Which of the following benefits of diversification explains the idea that combining
unrelated businesses can allow firms to finance projects through cross-subsidization
when they previously were unable to finance the same projects externally?
a) Use of internal capital markets
b) Economies of scale and scope
c) Economizing on transaction costs
d) Diversifying shareholder portfolios
e) Identifying undervalued firms
What entity as a supplier has the most substantial power over manufacturers in the
commercial aircraft market?
a) Raw materials suppliers
b) Airlines
c) Aircraft leasing companies
d) Unions
e) Passengers
When are sunk costs a most effective entry barrier?
a) When the incumbent has incurred them and the entrant has not
b) When incumbents have long-standing relationships with suppliers and customers
c) When channels are few and hard to replicate
d) When a firm has a reputation for toughness or competes in multiple markets
e) When marginal costs are low and flooding the market causes large price reductions
Which of the following would reduce co-ordination and hold-up problems?
a) Cost of upstream vertical supplies
b) Manager contracts
c) Required quality of finished product
d) Governance
e) None of the above
Which of the following products and services depend on standards?
a) Cellular communications
b) Internet
c) Video gaming
d) High-definition television
e) All of the above
Which of the following is not an isolating mechanism that falls under the heading of
early-mover advantage?
a) Learning curve
b) Reputation and buyer uncertainty
c) Buyer switching costs
d) Network effects
e) Superior access to inputs or customers
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
What is a grim trigger strategy in a two firm repeated game?
a) A strategy where a firm will always aggress regardless of how the other firm acts
b) A strategy where a firm will always cooperate regardless of how the other firm acts
c) A strategy in which a firm is prepared to match whatever changes in strategy the
competitor makes
d) A strategy in which a firm initially cooperates and then aggresses for the rest of the
game as soon as the opponent aggresses
e) A strategy in which a firm is prepared to aggress when its opponent cooperates and
cooperate when its opponent aggresses
What term describes a decision that has a long-term impact and is difficult to reverse?
a) Dedicated investment
b) Strategic commitment
c) Critical choice
d) Market investment
e) Firm commitment
Examining which of the following is broadly considered one of the easiest ways to
measure diversifying activity?
a) Joint Ventures
b) Mergers and acquisitions
c) Internal Business Development
d) Strategic Alliances
e) Collaborative agreements
What term best describes a resource that cannot ‘sell itself” to the highest bidder?
a) Isolated
b) Value-creating
c) Scarce
d) Imperfectly mobile
e) Profit maximizing
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
What step of Ghemawat’s framework for analyzing commitment intensive choices
involves analyzing whether the firm’s commitment is likely to result in a product market
position in which the firm delivers superior benefits to consumers or operates with
lower costs than competitors?
a) Positioning analysis
b) Sustainability analysis
c) Flexibility analysis
d) Judgment analysis
e) Final Commitment analysis
Which of the following cost line items would be a fixed cost?
a) Commissions to Salespeople
b) Rent
c) Raw Materials
d) Packaging
e) Shipping/Delivery Charges
What mode of long-distance communication first laid the groundwork for today’s
modern communication forms?
a) U.S. Postal Service
b) Private mail service
c) Telegraph
d) Telephone
e) Railroad
What type of firm is one that is already operating in a particular market?
a) Market leader
b) Entrant
c) Incumbent
d) Market follower
e) Monopolist
Which of the following processes is most representative of a vertically integrated firm
on the “make” 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) Perform activity internally