Chapter 8

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Oxford University *

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1001

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Management

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Nov 24, 2024

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Uploaded by mikekyalo64

1 Chapter 8 Student’s Name Institution’s Affiliation Course Code & Title Instructor’s Name Due Date

2 Chapter 8 SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 1. What must executives decide when formulating a corporate strategy?  Executives must decide on the scope and direction of the company, including the industries and markets it will operate in, and how it will gain a competitive advantage. 2. List the five reasons why firms need to grow.  The five reasons why firms need to grow are; a. Economies of scale, b. Increased Market Power, c. Managerial Motives, d. Synergy, And e. Diversification. 3. Why generic industry value chains are called vertical value chains?  Generic industry value chains are called vertical value chains because they depict the various stages of production, from raw materials to the final product, in a vertical sequence. 4. What are the advantages and disadvantages of organizing economic activity within films?  Advantages of organizing economic activity within firms include cost savings, coordination and control, and the ability to protect proprietary information.  Disadvantages include bureaucracy, lack of flexibility, and potential inefficiencies. 5. How are information asymmetries created? What are the implications?

3  Information asymmetries are created when one party in a transaction has more or better information than the other. The implications include the risk of adverse selection and moral hazard. 6. What are the three types of specialized assets?  The three types of specialized assets are site specificity, physical asset specificity, and human asset specificity. 7. Discuss the benefits of taper integration.  Benefits of taper integration include improved coordination, cost savings, and greater control over the supply chain. 8. Discuss the various general diversification strategies available to a firm.  General diversification strategies include concentric diversification, conglomerate diversification, and horizontal diversification. 9. What is conglomerate? How does it benefit from a diversification strategy?  A conglomerate is a corporation that owns a collection of diverse companies. It benefits from a diversification strategy by spreading risks across different industries and markets. 10. What options do managers have to formulate corporate strategy once they have a clear understanding of their firm’s core competencies?  Once managers have a clear understanding of their firm's core competencies, they can formulate corporate strategy by pursuing growth through market penetration, market development, product development, or diversification.

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