Which of the following is true with regard to the difference in production costs between
an item produced in a vertically integrated firm and an item exchanged through an arm’s
length market transaction as the level of asset specificity increases?
a) The cost difference increases with greater asset specificity
b) Scale-based advantages of outside suppliers are likely to be stronger with greater
asset specificity
c) The cost difference declines with greater asset specificity
d) Scope-based advantages of outside suppliers are likely to be stronger with greater
asset specificity
e) The costs are negative for all levels of asset specificity
What was the major role of private banks in the early 1800s?
a) Serve as an institution for deposits
b) Issue credit
c) Reduce the risk of price fluctuation
d) Create futures markets
e) Sell stocks
What does Andrew Pettigrew identify to be the key issue that plagued Imperial
Chemical Industries that stymied the organizational adaptation that was necessary to
keep it successful in the 1970s?
a) Contracts
b) Cultural inertia
c) Pricing
d) Entry-deterring behaviors
e) Employment practices
Which of the following is measured by a report card that assesses product performance?
a) Process
b) Inputs
c) Warrantees
d) Outcomes
e) Longevity
Which of following factors should be considered when assessing complements and
substitutes?
a) Availability of close substitutes and/or complements
b) Price-value characteristics of substitutes/complements
c) Price elasticity of industry demand
d) All of the above
e) None of the above
How has Atlanta been able to grow as a center of commerce despite its poor water and
rail connections?
a) Widespread air transportation
b) New government regulations
c) Improved Financing
d) Better Communications
e) Better technology and innovation
Which of the following processes is most representative of a less integrated firm on the
‘buy’ end of the make-or-buy continuum?
a) Arm’s length market transactions
b) Long-term contracts
c) Strategic alliances and joint ventures
d) Parent/subsidiary relationships
e) Parent/subsidiary relationships
Which of the following conclusions can we make about vertical integration with
regards to product market share and scope?
a) If asset specificity is significant enough, vertical integration will be more profitable
than arm’s-length market purchases, even when production of the input is characterized
by strong scale economies or when the firm’s product market scale is small.
b) A firm gains more from vertical integration when outside market specialists are better
able to take advantage of economies of scale and scope
c) A firm with multiple product lines will benefit more from being vertically integrated
in the production of components for those products in which it can achieve significant
market scale
d) The more a firm produces, the greater its input and this ultimately decreases the
likelihood that in-house production can take as much advantage of economies of scale
and scope as an outside market specialist
e) If a firm is considering whether to make or buy an input requiring significant
up-front setup costs, and there is a large market outside the firm for the input, then the
firm should buy the input from outside market specialists
In Chandler’s classic work Strategy and Structure, what was the basic thesis he
concluded by researching case studies of Dupont, GM, Standard Oil of New Jersey and
Sears?
a) Neither structure nor strategy affects one another
b) Either structure or strategy can drive changes in the other
c) Strategy follows structure
d) Structure follows strategy
e) Understanding the relationship of structure and strategy is not necessary in
determining how a firm organizes
What is the accounting concept inventory turnover as developed by Sears in the late
19th century?
a) To systemize and circulate credit information
b) To manage the requirements of operating efficiencies
c) To publicly disclose the details of a firm’s operations
d) To present the payment of dividends out of profits
e) To link profits to fluctuations in sales volume
Which of the following describes when a manufacturer produces some of an input
quantity itself and purchases the remaining portion from independent firms?
a) Forward Integration
b) Tapered integration
c) Backward Integration
d) Balanced integration
e) Combined integration
What does it mean for a manufacturing firm to vertically integrate?
a) Expand using established product technologies to offer a wider variety of products
b) Reorganize management into semi-autonomous divisions
c) Produce raw materials and distribute finished goods on their own
d) Geographic distance between buyers and sellers
e) Use management consultants to optimize processes
What Japanese term describes a labyrinth of firms with long-term semi-formal
relationships up and down the vertical chain?
a) Kaizen
b) Keiretsu
c) Kanban
d) Karµshi
e) Mochibun kaisha
What term does Uzzi use to describe relationships characterized by trust and a
willingness to exchange closely held information and work together to solve problems?
a) Strategic partnerships
b) Joint ventures
c) Jobbers agreements
d) Embedded ties
e) Strategic alliance
Which of the following is generally thought of as a buyer in the hospital industry?
a) Pharmaceutical drug houses
b) Medical equipment companies
c) Technician
d) Patients
e) Nurse
Which of the following statements is least true regarding how culture can serve as a
control within organizations?
a) Culture controls the activities of employees on the basis of monitoring rather than
firm attachment
b) Individuals who value belonging to the culture will align their individual goals and
behaviors to those of the firm
c) The efficiency of culture as a control can be attributed in part to individuals
controlling themselves
d) The efficiency of culture as a control can be attributed in part to monitoring costs
being reduced
e) The efficiency of culture as a control can be attributed in part to opportunism being
held to a minimum
Which of the following terms best describes a review system in which an employee’s
supervisor, coworkers and subordinates are all asked to provide information regarding
that employee’s performance over a period of time?
a) Traditional top down review system
b) 360-degree peer review system
c) Management-by-objective system
d) Subjective performance evaluation
e) Pay-for-performance