Chapter 6

Question 1

Corporate strategy

Answer 1

is a firm’s theory how to gain competitive advantage by operating in several businesses simultaneaously.

Question 2

There are three most influential explanations of when vertical integration can create value or a firm

Answer 2

1. Opportunism, unfairly exploited in an change
2. Firm capabilities
3. Flexibility

Question 3

Imitability of vertical integration

Answer 3

Direct duplication of vertical integration

Substitues of vertical integration

Question 4

Compensation in implementing vertical integration strategies

Answer 4

Opportunism explanations: Salary, cash bonuses for individual performance & stock grants for individual performance.

Capabilties explanations: Cash bonuses/stock grants for corporate or group performance

Flexibility explanations: Stock options for individual, corporate, or group performance.