BP&S chapter 6 Questions With Complete Solutions
Which company shares marketing capabilities?
Sany.
What is a risk associated with activity sharing?
Shared resources could result in underutilization or
unavailability during critical times.
What are corporate-level core competencies?
Complex sets of resources and capabilities that link different
businesses, primarily through managerial and technological
knowledge, experience, and expertise.
How does linked diversification create value for firms?
By eliminating the need to allocate resources to an existing core
competence that has already been developed in another business.
What is resource intangibility?
A characteristic that makes it difficult for competitors to
understand and imitate a firm's resources and capabilities.
Give an example of a corporate-level core competency.
A semiconductor chip expert who can oversee production in
both laptops/phones and cars.
How can a strong marketing team benefit multiple businesses?
A great marketing team developed in one business can be
utilized in another business as well.
,What is Market Power?
Market Power exists when a firm is able to sell its products
above the existing competitive level or to reduce the costs of its
primary and support activities below the competitive level, or
both.
How can firms create market power?
Firms can create market power through pooled negotiating
power and vertical integration.
What is pooled negotiating power?
Pooled negotiating power is gaining greater bargaining power
with suppliers and customers.
What is vertical integration?
Vertical integration is when a company produces its own inputs
(backward integration) or owns its own source of output
distribution (forward integration).
How does multimarket competition affect market power?
Multimarket competition reduces the possibility of attack by a
rival and increases market power.
What are three ways to increase market power?
Market power can be increased by scaling, multipoint
competition, and vertical integration.
Vertical Integration
Practice where a single entity controls the entire process of a
product, from the raw materials to distribution
, What is one rationale for vertical integration?
Save on operational costs
What is another rationale for vertical integration?
Avoid market costs
How can vertical integration improve product quality?
By controlling more of the production process
What advantage does vertical integration provide regarding
technology?
Protect technology from imitation by rivals
What can companies exploit through vertical integration?
Underlying capabilities in the marketplace
How does vertical integration enhance access to information?
Provides access to more complementary information and
knowledge
When is vertical integration especially valuable?
When no market prices exist for connected assets
What is an example of vertical integration in the aircraft
industry?
Manufacturing aircraft wings in-house instead of finding a
manufacturer
What is a drawback of vertical integration related to outside
suppliers?
Which company shares marketing capabilities?
Sany.
What is a risk associated with activity sharing?
Shared resources could result in underutilization or
unavailability during critical times.
What are corporate-level core competencies?
Complex sets of resources and capabilities that link different
businesses, primarily through managerial and technological
knowledge, experience, and expertise.
How does linked diversification create value for firms?
By eliminating the need to allocate resources to an existing core
competence that has already been developed in another business.
What is resource intangibility?
A characteristic that makes it difficult for competitors to
understand and imitate a firm's resources and capabilities.
Give an example of a corporate-level core competency.
A semiconductor chip expert who can oversee production in
both laptops/phones and cars.
How can a strong marketing team benefit multiple businesses?
A great marketing team developed in one business can be
utilized in another business as well.
,What is Market Power?
Market Power exists when a firm is able to sell its products
above the existing competitive level or to reduce the costs of its
primary and support activities below the competitive level, or
both.
How can firms create market power?
Firms can create market power through pooled negotiating
power and vertical integration.
What is pooled negotiating power?
Pooled negotiating power is gaining greater bargaining power
with suppliers and customers.
What is vertical integration?
Vertical integration is when a company produces its own inputs
(backward integration) or owns its own source of output
distribution (forward integration).
How does multimarket competition affect market power?
Multimarket competition reduces the possibility of attack by a
rival and increases market power.
What are three ways to increase market power?
Market power can be increased by scaling, multipoint
competition, and vertical integration.
Vertical Integration
Practice where a single entity controls the entire process of a
product, from the raw materials to distribution
, What is one rationale for vertical integration?
Save on operational costs
What is another rationale for vertical integration?
Avoid market costs
How can vertical integration improve product quality?
By controlling more of the production process
What advantage does vertical integration provide regarding
technology?
Protect technology from imitation by rivals
What can companies exploit through vertical integration?
Underlying capabilities in the marketplace
How does vertical integration enhance access to information?
Provides access to more complementary information and
knowledge
When is vertical integration especially valuable?
When no market prices exist for connected assets
What is an example of vertical integration in the aircraft
industry?
Manufacturing aircraft wings in-house instead of finding a
manufacturer
What is a drawback of vertical integration related to outside
suppliers?
