Test 2

Question 0

the boundaries of the firm along three dimensions: industry value chain, products and services, and geography

Answer 0

Scope of the Firm

Question 1

the decisions that senior management makes and the actions it takes in the quest for competitive advantage in several industries and markets simultaneously; addresses where to compete

Answer 1

Corporate level strategy

Question 2

situation in which the stock price of related-diversification firms is valued at greater than the sum of their individual business units.

Answer 2

Diversification premium

Question 3

situation in which the stock price of highly diversified firms is valued at less than the sum of their individual business units

Answer 3

Diversification discount

Question 4

corporate strategy in which a firm derives less than 70% of its revenues from a single business activity and there are few, if any, linkages among its businesses

Answer 4

Unrelated diversification strategy

Question 5

Corporate strategy in which a firm derives less than 70% of its revenues from a single business activity but obtains revenues from other lines of business that are linked to the primary business activity.

Answer 5

Related diversification strategy

Question 6

corporate strategy in which a firm is active in several different product markets and several different countries

Answer 6

Product-market diversification strategy

Question 7

corporate strategy in which a firm is active in several different countries

Answer 7

Geographic diversification strategy

Question 8

corporate strategy in which a firm is active in several different product markets

Answer 8

Product diversification strategy

Question 9

an increase in the variety of products or markets in which to compete

Answer 9

Diversification

Question 10

moving one or more internal value chain activities outside the firm’s boundaries to other firms in the industry value chain.

Answer 10

Strategic outsourcing

Question 11

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 outside market firms for some of its distribution

Answer 11

Taper integration

Question 12

assets that 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.

Answer 12

Specialized assets

Question 13

changes in an industry value chain that involve moving ownership of activities closer to the end point of the value chain

Answer 13

Forward vertical integration

Question 14

changes in an industry value chain that involve moving ownership of activities upstream to the originating point of the value chain

Answer 14

Backward vertical integration

Question 15

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

Answer 15

Industry value chain

Question 16

the firm’s ownership of its production of needed inputs or of the channels by which it distributes its outputs

Answer 16

Vertical integration

Question 17

a theoretical framework in strategic management to explain and predict the scope of the firm, which is central to formulating a corporate level strategy that is more likely to lead to competitive advantage.

Answer 17

Transaction cost economics

Question 18

organizational form in which two or more partners create and jointly own a new organization

Answer 18

Joint venture

Question 19

a long term strategic decision that is both difficult and costly to reverse

Answer 19

Credible commitment

Question 20

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; the franchisee in turn pays an up front buy in lump sum and a percentage of revenues

Answer 20

Franchising

Question 21

a form of long term contracting in the manufacturing sector that enables firms to commercialize intellectual property

Answer 21

Licensing

Question 22

situations in which one party is more informed than another, mostly due to the possession of private information

Answer 22

Information asymmetries

Question 23

situation in which an agent performing activities on behalf of a principal pursues his or her own interests

Answer 23

Principal-agent problem

Question 24

all costs associated with an economic exchange, whether within a firm or in markets

Answer 24

Transaction costs

Question 25

all costs pertaining to organizing an economic exchange within a hierarchy, including recruiting and retaining employees, paying salaries and benefits, and setting up a business.

Answer 25

Administrative costs

Question 26

a corporate planning tool in which the corporation is viewed as a portfolio of business units, which are represented graphically along relative market share and speed of market growth. SBU’s are plotted into four categories, each of which warrants a different investment strategy

Answer 26

Boston Consulting Group growth share matrix

Question 27

the joining of two independent companies to form a combined entity.

Answer 27

Merger

Question 28

the purchase or takeover of one company by another; can be friendly or hostile

Answer 28

Acquisition

Question 29

situation in which a network exhibits local clusters, each with high degree centrality.

Answer 29

Small world phenomenon

Question 30

spaces where two organizations are connected to the same organization, but are not connected to one another.

