Chapter Terms- Final Notes

4 Pages
Unlock Document

University of Toronto Scarborough
Economics for Management Studies
Jack Parkinson

Chapter 4 –Power of Principles: Historical Perspective Infrastructure: includes those assets that assist in the production or distribution of goods and services that the firm itself cannot easily provide. It consists of following main factors: transportation, communication, financing, basic research (R&D) and government (which intervenes/regulates certain economic activities and supplies some infrastructure). Vertical integration: If a firm chooses to perform more of the steps in the vertical chain itself then such a firm is referred to as (more) vertically integrated. The process of undertaking more of the production steps in the vertical chain (i.e. becoming more vertically integrated) is referred to as vertical integration. Horizontal Integration: Organizations are said to be horizontally integrated if they have adopted a strategy to be large in the product (output) market. They can choose large either in terms of physical quantity of a single product (large volume/output - integration based on scale economies) or in terms of the variety of output (integration based on scope economies). Economies of scope: Cost savings that the firm achieves as it increases the variety of activities it performs, such as the variety of goods its produces. This implies TC (Q ,X ) Y TC(Q ,0)X+ TC(0,Q ), fYr fixed levels of production of goods X & Y. Economies of scale: Indicates that average costs decrease as output increases Throughput: The movement of inputs and outputs through a production process. Path Dependence: A process shows path-dependence if past circumstances could exclude certain evolutions in the future. Multi-Divisional Form: An organizational form that is comprised of a set of autonomous divisions led by a corporate headquarters office, assisted by a corporate stag that provides information about the internal and external business environment. Rather than organizing by function or by task, a multidivisional structure organizes by product line, related business units, or customer type. In this form of organization, managers who control individual divisions and are held responsible for their performance report to higher-level managers, who evaluate them, coordinate activities, and plan the firm’s strategy. Multi-Product Firm: It became possible to include more and more activities within the domain of a single firm. For example, Du Pont, initially an explosives manufacturer, diversified into the manufacture of chemical fertilizers, and introduced new fibres like nylon and other chemistry-based products. Network Structure: An organization form in which work groups may be organized by function, geography, or customer base, but where relationships between work groups are governed more by often- changing implicit andexplicit requirements of common tasks than by the formal lines of authority that characterize other structures. Chapter 2- Economies of Scale/Scope & Chapter 5- Vertical Boundaries of the Firm Core competencies: These are the functions that an organizations does best (either in terms of highest profit margin or highest value-added). Such activities might have lower agency and influence costs and can be tied to special internal proprietary information (trade secrets) or relationship specific assets. Learning economies: The idea that refers to the cost advantages (saving) that flow from accumulating (past) experience and know-how. Indicates that average costs decreases as past output increases. Conflicting out: When a potential client approaches a professional s
More Less

Related notes for MGEC40H3

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.