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Question
Discuss the opportunism-based explanation of vertical integration value creation and identify when, under this explanation, firms should vertically integrate. In your answer be sure to clearly define opportunism and the role that transaction-specific investments play in the opportunism-based explanation.
Answer
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Related questions
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The ________ consists of broad trends in the context in which a firm operates that can have an impact on a firm's strategic choices.
A) micro-environment
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________ measures of competitive advantage compare a firm's level of return to its cost of capital instead of to the average level of return in the industry.
A) Economic
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C) Strategic
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A competitive advantage that lasts a very short period of time is known as a ________ competitive advantage.
A) temporary
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The difference between the perceived benefits gained by a customer who purchases a firm's products or services and the full economic costs of these products or services is known as
A) accounting value.
B) comparative value.
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When a firm is able to create more economic value than rival firms it is said to have a(n)
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A) Strategy formulation
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The cost of equity is equal to the interest a firm must pay its debt holders in order to induce those debt holders to lend money to the firm.
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Identify the conditions under which a strategic alliance can be rare and discuss the role that complementary resources can play in the rarity of strategic alliances.
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________ collusion exists when firms coordinate their production and pricing decisions not by directly communicating with each other but by exchanging signals with other firms about their intent to cooperate.
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Strategic alliances are particularly valuable in facilitating market entry and exit when the value of market entry or exit is
A) high.
B) low.
C) moderate.
D) uncertain.
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A firm's ability to learn is known as its
A) competitive position.
B) competitive advantage.
C) distinctive competence.
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Strategic alliances can create economic value through helping firms improve their current operations by
A) facilitating the development of technology standards.
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Sometimes the value of cheating in a joint venture is sufficiently large that a firm cheats even though doing so hurts the joint venture and forecloses future opportunities.
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In general, contracts are sufficient to resolve all the problems associated with cheating in an alliance.
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Research on international joint ventures suggests that the existence of transaction-specific investments in their relationships makes these agreements relatively immune to holdup problems.
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In an alliance a holdup occurs when a firm that has not made significant transaction-specific investments demands returns from an alliance that are higher than what the partners agreed to when they created the alliance.