SEVI 3013H Exam 2 Questions with
Verified Solutions
sharing activities - ANSWER-having activities of two or more businesses' value chains
done by one of the businesses
market power - ANSWER-firms' abilities to profit through restricting or controlling supply
to a market or coordinating with other firms to reduce investment
1. pooled negotiating power
2. vertical integration - ANSWER-What are the two primary means to achieve market
power?
pooled negotiating power - ANSWER-the improvement in bargaining position relative to
suppliers and customers
vertical integration - ANSWER-an expansion or extension of the firm by integrating
preceding or successive production processes
transaction cost perspective - ANSWER-a perspective that the choice of a transaction's
governance structure, such as vertical integration or market transaction, is influenced by
transaction costs, including search, negotiating, contracting, monitoring, and
enforcement costs, associated with each choice
unrelated diversification - ANSWER-a firm entering a different business that has little
horizontal interaction with other businesses of a firm
1. restructuring
2. parenting
3. portfolio management - ANSWER-What are the three primary ways to create value
with unrelated diversification?
parenting advantage - ANSWER-the positive contributions of the corporate office to a
new business as a result of expertise and support provided and not as a result of
substantial changes in assets, capital structure, or management
restructuring - ANSWER-the intervention of the corporate office in a new business that
substantially changes the assets, capital structure, and/or management, including
selling off parts of the business, changing the management, reducing payroll and
unnecessary sources of expenses, changing strategies, and infusing the new business
with new technologies, processes, and reward systems
, portfolio management - ANSWER-a method of (a) assessing the competitive position of
a portfolio of businesses within a corporation, (b) suggesting strategic alternatives for
each business, and (c) identifying priorities for the allocation of resources across the
businesses
acquisitions - ANSWER-the incorporation of one firm into another through purchase
mergers - ANSWER-the combining of two or more firms into one new legal entity
divestment - ANSWER-the exit of a business from a firm's portfolio
strategic alliance - ANSWER-a cooperative relationship between two or more firms
joint ventures - ANSWER-new entities formed within a strategic alliance in which two or
more firms, the parents, contribute equity to form the new legal entity
internal development - ANSWER-entering a new business through investment in new
facilities, often called corporate entrepreneurship and new venture development
managerial motives - ANSWER-managers acting in their own self-interest rather than to
maximize long-term shareholder value
growth for growth's sake - ANSWER-managers' actions to grow the size of their firms
not to increase long-term profitability but to serve managerial self-interest
egotism - ANSWER-managers' actions to shape their firms' strategies to serve their
selfish interests rather than to maximize long-term shareholder value
antitakeover tactics - ANSWER-managers' actions to avoid losing wealth or power as a
result of a hostile takeover
greenmail - ANSWER-a payment by a firm to a hostile party for the firm's stock at a
premium, made when the firm's management feels that the hostile party is about to
make a tender offer
golden parachute - ANSWER-a prearranged contract with managers specifying that, in
the event of a hostile takeover, the target firm's managers will be paid a significant
severance package
poison pill - ANSWER-used by a company to give shareholders certain rights in the
event of takeover by another firm
traditional approach to strategic control - ANSWER-a sequential method of
organizational control in which (1) strategies are formulated and top management sets
Verified Solutions
sharing activities - ANSWER-having activities of two or more businesses' value chains
done by one of the businesses
market power - ANSWER-firms' abilities to profit through restricting or controlling supply
to a market or coordinating with other firms to reduce investment
1. pooled negotiating power
2. vertical integration - ANSWER-What are the two primary means to achieve market
power?
pooled negotiating power - ANSWER-the improvement in bargaining position relative to
suppliers and customers
vertical integration - ANSWER-an expansion or extension of the firm by integrating
preceding or successive production processes
transaction cost perspective - ANSWER-a perspective that the choice of a transaction's
governance structure, such as vertical integration or market transaction, is influenced by
transaction costs, including search, negotiating, contracting, monitoring, and
enforcement costs, associated with each choice
unrelated diversification - ANSWER-a firm entering a different business that has little
horizontal interaction with other businesses of a firm
1. restructuring
2. parenting
3. portfolio management - ANSWER-What are the three primary ways to create value
with unrelated diversification?
parenting advantage - ANSWER-the positive contributions of the corporate office to a
new business as a result of expertise and support provided and not as a result of
substantial changes in assets, capital structure, or management
restructuring - ANSWER-the intervention of the corporate office in a new business that
substantially changes the assets, capital structure, and/or management, including
selling off parts of the business, changing the management, reducing payroll and
unnecessary sources of expenses, changing strategies, and infusing the new business
with new technologies, processes, and reward systems
, portfolio management - ANSWER-a method of (a) assessing the competitive position of
a portfolio of businesses within a corporation, (b) suggesting strategic alternatives for
each business, and (c) identifying priorities for the allocation of resources across the
businesses
acquisitions - ANSWER-the incorporation of one firm into another through purchase
mergers - ANSWER-the combining of two or more firms into one new legal entity
divestment - ANSWER-the exit of a business from a firm's portfolio
strategic alliance - ANSWER-a cooperative relationship between two or more firms
joint ventures - ANSWER-new entities formed within a strategic alliance in which two or
more firms, the parents, contribute equity to form the new legal entity
internal development - ANSWER-entering a new business through investment in new
facilities, often called corporate entrepreneurship and new venture development
managerial motives - ANSWER-managers acting in their own self-interest rather than to
maximize long-term shareholder value
growth for growth's sake - ANSWER-managers' actions to grow the size of their firms
not to increase long-term profitability but to serve managerial self-interest
egotism - ANSWER-managers' actions to shape their firms' strategies to serve their
selfish interests rather than to maximize long-term shareholder value
antitakeover tactics - ANSWER-managers' actions to avoid losing wealth or power as a
result of a hostile takeover
greenmail - ANSWER-a payment by a firm to a hostile party for the firm's stock at a
premium, made when the firm's management feels that the hostile party is about to
make a tender offer
golden parachute - ANSWER-a prearranged contract with managers specifying that, in
the event of a hostile takeover, the target firm's managers will be paid a significant
severance package
poison pill - ANSWER-used by a company to give shareholders certain rights in the
event of takeover by another firm
traditional approach to strategic control - ANSWER-a sequential method of
organizational control in which (1) strategies are formulated and top management sets
