Chandler

Question 1

economies of scale

Answer 1

large plants can produce at a much lower cost than small ones because the cost per unit drops as the volume of output rises

Question 2

economies of scope

Answer 2

large plants can use many of the same raw and semi-finished materials and intermediate production processes to make a variety of different products

Question 3

3 conditions that need to be met for firms to benefit from economies of scale and economies of scope

Answer 3

1. constant flow of materials
2. national and international marketing and distribution functions must be created
3. teams of lower and middle management must be recruited

Question 4

what is a first mover

Answer 4

first company to invest enough money in the research and development to come up with a new product and to develop the market for the new product

Question 5

what is a challenger

Answer 5

trying to challenge the first mover

Question 6

what happens if a firm loses the opportunity to be a first mover

Answer 6

it is difficult to regain competitive advantage

Question 7

what happens if a company invests in too much unrelated business (too diversified)

Answer 7

less opportunities for the economies of scope

Question 8

what is the term for concentrating in only one business sector

Answer 8

dominant business strategy

Question 9

what is the term for concentrating is too many unrelated business sectors

Answer 9

unrelated business strategy

Question 10

what is related constrained business strategy

Answer 10

where there is just enough diversified investment and still well understanding the business that it is active