Question 1

Once a firm has vertically integrated it has committed its organizational structure,its management controls,and its compensation policies to a particular vertically integrated way of doing business and it has enhanced its flexibility.

Accepted Answer

The answer of Once a firm has vertically integrated it...

Question 2

A firm's vertical integration strategy is rare when few competing firms are able to create value by vertically integrating in the same way.

Accepted Answer

If many firms in the industry can create value by vertically integrating in the same way, then a vertical integration strategy is not rare.

Question 3

Research suggests that,in general,vertically integrating is more flexible than not vertically integrating.

Accepted Answer

The answer of Research suggests that,in general,vertically integrating is more...

Question 4

If a firm has capabilities that are valuable and rare,then vertically integrating into businesses that exploit these capabilities can enable the firm to gain at least a temporary competitive advantage.

Accepted Answer

If a firm possesses valuable and rare capabilities, vertical integration can help increase its competitiveness, at least in the short term, by expanding into businesses that can exploit these capabilities.

Question 5

A firm's vertical integration strategy can only be rare when it is the only firm that is able to vertically integrate efficiently.

Accepted Answer

A firm's vertical integration strategy can be rare even if other firms are not able to vertically integrate efficiently. Other factors such as market competition and regulatory constraints can also impact a firm's decision to vertically integrate.

Question 6

From a CEO's perspective,coordinating functional specialists to implement a vertical integration strategy rarely involves conflict resolution.

Accepted Answer

Coordinating functional specialists to implement a vertical integration strategy can often involve conflict resolution due to the need to integrate different functional areas and their respective goals, priorities, and processes. This may involve resolving conflicts related to decision-making, resource allocation, communication, and power dynamics among specialists from different departments or areas of expertise.

Question 7

Flexibility is low when the cost of changing strategic choices is low.

Accepted Answer

The answer of Flexibility is low when the cost of...

Question 8

Flexibility is only valuable when the decision-making setting a firm is facing is uncertain.

Accepted Answer

Flexibility allows a firm to adapt and adjust to changing circumstances, which is particularly important when the decision-making setting is uncertain. In a more stable and predictable environment, rigid strategies and processes may be more effective.

Question 9

Strategic alliances are the major substitute for vertical integration.

Accepted Answer

Strategic alliances allow companies to collaborate and share resources without full integration, making it a viable alternative to vertical integration.

Question 10

A firm's ability to conceive of and implement vertical integration strategies tends to be highly susceptible to direct duplication.

Accepted Answer

Vertical integration strategies are often complex and involve unique resources, capabilities, and relationships that are difficult for competitors to directly duplicate.

Question 11

Numerous conflicts can arise among functional managers in a vertically integrated U-form organization.

Accepted Answer

In a U-form organization, functional managers may have conflicts due to their focus on different functional areas and priorities. As the U-form organization is vertically integrated, these conflicts can have a significant impact on the overall performance of the organization.

Question 12

A decision-making setting is uncertain when the future value of an exchange cannot be known when investments in that exchange are being made.

Accepted Answer

Uncertainty refers to the inability to know the future value of an exchange when decisions are made. This is different from risk, which involves known probabilities of different outcomes.

Question 13

While the functional or U-form structure is used to implement a cost-leadership or product-differentiation strategy,a matrix structure is most often used to implement a vertical integration strategy.

Accepted Answer

A matrix structure is usually used when there are multiple factors to consider such as geographic location, products or projects to be implemented. It is not specifically tied to a vertical integration strategy.

Question 14

Flexibility is always valuable.

Accepted Answer

The answer of Flexibility is always valuable....

Question 15

Outsourcing can help firms reduce costs and focus their efforts on those business functions that are central to their competitive advantage.

Accepted Answer

Outsourcing allows companies to delegate non-core tasks to specialized firms, which leads to cost savings and allows the company to focus on its core competencies.

Question 16

The downside risks associated with investing in a strategic alliance are unknown but fixed.

Accepted Answer

The downside risks associated with investing in a strategic alliance are not fixed, as they can change depending on various factors such as market conditions, external events, and the performance of the partners involved.

Question 17

A flexibility-based approach to vertical integration suggests that when the decision-making setting regarding a business activity is highly uncertain,firms should form a strategic alliance to enter this activity instead of vertically integrating.

Accepted Answer

A flexibility-based approach to vertical integration argues that firms should use strategic alliances instead of vertical integration when facing high uncertainty in decision-making settings. This allows firms to maintain flexibility in their business activities and avoid the potential costs and risks of vertical integration.

Question 18

A firm may be able to gain an advantage from vertically integrating when it resolves some uncertainty it faces sooner than its competition.

Accepted Answer

Vertical integration can bring together different stages of production and supply chain under one company. This can resolve uncertainties such as quality control, delivery schedules, or supply chain disruptions, giving the firm an advantage over competitors who rely on external suppliers. By having control over the entire production process, a vertically integrated firm can respond quickly and effectively to changes in market demand and supply.

Question 19

Strategizing is one of the most important control mechanisms available to CEOs in vertically integrated U-form organizations.

Accepted Answer

Strategizing is more associated with M-form organizations, where divisions operate semi-autonomously, rather than U-form organizations, which are typically more centralized and functionally structured.

Question 20

The use of budgets in a vertically integrated U-form organization can lead functional managers to overemphasize short-term behavior that is easy to measure and underemphasize longer-term behavior that is more difficult to measure.

Accepted Answer

Functional managers in a vertically integrated U-form organization may prioritize meeting short-term budget goals for their specific department over long-term planning and investment, particularly if long-term goals may not have an immediate impact on the budget. This can lead to a focus on easy-to-measure short-term outcomes at the expense of longer-term strategic planning and investment.

Quiz 6: Vertical Integration