Belmont University Strategic
Management Final Exam Questions &
Answers(RATED A+)
corporate strategy - ANSWERthe decisions that senior management makes and the goal-directed
actions it takes to gain and sustain competitive advantage in several industries and markets
simultaneously
transaction cost economics - ANSWERa theoretical framework to explain and predict the boundaries
of the firm, which is central to formulating a corporate strategy that is more likely to lead to
competitive advantage
internal transaction costs - ANSWERcosts pertaining to organizing an economic exchange within a
hierarchy; also called administrative costs
principal-agent problem - ANSWERsituation in which an agent performing activities on behalf of a
principal pursues his or her own interests
transaction costs - ANSWERall internal and external costs associated with an economic exchange,
whether within a firm or in markets
external transaction costs - ANSWERcosts of searching for a firm or an individual with whom to
contract, and then negotiating, monitoring, and enforcing the contract
information asymmetry - ANSWERsituation in which one party is more informed than another
because of the possession of private information
strategic alliances - ANSWERvoluntary arrangements between firms that involve the sharing of
knowledge, resources, and capabilities with the intent of developing processes, products, or services
licensing - ANSWERa form of long-term contracting in the manufacturing sector that enables firms to
commercialize intellectual property
, franchising - ANSWERa long-term contract in which a franchisor grants a franchisee the right to use
the franchisor's trademark and business processes to offer goods and services that carry the
franchisor's brand name
credible commitment - ANSWERa long-term strategic decision that is both difficult and costly to
reverse
joint venture - ANSWERa stand-alone organization created and jointly owned by two or more parent
companies
vertical integration - ANSWERthe firm's ownership of its production of needed inputs or of the
channels by which it distributes its outputs
industry value chain - ANSWERdepiction of the transformation of raw materials into finished goods
and services along distinct vertical stages, each of which typically represents a distinct industry in
which a number of different firms are competing
backward vertical integration - ANSWERchanges in an industry value chain that involve moving
ownership of activities upstream to the originating (inputs) point of the value chain
forward vertical integration - ANSWERchanges in an industry value chain that involve moving
ownership of activities closer to the end (customer) point of the value chain
specialized assets - ANSWERunique assets with high opportunity cost: they have significantly more
value in their intended use than in their next-best use. they come in three types: site specificity,
physical-asset specificity, and human-asset specificity
vertical market failure - ANSWERwhen the markets along the industry value chain are too risky, and
alternatives too costly in time or money
taper integration - ANSWERa way of orchestrating value activities in which a firm is backwardly
integrated but also relies on outside-market firms for some of its supplies and/or is forwardly
integrated but also relies on outside-market firms for some of its distribution
Management Final Exam Questions &
Answers(RATED A+)
corporate strategy - ANSWERthe decisions that senior management makes and the goal-directed
actions it takes to gain and sustain competitive advantage in several industries and markets
simultaneously
transaction cost economics - ANSWERa theoretical framework to explain and predict the boundaries
of the firm, which is central to formulating a corporate strategy that is more likely to lead to
competitive advantage
internal transaction costs - ANSWERcosts pertaining to organizing an economic exchange within a
hierarchy; also called administrative costs
principal-agent problem - ANSWERsituation in which an agent performing activities on behalf of a
principal pursues his or her own interests
transaction costs - ANSWERall internal and external costs associated with an economic exchange,
whether within a firm or in markets
external transaction costs - ANSWERcosts of searching for a firm or an individual with whom to
contract, and then negotiating, monitoring, and enforcing the contract
information asymmetry - ANSWERsituation in which one party is more informed than another
because of the possession of private information
strategic alliances - ANSWERvoluntary arrangements between firms that involve the sharing of
knowledge, resources, and capabilities with the intent of developing processes, products, or services
licensing - ANSWERa form of long-term contracting in the manufacturing sector that enables firms to
commercialize intellectual property
, franchising - ANSWERa long-term contract in which a franchisor grants a franchisee the right to use
the franchisor's trademark and business processes to offer goods and services that carry the
franchisor's brand name
credible commitment - ANSWERa long-term strategic decision that is both difficult and costly to
reverse
joint venture - ANSWERa stand-alone organization created and jointly owned by two or more parent
companies
vertical integration - ANSWERthe firm's ownership of its production of needed inputs or of the
channels by which it distributes its outputs
industry value chain - ANSWERdepiction of the transformation of raw materials into finished goods
and services along distinct vertical stages, each of which typically represents a distinct industry in
which a number of different firms are competing
backward vertical integration - ANSWERchanges in an industry value chain that involve moving
ownership of activities upstream to the originating (inputs) point of the value chain
forward vertical integration - ANSWERchanges in an industry value chain that involve moving
ownership of activities closer to the end (customer) point of the value chain
specialized assets - ANSWERunique assets with high opportunity cost: they have significantly more
value in their intended use than in their next-best use. they come in three types: site specificity,
physical-asset specificity, and human-asset specificity
vertical market failure - ANSWERwhen the markets along the industry value chain are too risky, and
alternatives too costly in time or money
taper integration - ANSWERa way of orchestrating value activities in which a firm is backwardly
integrated but also relies on outside-market firms for some of its supplies and/or is forwardly
integrated but also relies on outside-market firms for some of its distribution
