Understanding the External Environment of a Firm Requires One Ultimately

question 49

Multiple Choice

Understanding the external environment of a firm requires one ultimately to identify

• A)the opportunities to make profit in the industry.
• B)the five forces identified by porter's model.
• C)the barriers to entry and to exit in that industry.
• D)the expected level of profit in the mid-term for that industry.

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Definitions:

Horizontally Integrated Firms

refers to companies that expand by acquiring or merging with other firms operating at the same level in the supply chain or in the same industry.

Vertically Integrated Firms

Companies that control multiple stages of production for their products, from raw materials to final goods, to reduce costs and increase efficiency.

Principal-Agent Problem

This issue arises when there is a conflict of interest between a principal (who delegates authority) and an agent (who performs tasks), typically due to differing goals or asymmetrical information.

Hospitals

Healthcare institutions providing patient treatment with specialized staff and equipment.