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Making or Buying Strategy MCQ

Bounded rationality means:

We never have perfect knowledge and hence can never be perfectly rational

We are irrational by nature

We cannot be rational because we are forgetful

Gaining advantage by being economical with, or even distorting, what we take to be the truth

Answer

Correct Answer: We never have perfect knowledge and hence can never be perfectly rational

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What is TCEs’ key question?

Whether transactions should be coordinated within a firm or across markets

Whether rationality is bounded enough

Whether to invest more in innovation

All of the above

Answer

Correct Answer: Whether transactions should be coordinated within a firm or across markets

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TCE postulates that human actors are characterized by __, _ and ____.

Creativity/opportunism/strategic foresight

Bounded rationality/bounded business units/unbounded energy

Bounded rationality/opportunistic behaviour/feasible foresight

None of the above

Answer

Correct Answer: Bounded rationality/opportunistic behaviour/feasible foresight

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The ‘father’ of TCE is:

Karl Marx

Hamish McTaggart

Ronald Coase

Henry Mintzberg

Answer

Correct Answer: Ronald Coase

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According to TCE, the boundary of the firm is _______.

Defined by real estate

Defined by geography

Defined by economic considerations concerning make or buy, internalizing or externalizing activities

None of the above

Answer

Correct Answer: Defined by economic considerations concerning make or buy, internalizing or externalizing activities

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The alternative to market transactions in TCE is:

Barter

Gifts

Employment contracts

Potlatch

Answer

Correct Answer: Employment contracts

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Outsourcing occurs when:

Activities that were previously undertaken by the firm are moved to outside suppliers

Firms take over sourcing things themselves that they previously bought

A firm undergoes innovation

None of the above

Answer

Correct Answer: Activities that were previously undertaken by the firm are moved to outside suppliers

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Vertical integration occurs:

When a firm competes with another

When a firm outsources to another

When a firm moves into activities that were previously undertaken by a supplier or a customer

When a firm acquires or merges with another

Answer

Correct Answer: When a firm moves into activities that were previously undertaken by a supplier or a customer

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Horizontal integration occurs:

When a firm competes with another

When a firm outsources to another

When a firm is dissolved

When a firm acquires or merges with another

Answer

Correct Answer: When a firm acquires or merges with another

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Which of the following forms of governance does Transaction Costs Economics (TCE) consider?

Hierarchical

Diagonal

Linear

Triangular

Answer

Correct Answer: Hierarchical

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Making or Buying Strategy MCQ

Bounded rationality means:

What is TCEs’ key question?

TCE postulates that human actors are characterized by ______, _______ and ______.

The ‘father’ of TCE is:

According to TCE, the boundary of the firm is _______.

The alternative to market transactions in TCE is:

Outsourcing occurs when:

Vertical integration occurs:

Horizontal integration occurs:

Which of the following forms of governance does Transaction Costs Economics (TCE) consider?

TCE postulates that human actors are characterized by __, _ and ____.