apart, the company does
not solely depend on outside distributors to reach its customers. In fact, it has its own retail stores to
distribute its products. In this scenario, which of the following alternatives to vertical integration is
Virtue Products applying? - answer-taper integration
Apple and Nike have their own retail outlets and also use other independent retailers, both the brick-
and-mortar type and online, to sell their products. This is an example of - answer-taper integration
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