MGMT-3013 UARK
Business-Level Strategy - Answer- goal-directed actions when competing in a single
product market.
Strategic Trade-Offs - Answer- cost or value position; higher value creation tends to
generate higher cost.
Differentiation Strategy - Answer- seeks to create higher value for customers than
the value that competitors create.
Cost-Leadership Strategy - Answer- seeks to create the same or similar value for
customers at a lower cost.
Scope of Competition - Answer- The size of market firm chooses to compete.
Focused Cost-Leadership Strategy - Answer- cost-leadership strategy with narrow
focus on a niche market.
Focused Differentiation Strategy - Answer- differentiation strategy with narrow focus
on a niche market.
Economies of Scope - Answer- Savings from producing two (or more) outputs at less
cost than producing each output individually, using same resources and technology.
Economies of Scale - Answer- Decreases in cost per unit as output increases.
Minimum Efficient Scale (MES) - Answer- Output range needed to lower cost per unit
stake out the lowest-cost position through economies of scale.
Diseconomies of Scale - Answer- Increases in cost per unit when output increases.
Blue Ocean Strategy - Answer- successfully combines differentiation and cost-
leadership activities
Value Innovation - Answer- value for both the firm and the consumers; cornerstone
of blue ocean strategy.
Value Curve - Answer- Horizontal connection of value points helping determine
courses of action.
Strategy Canvas - Answer- Graphical depiction of a company's performance vs
competition
Corporate Strategy - Answer- senior management decisions and goal directed
actions taken to gain and sustain competitive advantage in several industries and
markets simultaneously.
, Transaction Cost Economics - Answer- theoretical framework to explain and predict
boundaries of the firm, central to formulating a corporate strategy likely leading to
competitive advantage.
Transaction Costs - Answer- All internal and external costs associated with an
economic exchange
External Transaction Costs - Answer- Costs of seeking individual with whom to
contract, costs of negotiating, monitoring, and enforcing the contract.
Internal Transaction Costs - Answer- Costs associated with economic exchange
within a hierarchy; administrative costs.
Principal-Agent Problem - Answer- agent performing activities on behalf of a
principal pursues his or her own interests.
Information Asymmetry - Answer- one party is more informed than another thus
having possession of private information.
Licensing - Answer- long-term contract enabling firms to commercialize intellectual
property.
Franchising - Answer- long-term contract granting franchisee rights to use
franchisor's trademark and business processes to offer goods and services that carry
franchisor's brand name.
Credible Commitment - Answer- long-term decision, both difficult and costly to
reverse.
Joint Venture - Answer- owned by two or more parent companies.
Vertical Integration - Answer- firm's ownership of its production of needed inputs or
of the channels by which it distributes its outputs.
Industry Value Chain - Answer- transformation of raw materials into finished goods
and services along distinct vertical stages, each representing a distinct industry
which different firms are competing.
Backward Vertical Integration - Answer- Changes involving movement of ownership
activities upstream to the originating (inputs) point of the value chain.
Forward Vertical Integration - Answer- Changes involving movement of ownership
activities closer to the end (customer) point of the value chain.
Specialized Assets - Answer- Unique 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.
Business-Level Strategy - Answer- goal-directed actions when competing in a single
product market.
Strategic Trade-Offs - Answer- cost or value position; higher value creation tends to
generate higher cost.
Differentiation Strategy - Answer- seeks to create higher value for customers than
the value that competitors create.
Cost-Leadership Strategy - Answer- seeks to create the same or similar value for
customers at a lower cost.
Scope of Competition - Answer- The size of market firm chooses to compete.
Focused Cost-Leadership Strategy - Answer- cost-leadership strategy with narrow
focus on a niche market.
Focused Differentiation Strategy - Answer- differentiation strategy with narrow focus
on a niche market.
Economies of Scope - Answer- Savings from producing two (or more) outputs at less
cost than producing each output individually, using same resources and technology.
Economies of Scale - Answer- Decreases in cost per unit as output increases.
Minimum Efficient Scale (MES) - Answer- Output range needed to lower cost per unit
stake out the lowest-cost position through economies of scale.
Diseconomies of Scale - Answer- Increases in cost per unit when output increases.
Blue Ocean Strategy - Answer- successfully combines differentiation and cost-
leadership activities
Value Innovation - Answer- value for both the firm and the consumers; cornerstone
of blue ocean strategy.
Value Curve - Answer- Horizontal connection of value points helping determine
courses of action.
Strategy Canvas - Answer- Graphical depiction of a company's performance vs
competition
Corporate Strategy - Answer- senior management decisions and goal directed
actions taken to gain and sustain competitive advantage in several industries and
markets simultaneously.
, Transaction Cost Economics - Answer- theoretical framework to explain and predict
boundaries of the firm, central to formulating a corporate strategy likely leading to
competitive advantage.
Transaction Costs - Answer- All internal and external costs associated with an
economic exchange
External Transaction Costs - Answer- Costs of seeking individual with whom to
contract, costs of negotiating, monitoring, and enforcing the contract.
Internal Transaction Costs - Answer- Costs associated with economic exchange
within a hierarchy; administrative costs.
Principal-Agent Problem - Answer- agent performing activities on behalf of a
principal pursues his or her own interests.
Information Asymmetry - Answer- one party is more informed than another thus
having possession of private information.
Licensing - Answer- long-term contract enabling firms to commercialize intellectual
property.
Franchising - Answer- long-term contract granting franchisee rights to use
franchisor's trademark and business processes to offer goods and services that carry
franchisor's brand name.
Credible Commitment - Answer- long-term decision, both difficult and costly to
reverse.
Joint Venture - Answer- owned by two or more parent companies.
Vertical Integration - Answer- firm's ownership of its production of needed inputs or
of the channels by which it distributes its outputs.
Industry Value Chain - Answer- transformation of raw materials into finished goods
and services along distinct vertical stages, each representing a distinct industry
which different firms are competing.
Backward Vertical Integration - Answer- Changes involving movement of ownership
activities upstream to the originating (inputs) point of the value chain.
Forward Vertical Integration - Answer- Changes involving movement of ownership
activities closer to the end (customer) point of the value chain.
Specialized Assets - Answer- Unique 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.
