Deck 3: Analyzing the Internal Environment of the Firm

Question 1

_____ occurs when firms tap into the knowledge and ideas of a large number of customers and other stakeholders, typically through online forums.

A) Resource sharing
B) SWOT analysis
C) Crowdsourcing
D) Value net

Answer 1

C

Question 2

When considering SWOT analysis, which of the following elements are unique and constitute the staring point for a discussion of a firm's competitive advantage?

A) SW elements
B) OT elements
C) ST elements
D) All elements of the SWOT analysis are equally likely to be common across different firms within an industry.

Answer 2

A

Question 3

Customer service would include

A) product promotion.
B) product distribution.
C) parts supply.
D) procurement of critical supplies.

Answer 3

C

Question 4

In assessing its primary activities, an airline would examine

A) employee training programs.
B) baggage handling.
C) criteria for lease versus purchase decisions.
D) the effectiveness of its lobbying activities.

Question 5

A marketing department that promises delivery faster than the production department's ability to produce is an example of a lack of understanding of the

A) interrelationships among functional areas and firm strategies.
B) need to maintain the reputation of the company.
C) organizational culture and leadership.
D) synergy of the business units.

Question 6

When considering SWOT analysis, which of the following elements are more likely to be common across different firms within an industry?

A) SW elements
B) OT elements
C) ST elements
D) All elements of the SWOT analysis are equally likely to be common across different firms within an industry.

Question 7

All of the following have been identified as concerns in crowdsourcing, except?

A) Strong brand reputation
B) High demand uncertainty
C) Too many initiatives
D) Excess contributors

Question 8

Developing collaborative "win-win" relationships with suppliers is an important consideration in which supporting activity?

A) General administration
B) Human resource management
C) Technology management
D) Procurement

Question 9

_____ are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling.

A) Services
B) Inbound logistics
C) Outbound logistics
D) Operations

Question 10

Which of the following is a support activity?

A) Inbound logistics
B) Operations
C) Technology development
D) Customer service

Question 11

Providing excellent reward and incentive programs to motivate employees is an important consideration in which supporting activity?

A) General administration
B) Human resource management
C) Technology management
D) Procurement

Question 12

Which of the following lists consists of support activities?

A) Human resource management, technology development, customer service, and procurement
B) Human resource management, customer service, marketing and sales, and operations
C) Human resource management, information systems, procurement, and firm infrastructure
D) Customer service, information systems, technology development, and procurement

Question 13

According to value-chain analysis, which of the following would be considered part of a firm's infrastructure?

A) Human resource management
B) Information systems
C) Technology development
D) Procurement

Question 14

For firms such as Campbell Soup Company, information systems have been a source of competitive advantage by enabling them to

A) forecast future demand.
B) replenish products in a timely manner.
C) monitor inventories in distribution centers.
D) all of these are correct.

Question 15

All of the following are considered advantages of a just-in-time inventory system, except:

A) Reduced raw material storage costs
B) Minimized idle production facilities and workers
C) Reduced work-in-process inventories
D) Reduced dependence on suppliers

Question 16

Assessment of a firm's primary activities should include analysis of each of the following, except

A) inbound logistics.
B) operations.
C) human resources
D) marketing and sales.

Question 17

Inbound logistics include

A) machining and packaging.
B) warehousing and inventory control.
C) repair and parts supply.
D) promotion and packaging.

Question 18

Establishing a culture to enhance creativity and innovation is an important consideration in which supporting activity?

A) General administration
B) Human resource management
C) Technology management
D) Procurement

Question 19

Advertising is a _____ activity. Supply of replacement parts is a _____ activity.

A) primary; primary
B) support; primary
C) support; secondary
D) primary; support

Question 20

Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It

A) supports only individual primary activities.
B) supports only individual support activities.
C) supports both individual primary and support activities and the entire value chain.
D) supports mostly support activities but does have some impact on primary activities.

Question 21

_____ are the competencies or skills that a firm employs to transform inputs into outputs.

A) Tangible resources
B) Intangible resources
C) Reputational resources
D) Organizational capabilities

Question 22

How should managers assess changes in their firm's competitive position in their industries during a period of unusual economic growth?

