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Exam prompt: Questions
1. Identify and describe the main business units (BU) of
Exam prompt: Questions
1. Identify and describe the main business units (BU) of the firm.
2. Identify two or more business units that engage in a transaction within the firm. That is, from the
business units identified in 1. argue that at least one of them supplies (supplier BU) another one
(buyer BU) with productive inputs (goods or services). Describe the products or services supplied.
3. Does the transaction described in 2. add more value than the alternative spot market
transaction? For this question, you are asked to elaborate a counterfactual situation describing how
a fictional spot market transaction between the supplier BU and buyer BU would affect the
willingness to pay for the product the buyer BU produces and the opportunity cost of the supplier
BU(s). Compare that counterfactual with the value created within the firm—where the supplier
BU(s) and the buyer BU are part of the same corporation.
4. Given your answer in 3., list a set of synergies between supplier BU(s) and the buyer BU? Are
those synergies positive or negative overall? For this question, you must check the extent to which
each negative (culture, commitment to bad relationships and conformism) and positive (asset
specificity, frequency and future relationships) synergies play a role in creating or destroying value
created within the firm.
5. How does the buyer BU identified in questions 2-4. differentiate from its rivals in the industry that
buyer BU participates as a competitor?
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