Assessment-3 Question Correct Answer

It makes sense for a firm to vertically Transactions costs in the market >
1
integrate only if ___________ Administrative costs within the firm

A firm's ___________________is the way

in which managers conceptualize the
business and make critical resource
2 allocation decisions-be it in technologies, dominant logic
product development, distribution,
advertising, or in human resource
management.

Which of the following represent the

synergies that a multi-business firm can
3 claim across its two businesses A and B?
[V(A) represents the value of business A
and so on]

Which of the following aptly represents

4 the question corporate strategy attempts
to answer?

Which of the following is not a means of

Sharing activities across different
5 obtaining synergies across different
products.
businesses of a multi-business firm?

Which of the following is a potential

6
problem in a multi-business firm?

Strategy scholars argue that

diversification can also lead to loss of Cost of coordination is higher than gain
7
value. This can happen because of from economies of scope
_______

Which of the following is not an

explanation for where business groups fill
8 Conglomerate discount
institutional voids in developing
countries?
 A business group with a high level of
unrelated diversification has its
businesses as separately listed and legal
9
entities. The parent company however is
not a listed organization. Which type of
multi-business structure is this?

A small number of business houses with

diversified businesses control a large part
of the country's economy in several
10
nations in Asia. Which of the following is a
compelling explanation for this
phenomenon?

The CEO of an express delivery service

company is contemplating an entry into
Do vertically integrate. It gives you
11 truck manufacturing through an
access to critical resources.
acquisition. What would you suggest to
the CEO? and why?

A company should diversify into multiple all of the above three requirements are
12
businesses only if ______ met

Geographic diversification across national

13 boundaries often hurts a company's
performance because ______
 Which of the following is the most
14 compelling reason for diversifying into a
new business?
Options

1.Transactions costs in the market >

Administrative costs within the firm
2.Administrative costs within the firm >
Transactions costs in the market
3.Administrative costs within the firm =
Transactions costs in the market
4.Transaction costs do not exist

1.dominant logic
2.economic logic
3.ecological logic
4.dormant logic

V(A)+ V(B) - V(AB)

V(AB)+V(A)+V(B)
V(AB)-V(A)+V(B)
V(AB)-V(A)-V(B)
unanswered

How to position a business in the

market?
Which businesses to compete in?
Who is my competitor?
How do I compete?

Leveraging existing resources

Sharing activities across different
products
Using capabilities from one business in
another business
Outsourcing an activity that was
previously undertaken by the firm

Slower decision making

High governance costs
Lack of high-powered incentives
All of the above

Focused diversification
Related diversification
Cost of coordination is higher than gain
from economies of scope
High levels of executive compensation

Poorly developed labor markets

Weak protection that consumers have
Weak contract enforcement
Conglomerate discount
Cooperative form
SBU form
Competitive form
None of these

Business groups can act to compensate

for institutional voids
Family businesses are easier to control
The gains from synergies of a multi
business strategy is higher than costs
associated with it
Business groups add value through
centralized corporate functions Rest all options are covered only bold sentence is not covered

Do vertically integrate. It gives you access

to critical resources.
Do vertically integrate. It promises
monopoly control over your competitors.
Do not integrate. Express delivery and
truck manufacturing are businesses that
require very different competencies.
Do not integrate. The transactions costs
of buying trucks in the market are greater
than the administrative costs of making
trucks within the firm.

1.economies of scope exist

2.the extra value created by the company
is greater than the value that
independent shareholders can create for
themselves by risk diversification
3.the extra value created by the firm is
greater than what can be created by
another parent firm
4.all of the above three requirements are
met

countries differ in languages, cultures,

norms and institutional practices
economies of scope exist
economies of scale exist
some countries have low labor costs
The entry barriers for this new business
are low
The company has a corporate advantage
when it enters this new business
Five forces analysis suggests that the
industry is attractive
The new business is unrelated to its
existing businesses