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Exam 8: Vertical Integration

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Question 41

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Research suggests that,in general,vertically integrating is more flexible than not vertically integrating.

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Question 42

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________ are when employees are given the right,but not the obligation,to purchase stock at predetermined prices.

A) Flexibility grants
B) Stock grants
C) Stock options
D) Grant options

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Question 43

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From a CEO's perspective,coordinating functional specialists to implement a vertical integration strategy rarely involves conflict resolution.

Discuss the firm capabilities-based explanation of how vertical integration can create value.In your discussion identify the two broad implications of this approach and when,under this approach,firms should engage in vertical integration.

If one of the suppliers that Digipics purchases its components from purposefully delivered a batch of its product that was substandard but did not inform Digipics of this,this would be an example of

The number of steps in a firm's value chain that it accomplishes within its boundaries describes the firm's level of

According to the capabilities-based explanations of vertical integration,which of the following would be the most appropriate type of compensation to support strategy implementation?

A decision-making setting is ________ when the future of an exchange cannot be known when investments in that exchange are being made.

Firms should not vertically integrate into business activities where they do not possess the resources necessary to gain competitive advantages.

According to ________ of when vertical integration creates value,vertical integration is valuable when it reduces threats from a firm's suppliers or buyers due to any transaction-specific investments a firm has made.

If Digipics were to begin selling the cameras it assembled directly to customers through a website operated by the company,this would be an example of

A firm may be able to gain an advantage from vertically integrating when it resolves some uncertainty it faces sooner than its competition.

Define vertical integration and differentiate between forward vertical integration and backward vertical integration.

Evaluating a functional manager's performance relative to budgets can be an effective control when

Opportunism exists when a firm is unfairly exploited in an exchange.

Identify three reasons why a firm may be able to create value through vertical integration when most of its competitors are not able to create value through vertical integration.

The use of budgets in a vertically integrated U-form organization can lead functional managers to overemphasize short-term behavior that is easy to measure and underemphasize longer-term behavior that is more difficult to measure.

Flexibility is only valuable when the decision-making setting a firm is facing is uncertain.

A firm's vertical integration strategy can only be rare when it is the only firm that is able to vertically integrate efficiently.

Discuss the flexibility-based explanation of vertical integration.In discussing this explanation be sure to define flexibility,the role of uncertainty in this explanation,and identify when,under this explanation,firms should engage in vertical integration.