Business Strategy Exam 3 Connect
Questions
Chapter 8 - correct answer ✔✔
A large conglomerate is deciding on the range of new products and services it can offer to its customers
to further expand its operations. This decision determines the firm's - correct answer ✔✔level of
diversification
The executives of Anaplan Inc., a large conglomerate, are making decisions on the stages of the industry
value chain the firm must participate in, the range of products and services it should offer, and the global
markets it should compete in. What are the executives primarily determining? - correct answer ✔✔the
boundaries of the firm
Firms often consolidate industries through horizontal mergers and acquisitions to - correct answer
✔✔increase their market power
Which of the following examples would most likely limit a firm's growth? - correct answer ✔✔A social
entrepreneur makes conservation of the environment the primary goal of his firm.
Which of the following is an example of internal transaction costs? - correct answer ✔✔the costs
pertaining to setting up a shop floor
A disadvantage associated with obtaining goods and services externally includes - correct answer
✔✔nontrivial search costs to be borne by the firm.
Lillian, a real estate agent, is selling a moderately priced house in a subdivision. She knows from her
uncle that the factory being built half a mile from the subdivision will be manufacturing dog food, using a
process that creates a very strong odor that permeates the surrounding neighborhood. A buyer, who is
unaware of the type of factory under construction, makes an offer on one of the houses Lillian is selling,
and within a short time, the deal goes through. What does this scenario best illustrate? - correct answer
✔✔information asymmetries
, When Pluralsight Products planned to start its operations in Amerigo, an emerging nation, it realized that
it would have to set up its own distribution channels. This would be a risky and expensive strategic move.
The company had an option of hiring a small supply chain management company, Elastic Logistics, to
reach its ultimate customers. However, this would require Elastic Logistics to make huge investments,
which would be of no use to it if Pluralsight Products decided to exit the market. Thus, to gain Elastic
Logistics' confidence, Gilded Products purchased 40 percent of the stock of Elastic Logistics. What does
this scenario best illustrate? - correct answer ✔✔equity alliance
________ is best described as the changes in an industry value chain that involve moving ownership of
activities upstream to the originating (inputs) point of the value chain. - correct answer ✔✔Backward
vertical integration
Which of the following best illustrates backward vertical integration? - correct answer ✔✔a chocolate
manufacturing company setting up its own cocoa plantations
Zscaler started as an original equipment manufacturing firm (OEM) for brand-name mobile device
companies. Later, it started offering a lineup of innovative and high-performance smartphones by
acquiring BuildIt, a San Francisco-based design firm. This strategic move of Zscaler is known as - correct
answer ✔✔forward vertical integration
Which of the following best illustrates human-asset specificity? - correct answer ✔✔training employees
on how to operate a customized furnace
LMP Automotive Holdings Inc., a large multinational conglomerate, has hired an external consultant to
process and audit its payroll. This allows the company to focus on manufacturing and marketing activities
rather than developing and maintaining its own human resource management systems. Which of the
following alternatives to vertical integration has LMP Automotive Holdings Inc. adopted? - correct
answer ✔✔strategic outsourcing
The rationale behind related diversification is to - correct answer ✔✔benefit from economies of scale
and scope.
Amazon expanded its single-product business by leveraging spare capacity into cloud computing and by
offering its Kindle line of tablet computers and Echo line of digital assistants. This is an example of -
correct answer ✔✔related-linked diversification
Questions
Chapter 8 - correct answer ✔✔
A large conglomerate is deciding on the range of new products and services it can offer to its customers
to further expand its operations. This decision determines the firm's - correct answer ✔✔level of
diversification
The executives of Anaplan Inc., a large conglomerate, are making decisions on the stages of the industry
value chain the firm must participate in, the range of products and services it should offer, and the global
markets it should compete in. What are the executives primarily determining? - correct answer ✔✔the
boundaries of the firm
Firms often consolidate industries through horizontal mergers and acquisitions to - correct answer
✔✔increase their market power
Which of the following examples would most likely limit a firm's growth? - correct answer ✔✔A social
entrepreneur makes conservation of the environment the primary goal of his firm.
Which of the following is an example of internal transaction costs? - correct answer ✔✔the costs
pertaining to setting up a shop floor
A disadvantage associated with obtaining goods and services externally includes - correct answer
✔✔nontrivial search costs to be borne by the firm.
Lillian, a real estate agent, is selling a moderately priced house in a subdivision. She knows from her
uncle that the factory being built half a mile from the subdivision will be manufacturing dog food, using a
process that creates a very strong odor that permeates the surrounding neighborhood. A buyer, who is
unaware of the type of factory under construction, makes an offer on one of the houses Lillian is selling,
and within a short time, the deal goes through. What does this scenario best illustrate? - correct answer
✔✔information asymmetries
, When Pluralsight Products planned to start its operations in Amerigo, an emerging nation, it realized that
it would have to set up its own distribution channels. This would be a risky and expensive strategic move.
The company had an option of hiring a small supply chain management company, Elastic Logistics, to
reach its ultimate customers. However, this would require Elastic Logistics to make huge investments,
which would be of no use to it if Pluralsight Products decided to exit the market. Thus, to gain Elastic
Logistics' confidence, Gilded Products purchased 40 percent of the stock of Elastic Logistics. What does
this scenario best illustrate? - correct answer ✔✔equity alliance
________ is best described as the changes in an industry value chain that involve moving ownership of
activities upstream to the originating (inputs) point of the value chain. - correct answer ✔✔Backward
vertical integration
Which of the following best illustrates backward vertical integration? - correct answer ✔✔a chocolate
manufacturing company setting up its own cocoa plantations
Zscaler started as an original equipment manufacturing firm (OEM) for brand-name mobile device
companies. Later, it started offering a lineup of innovative and high-performance smartphones by
acquiring BuildIt, a San Francisco-based design firm. This strategic move of Zscaler is known as - correct
answer ✔✔forward vertical integration
Which of the following best illustrates human-asset specificity? - correct answer ✔✔training employees
on how to operate a customized furnace
LMP Automotive Holdings Inc., a large multinational conglomerate, has hired an external consultant to
process and audit its payroll. This allows the company to focus on manufacturing and marketing activities
rather than developing and maintaining its own human resource management systems. Which of the
following alternatives to vertical integration has LMP Automotive Holdings Inc. adopted? - correct
answer ✔✔strategic outsourcing
The rationale behind related diversification is to - correct answer ✔✔benefit from economies of scale
and scope.
Amazon expanded its single-product business by leveraging spare capacity into cloud computing and by
offering its Kindle line of tablet computers and Echo line of digital assistants. This is an example of -
correct answer ✔✔related-linked diversification