A) Compare the firm's financial ratios with ratios of firms in other strategic groups in the industry.
B) Compare the firm's financial ratios over the most recent one-year period.
C) Compare the financial ratios of all firms in the country's industry-some of whom serve very diverse market segments and have specialized accordingly.
D) Compare the financial ratios of firms in the company's strategic group.

Question 23

A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain

A) no competitive advantage.
B) competitive parity.
C) a temporary competitive advantage.
D) a sustainable competitive advantage.

Question 24

A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of

A) social complexity.
B) path dependency.
C) physical uniqueness.
D) causal ambiguity.

Question 25

A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon

A) social complexity.
B) path dependency.
C) physical uniqueness.
D) tangible resources.

Question 26

A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics

A) Physical uniqueness, path dependency, causal ambiguity, and social complexity.
B) Psychographic uniqueness, path dependency, causal ambiguity, and substitutability.
C) Rarity, path dependency, causal ambiguity, and social substitutability.
D) Geographic uniqueness, cause dependency, social ambiguity, and path complexity.

Question 27

The following are examples of socially complex organizational phenomena, except

A) a firm's culture
B) interpersonal relations among a firm's managers
C) complex physical technology
D) reputation with suppliers and customers

Question 28

A meaningful ratio analysis

A) must go beyond the calculation and interpretation of financial ratios.
B) is based primarily on leverage ratios.
C) involves only liquidity ratios.
D) involves profitability ratios at a single point in time.

Question 29

Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations?

A) Leverage ratios
B) Profitability ratios
C) Activity ratios
D) Liquidity ratios

Question 30

For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have the following four attributes

A) Rare, valuable, mobile, and nonsubstitutable.
B) Rare, inimitable, physically unique, and nonsubstitutable.
C) Rare, valuable, inimitable, and nonsubstitutable.
D) Rare, valuable, physically unique, and causally ambiguous.

Question 31

Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of Gillette's

A) tangible resources.
B) intangible resources.
C) organizational capabilities.
D) strong primary activities.

Question 32

The best measure of a company's ability to meet imminent financial obligations is known as the

A) current ratio.
B) total asset turnover.
C) debt ratio.
D) profit margin.

Question 33

The primary challenge facing the firm in today's turbulent competitive environment is likely to be the realization that:

A) many of their current resources are not sustainable
B) the majority of their resources are inimitable
C) many of their current resources are accelerating toward obsolescence rapidly and their value to the firm is diminishing
D) Their resources may be inimitable because they lack social complexity

Question 34

Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading

A) if the overall strategy of the firm is the same.
B) in periods of recession or economic boom.
C) if the firm shows constant growth.
D) if the firm's stock is publicly traded.

Question 35

The "balanced scorecard" provides top managers with a _____ view of the business.

A) detailed and complex
B) fast but comprehensive
C) simple and routine
D) long-term financial

Question 36

The three key types of resources that are central to the resource-based view of the firm are

A) tangible resources, intangible resources, and organizational structure.
B) culture, tangible resources, and intangible resources.
C) tangible resources, intangible resources, and organizational capabilities.
D) tangible resources, intangible resources, and top management.

Question 37

Which of the following would be most difficult to assess?

A) The liquidity position of a firm
B) The legitimacy and reputation of a firm
C) Market share growth
D) The efficiency with which a firm utilizes its assets

Question 38

To create an intangible resource that cannot be easily copied, Canadian retailer Holt Renfrew combines

A) real estate and store fixtures.
B) brand name and experienced staff.
C) accumulated reputation for quality.
D) all of these answers are correct

Question 39

The resource-based view (RBV) of the firm combines two perspectives

A) the primary and support activities of the firm.
B) the interrelationships among the primary activities of the firm and corporate management.
C) the internal analysis of the firm as well as the external analysis of the industry and competitive environment.
D) the industry and the competitive environment.

Question 40

The "balanced scorecard" developed by Kaplan and Norton helps to integrate

A) financial analysis and a firm's reputation.
B) intangible resources and operational measures.
C) financial analysis and stakeholder perspectives.
D) short-term perspectives and strategic positioning.

Question 41

Campbell's Soup uses continuous replenishment for the Loblaw stores it supplies in Canada.