Answer 30

Structural holes

Question 31

the number of direct ties a firm has in a network, out of possible direct ties; the more direct ties, the more centrally located the firm is

Answer 31

Degree centrality

Question 32

a social structure composed of multiple organizations and the links among the nodes

Answer 32

Strategic network

Question 33

a firm’s ability to effectively manage

Answer 33

Alliance management capability

Question 34

a standalone organization created and jointly owned by two or more parent companies

Answer 34

Joint venture

Question 35

equity investments from established firms in entrepreneurial ventures; falls under the broader rubric of equity alliances.

Answer 35

Corporate venture capital

Question 36

knowledge that cannot be codified; concerns knowing how to do a certain task and can be acquired only through active participation in that task

Answer 36

Tacit knowledge

Question 37

partnership in which at least one partner takes partial ownership in the other partner

Answer 37

Equity alliance

Question 38

knowledge that can be codified; concerns knowing about a process or product.

Answer 38

Explicit knowledge

Question 39

acquisition in which the target company does not wish to be acquired

Answer 39

Hostile takeover

Question 40

partnership based on contracts between firms. The most frequent forms are supply agreements, distribution agreements, and licensing agreements

Answer 40

Non-equity alliance

Question 41

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; the firm that accomplishes its goal more quickly as an incentive to exit the alliance or reduce its knowledge sharing

Answer 41

Learning races

Question 42

strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries.

Answer 42

Relational view of competitive advantage

Question 43

a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to led to competitive advantage

Answer 43

Strategic alliance

Question 44

a form of self-delusion, in which managers convince themselves of their superior skills in the face of clear evidence to the contrary.

Answer 44

Managerial hubris

Question 45

the process of acquiring and merging with competitors, leading to industry consolidation.

Answer 45

Horizontal integration

Question 46

process of closer integration and exchange between different countries and people worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs.

Answer 46

Globalization

Question 47

a type of positive externality that is regionally constrained.

Answer 47

Knowledge spillover

Question 48

a group of interconnected companies and institutions in a specific industry, located near each other geographically and also linked by common characteristics

Answer 48

Regional clusters

Question 49

world leadership in specific industries

Answer 49

National competitive advantage

Question 50

assumption that geographic location alone should not lead to firm level competitive advantage because firms are now, more than ever, able to source inputs globally.

Answer 50

Death-of-distance hypothesis

Question 51

strategy that attempts to combine the benefits of a localization strategy with those of a global standardization strategy

Answer 51

Transnational strategy

Question 52

strategy attempting to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best of class capabilities reside at the lowest cost.

Answer 52

Global-standardization strategy

Question 53

strategy pursued by MNE’s that attempts to max local responsiveness, with the intent that local consumers will perceive them to be domestic companies; strategy arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions; also called a multi domestic strategy

Answer 53

Localization strategy

Question 54

strategy that involves leveraging home based core competencies by selling the same products or services in both domestic and foreign markets; advantageous when the MNE faces low pressures for both local responsiveness and cost reductions

Answer 54

International strategy

Question 55

a company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries.

Answer 55

Multinational enterprise

Question 56

strategy framework that juxtaposes the pressures an MNE faces for cost reductions and local responsiveness to gain and sustain competitive advantage when competing globally: international strategy, localization strategy, global-standardization strategy, and transnational strategy

Answer 56

Integration-responsiveness framework

Question 57

the need to tailor product and service offerings to fit local consumer preferences and host country requirements; generally entails higher cost

Answer 57

Local responsiveness

Question 58

assumption that consumer needs and preferences throughout the world are converging and this becoming increasingly homogenous

Answer 58

Globalization hypothesis

Question 59

cultural disparity between an internationally expanding firm’s home country and its targeted host country.

Answer 59

Cultural distance

Question 60

dimension of culture that focuses on societal differences in tolerance toward ambiguity and uncertainty

Answer 60

Uncertainty-voidance dimension

Question 61

dimension of culture that focuses on the relationship between genders and its relation to an individual’s role at work and in society.

