Chapter 6 - Vertical Integration

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

Vertical integration is a type of

When Apple, Inc. opened retail stores to sell its computers and iPods, this was an example of

If Dell computers were to open its own factory to manufacture the LCD televisions it sells at its online store, this would be an example of

A firm's ________ measures the percentage of a firm's sales that is generated by activities done within the boundaries of a firm.

Which of the following is not used to determine a firm's level of vertical integration using the value added as a percentage of sales approach?

A firm with a ________ ratio between value added and sales has brought ________ of the value-creating activities associated with its business inside its boundaries, consistent with a high level of vertical integration.

In 1937, which Nobel Prize-winning economist first articulated the question of vertical integration, i.e., which stages of the value chain should be included within a firm's boundaries and why?

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

A(n) ________ is any investment in an exchange that has significantly more value in the current exchange than it does in alternative exchanges.

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.

The essence of the ________ to vertical integration is that if a firm possesses valuable, rare, and costly-to-imitate resources in a business activity, it should vertically integrate into that activity otherwise it should not vertically integrate into that activity.

To the extent that other firms may have competitive advantages in business activities that a firm is considering to enter through vertical integration, vertically integrating into these activities could put the firm at a

________ refers to how costly it is for a firm to alter its strategic and organizational decisions.

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

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

A(n) ________ approach to vertical integration suggests that rather than vertically integrating into a business activity whose value is highly uncertain firms should not vertically integrate and instead should form a strategic alliance to manage this exchange.

Which of the explanations of vertical integration is the oldest and has received the greatest empirical support?

If a firm decided to maintain relationships with several different call center management companies, each of which have adopted different technological solutions to the problem of how to use call center employees to assist customers who are using very complex products, to reduce the uncertainty of whether the people staffing the phone can help the firm's customers, this would be consistent with which explanation of vertical integration?

Some observers predict that by ________ an additional 3.3 million jobs in the United States will be outsourced, many to operations overseas.

If a computer company decided to open its own call centers to provide technical support to its corporate customers because the employees in these call centers need a significant level of in-depth training that was highly specialized to the computer company's products, this would be consistent with which explanation of vertical integration?

A firm is likely to be among the first in its industry to vertically disintegrate an exchange when

Which of the following statements regarding direct duplication and substitutes for vertical integration is accurate?

The major substitute for vertical integration is

Which organizational structure is used to implement a vertical integration strategy?

From a CEO's perspective, coordinating functional specialists to implement a vertical integration strategy almost always involves

If Brenda Thompson, Tom Mix's supervisor, wanted to use a budgeting process to help evaluate Tom's performance but wanted to ensure that using a budget did not encourage Tom to focus on short-term behaviors at the expense of long-term results, she should

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

Which committee in a U-form organization meets monthly and usually consists of the CEO and each of the heads of the functional areas included in a firm?

Which committee in a U-form organization meets weekly and reviews the performance of the firm on a weekly basis and typically consists of a CEO and two or three functional senior managers?

Investments made by employees that have more value in a particular company than in alternative companies are known as

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

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?

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

________ are payments to employees in a firm's stock.

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

The ________ explanations call for compensation that focuses on individual employees, such as cash bonuses for individual performance.

Compensation that focuses on groups of employees such as cash bonuses and stock grants are best suited for ________ explanations of vertical integration.

The ________ logic suggests that compensation that has a fixed and known downside risk and significant upside potential is important for firms implementing vertical integration strategies.

Firm-specific investments are a type of ________ investments.

If Digipics were to begin manufacturing lenses for the cameras they assembled, this would be an example of

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

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

If Digipics were to agree to spend a significant amount of money to establish a new assembly line for a large client, PicPro, that has unique needs that would make this assembly line largely useless for any other customer, the funds Digipics spent in establishing this line would be an example of

The fact that it would be very costly for Digipics to alter its operations if the large customer referred to in the previous question decided to stop doing business with Digipics suggests that Digipics has ________ in this situation.

TerraLoc's decision to manufacture the battery in-house is most consistent with which explanation of vertical integration?

TerraLoc's development of the new battery technology is likely to

TerraLoc is most likely to use the ________ organizational structure.

If TerraLoc were to use a U-form organizational structure and the CEO decided to use budgets as a management control but wanted to make sure that the managers did not become too focused on the short term, the CEO should do all of the following except

If TerraLoc wanted to expand into selling its GPS units through company-owned retail stores, this would be an example of ________