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TMP Final Exam Questions And Correct Answers
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TMP Final Exam Questions And Correct AnswersVertical and Horizontal Scope - ANSWER Product Scope - the entire product - Vertical
Market Scope - Horizontal
What is scope? And what are the three major types of scope mentioned? (three of them)
- ANSWER The extent of firm's activities that comprises of the products/services
offered, markets covered and the location of operation.
-vertical scope
-horizontal scope
-geographic scope
Why does scope matter? - ANSWER 1. Helps in integrating company's resources and
competencies
2. Helps in distinguishing from competitors
3. Clears the pathway for expansion and scaling
What are the two questions you should ask when determining scope and what do each
of those questions mean? also recognize other name, e.g. ownership and better off
tests) ANSWER 1. Does the presence of the corporation in a given market improve the
total competitive advantage of business units over and above what they could achieve
on their own? better off test
2. Does ownership of the business unit produce a greater competitive advantage than
an alternative arrangement would produce? (ownership test)
Which of the following conditions does the article indicate meet the better off test?
Know this for horizontal diversification, vertical integration, as well as geographic
scope decisions. - ANSWER horizontal integration:
Economies of scope If the total cost of jointly producing two outputs is less than the sum
of costs of each product Cross-selling benefits When economies of scope exist hd
, generates cost advantages and produce willingness to pay advantages Vertical
integration Relationship specific benefits When business units in vertical relationship
tailor their assets to exchanges
- jointly with rivals with the goal of better performing an activity, either for reduced
production costs or higher willingness to pay on the part of consumers));
downstream free-riding, i.e., reaping the benefits from others efforts;
geographic scope:
factor cost differences, locating abroad to take advantage of low input prices to third
markets;
economies of scale, competitive advantages from selling one's products abroad and
thereby reaching a significantly larger scale of
utilising global knowledge- exploiting worldwide knowledge, selling the original product
in a new country or replicating the domestic strategy in the new market
What is the difference between vertical and horizontal scope and identify examples of
each - ANSWER Vertical scope implies the ownership or control over various stages of
production or distribution process while horizontal scope is related to offering a
portfolio of products or services in the same industry or market segment. Examples of
vertical scope include a clothing manufacturer owning textile mills and retail stores,
while examples of horizontal scope include a technology company producing
smartphones, tablets, and laptops.
What is vertical scope, what is its major goal, and what are the types? - ANSWER
-Vertical integration as a strategy where a company owns or controls its suppliers,
distributors, or retail locations.
-Primary Goal is to control quality or costs
types:
long term contracts, a spot sales/purchases
informal supplier/customer relationships
agency agreements franchises
value adding vertical partnerships
joints ventures
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