Answer 61

Masculinity-femininity dimension

Question 62

dimension of culture that focuses on the relationship between individuals in a society, particularly the relationship between individual and collective pursuits

Answer 62

Individualism dimension

Question 63

dimension of culture that focuses on how a society deals with inequality among people in terms of physical and intellectual capabilities, and how those methods translate into power distributions within organizations

Answer 63

Power distance dimension

Question 64

the collective mental and emotional programming of the mind that differentiates human groups

Answer 64

National culture

Question 65

additional costs of doing business in an unfamiliar cultural and economic environment, and of coordinating across geographic distances

Answer 65

Liability of foreignness

Question 66

benefits from locating value chain activities in the worlds optimal geographies for a specific activity, wherever that may be

Answer 66

Location economies

Question 67

a firm’s investment in value chain activities abroad

Answer 67

Foreign direct investment

Question 68

a firm’s strategy to gain and sustain competitive advantage when competing against other foreign and domestic companies around the world.

Answer 68

Global strategy

Question 69

Seeks to reap economies of scale and location by pursuing a global division of labor based on wherever best of class capabilities reside at the lowest cost. It involves little or no local responsiveness

Answer 69

global standardization strategy

Question 70

attempts to combine the high local responsiveness of a localization strategy with the lowest cost position attainable from a global standardization strategy. It also aims to benefit from global learning. Although appealing, it is difficult to implement due to the organizational complexities

Answer 70

transnational strategy

Question 71

seeks to reap economies of scale and location by pursuing a global division of labor based on wherever best of class capabilities reside at the lowest cost. It involves little or no local responsiveness

Answer 71

global standardization strategy

Question 72

attempts to max local responsiveness in the face of law pressure for cost reductions. It is costly and inefficient because it requires the duplication of key business functions in multiple countries

Answer 72

localization strategy

Question 73

leverages home based CC’s into foreign markets, primarily through exports. It is useful when the MNE faces low pressures for both local responsiveness and cost reductions

Answer 73

international strategy

Question 74

deploys resources and capabilities to procure, produce, and distribute goods and services in at least two countries

Answer 74

multinational enterprise (MNE)

Question 75

a firms investments in value chain activities abroad

Answer 75

Foreign direct investment

Question 76

involves closer integration and exchange between different countries and people worldwide, made possible by factors such as falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs

Answer 76

Globalization

Question 77

Connects different network clusters. The broker often spans structural holes, which strengthens its position, especially in a small world network.

Answer 77

Network broker firm

Question 78

an alliance of several firms to pursue a common purpose. A social structure of multiple organizations and the links among the nodes.

Answer 78

Strategic network

Question 79

have the goal of sharing knowledge, resources, and capabilities in order to develop processes, products, or services.

Answer 79

Strategic alliances

Question 80

the process of acquiring and merging with competitors, leading to industry consolidation.

Answer 80

Horizontal integration

Question 81

helps managers decide what activities to do in house versus what services and products to obtain from the external market

Answer 81

Transaction cost economics

Question 82

less than 70% of a firm's revenues come from a single business, and there are few, if any, linkages among its businesses

Answer 82

unrelated diversification strategy

Question 83

less than 70% of a firm's revenues from a single business activity, but obtains revenues from other lines of business that are linked to the primary business activity

Answer 83

related diversification strategy

Question 84

derives between 70-95% of its revenue from a single business

Answer 84

dominant business firm

Question 85

a firm’s boundaries are delineated by its knowledge bases and competencies

Answer 85

resource based view of the firm

Question 86

derives 95% or more of its revenues from one business

Answer 86

single business firm

Question 87

involves moving one or more value chain activities outside the firm’s boundaries to other firms in the industry value chain.

Answer 87

Strategic outsourcing

Question 88

a strategy 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 market firms for some of its distribution

Answer 88

Taper integration

Question 89

contributes to competitive advantage if the incremental value created is greater than the incremental cost of the specific corporate level strategy.

Answer 89

Vertical integration

Question 90

involves moving ownership of activities closer to the end point of the value chain

Answer 90

Forward vertical integration

Question 91

denotes a firm’s value added - what percentage of a firm’s sales is generated by the firm within its boundaries.

Answer 91

Vertical integration

Question 92

involves moving ownership of activities upstream nearer to the originating point of the industry value chain

Answer 92

Backward vertical integration

Question 93

depicts the transformation of raw materials into finished goods and services. Each stage typically represents a distinct industry in which a number of different firms are competing

Answer 93

Industry value chain

Question 94

outsourcing of activities outside the home country

Answer 94

Off shoring