WEEK 9 - BSM 600 FINAL EXAM UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

WEEK 9 - BSM 600 FINAL EXAM UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS

Question:
1. What is the difference between corporate strategy and business strategy?
Answer:
Corporate strategy is concerned with WHERE the firm competes
Business strategy is concerned with HOW the firm competes

Question:
2. The scope of a business is concerned with what type of strategy?
Answer:
Corporate strategy - concerned with where the firm competes
Involves analyzing the range of products and the market activities the firm undertakes

Question:
3. What are the 3 areas of scope the define a firm's corporate strategy?
Answer:
1. Geographical Scope - geographical spread of a firms activities (locally, regionally, globally)
2. Product scope - the span of the firm's product range
3. Vertical Scope - the range of vertically linked activities and its involvement in the industry value chain

Question:
4. What is the difference between a firm's decision for integrations vs. specialization?
Answer:
Smaller scope = Specialized
Broad scope = Integrated

Question:
5. What are 3 key concepts for analyzing a firm's scope?
Answer:
1. Economies of Scope the cost savings of spreading the use of resources over multiple activities
2. Transaction Costs the costs of buying/selling goods in a capitalist marketplace
3. Costs of Corporate Complexities the costs of management/requirements of engaging in additional
business activities

Question:
6. Economies of Scale vs. Economies of Scope
Answer:
Economies of scale - reduction of average costs that occur from increasing the output of ONE SINGLE
product line
Economies of scope - the reduction in cost by spreading resources and increasing output over MULTIPLE
product lines (reusing resources for other products)