Question 42

Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value chain analysis.

Question 43

Managers should focus their attention on interrelationships among value chain activities within the firm-not on relationships among activities within the firm and other organizations (such as suppliers and customers).

Question 44

In value-chain analysis, general management is considered part of a firm's infrastructure.

Question 45

Value chain analysis assumes that a firm's basic economic purpose is to create value and it is a useful framework for analyzing a firm's strengths and weaknesses.

Question 46

A firm's intangible resources refer to its capacity to deploy tangible resources over time and leverage those resources effectively.

Question 47

Value-chain analysis cannot be applied to the service industry.

Question 48

An important implication of the "balance scorecard" approach is that

A) managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss
B) the key emphasis on customer satisfaction and financial goals are only a means to that end
C) managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously
D) gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction

Question 49

Performing a value chain analysis provides a complete assessment of the firm's strengths and weaknesses.

Question 50

Locations, technologies, patents, monopoly licences, and exclusive permits are among the resources that convey uniqueness and could possibly lead to competitive advantage.

Question 51

In value chain analysis, value is measured by market value of the total stock outstanding of the company.

Question 52

The value chain concept assumes that both primary and support activities produce value for customers.

Question 53

A dynamic capability is defined as the firm's ability to integrate, build, and reconfigure internal and external competencies to address a rapidly changing competitive environment.

Question 54

Resources are valuable because they enable a firm to formulate and implement strategies to exploit opportunities, minimize threats, and improve its efficiency and effectiveness.

Question 55

Tangible resources are assets that are relatively easy to identify such as financial and physical assets.

Question 56

Primary activities contribute to the physical creation of a product or service, its sale and transfer to the buyer, and its service after the sale.

Question 57

Products and services that are difficult to imitate help firms sustain their profitability.

Question 58

The balanced scorecard enables managers to consider their business from all of the following perspectives, except

A) customer perspective.
B) internal business perspective.
C) innovation and learning perspective.
D) ethical perspective.

Question 59

Technology development is a much broader concept than research and development.

Question 60

The difference between manufacturing and service is in providing a customized solution rather than mass production as is common in manufacturing.

Question 61

An important implication of the balanced scorecard is that managers need not look at their job as primarily balancing stakeholder demands.

Question 62

Leverage ratios provide measures of a firm's capacity to meet its long-term financial obligations.

Question 63

Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a complete guide to study companies.

Question 64

For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria: rareness and difficulty in substitution.

Question 65

With reference to primary and support activities, explain how value-chain analysis might be applied to the service industry.

Question 66

An increase in profits indicates an improvement in cash flow.

Question 67

Capabilities that are causally ambiguous are difficult to imitate.

Question 68

Outline the four factors that will explain how employees and managers, as the owners of valuable, rare, and inimitable resources, are able to obtain a proportionately high level of the profits that they generate.

Question 69

Path dependency has no impact on the inimitability of resources.

Question 70

How can a firm develop (or enhance) its advantages in the marketplace by having strong, positive interrelationships among its value chain activities and those of its suppliers and customers? Provide an example.

Question 71

A primary benefit of the "balanced scorecard" is that it complements financial indicators with operational measures of customer satisfaction, internal processes, and the organization's innovation and improvement activities.

Question 72

The balanced scorecard enables managers to evaluate their business from only two perspectives: customer and financial.

Question 73

If employees' skills are idiosyncratic and rare (a source of resource-based advantage), they will lack bargaining power because the cost of replacing them is low for the firm.

Question 74

Historical comparisons are most appropriate during periods of recession or economic boom.

Question 75

What are some ways in which a firm's general administration can help create (or enhance) competitive advantages?

Question 76

What are the key advantages of value chain analysis over SWOT analysis?

Question 77

What are some of the key strengths and limitations of SWOT analysis?

Question 78

When using industry norms as a standard of comparison, managers must be sure that the firms used in the comparisons are representative of all sizes and strategies within the industry.

Question 79

The resource-based view (RBV) combines both the internal analysis of the firm and the external analysis of the environment. Discuss and provide examples.

Question 80

If competitors possess the same valuable resource, it is not a source of competitive advantage because all of these firms can potentially exploit that resource in the same way.