Deck 3: The Internal Environment: Resources, Capabilities, Core Competencies and Competitive Advantages

Question 1

A firm can sometimes grow through making mistakes and errors.

Answer 1

True

Question 2

Increasingly customers perceive higher value in global rather than domestic brands.

Answer 2

True

Question 3

Changes in the external environment cause core competencies to become core rigidities.

Answer 3

False

Question 4

We can often locate information about a firm's sources of competitive advantage in its corporate financial information.

Question 5

Competitive advantages that firms possess are permanent.

Question 6

Value-creating reputation is a quick way for firms to win the hearts of stakeholders.

Question 7

Firms create value by innovatively bundling and leveraging their resources and capabilities.

Question 8

Partnership management and operational skills are essential skills that managers need to possess in order to carry out outsourcing programs.

Question 9

The analysis of a firm's internal environment requires evaluators to examine the firm's portfolio of strategies and the bundles of homogenous resources and capabilities managers have created.

Question 10

Capabilities of an organisation emerge over time through complex interactions between and among tangible and intangible resources.

Question 11

A firm should try to obtain a sustainable competitive advantage by implementing strategies based on its particular resources, capabilities and core competencies.

Question 12

Every core competence is a capability and every capability is a core competence.

Question 13

Outsourcing is a way of adding value to a business that converts an external value-creating activity into an internal supplier.

Question 14

A value chain analysis examines how a firm's external activities are aligned with its primary activities.

Question 15

Capabilities may be easy to imitate if they are causally ambiguous or socially complex.

Question 16

A global mind-set is the ability to study an internal environment in ways that depend on the assumptions of a single country, culture and context.

Question 17

For capabilities to be a source of competitive advantage, they must allow a firm to perform value-creating activities in a manner that provides value similar to that provided by competitors.

Question 18

Once a firm has developed core competencies that can create value, it can use these core competencies as a permanent competitive advantage.

Question 19

All resources and capabilities are core competencies.

Question 20

While valuable capabilities decrease competitive rivalry, rare capabilities increase it.

Question 21

Which of the following is a true statement about capabilities?

A)Capabilities derive from a firm's capacity to deploy resources that have been integrated to achieve a desired end state.
B)Capabilities emerge quickly when resources interact.
C)Human capital is not a capability.
D)Capabilities become weaker and less valuable through repetition and practice.

Question 22

Resources and capabilities are core competencies only when their use:

A)leads to a competitive advantage for a firm
B)permits the diffusion of threats in the external environment
C)provides opportunities to defeat competitors
D)encourages quick responses to changes in the global economy

Question 23

The three conditions that characterise difficult managerial decisions concerning resources, capabilities and core competencies are:

A)imitability, complexity and interorganisational conflicts
B)uncertainty, value and availability of resources
C)uncertainty, complexity and interorganisational conflicts
D)complexity, rarity and capacity

Question 24

The condition of uncertainty in managerial decision making occurs when:

A)it is difficult to determine which core competency to nurture
B)a wide range of internal issues must be examined
C)there are changes in technologies, economic and political trends, and societal values
D)managers are unable to determine the best course of action to take

Question 25

Causally ambiguous means that:

A)the connection between cause and effect of capital is unclear in a firm
B)rivals find it difficult to understand the link between a firm's competencies and its competitive advantage
C)the connection between industry and firm performance is unclear
D)the effect of a firm's resources are unclear to the firm itself

Question 26

Relative to tangible resources, intangible resources are:

A)of less value to the firm
B)not the focus of strategic analysis
C)more difficult for competitors to imitate
D)more likely to be reflected on the firm's balance sheet

Question 27

Competitive advantage typically comes from:

A)individual resources
B)one very outstanding resource
C)several outstanding resources acting independently
D)the unique bundling of several resources

Question 28

A firm's inability to understand how a competitor uses its competencies to gain competitive advantage is an example of:

A)social complexity
B)causal ambiguity
C)the rarity of a capability
D)the non-substitutability of a capability

Question 29

Which of the following is not a factor that determines the sustainability of a competitive advantage?

A)The rate of core competence obsolescence because of environmental changes
B)The availability of substitutes for the core competence
C)The inimitability of the core competence
D)The extent of a core competence's effect on a firm's operations

Question 30

Capabilities that other firms cannot develop easily are classified as:

A)rare
B)valuable
C)non-substitutable
D)costly to imitate

Question 31

Value chain analysis is a tool used to:

A)analyse a firm's external environment
B)concentrate on a firm's internal environment without addressing concerns about the actions of competing firms
C)examine a firm's resources and capabilities to identify its core competencies
D)determine the expected duration of an opportunity in a firm's external environment

Question 32

Evidence has suggested that ________ of organisational decisions fail.

A)70 per cent
B)60 per cent
C)50 per cent
D)40 per cent

Question 33

Which of the following tools can help identify and build core competencies?

A)Porter's five forces model and value chain analysis
B)Scanning and the four criteria of sustainable competitive advantage
C)Value chain analysis and the four criteria of sustainable competitive advantage
D)Porter's five forces model and internal analysis

Question 34

The term a global mind-set refers to the ability:

A)to study an external environment in ways that are dependent on the assumptions of a single firm
B)to study an internal environment in ways that are dependent on the assumptions of a single country
C)to develop a competitive advantage in multiple markets
D)to develop human resources policies in culturally diverse markets

Question 35

The primary basis for a firm's capabilities is:

A)its ability to increase capacity as demand warrants
B)the amount of capital resources readily available
C)the good reputation it has built throughout its customer base
D)the skills and knowledge of its employees

Question 36

From the customer's point of view, a capability can be a core competence if it is:

A)easily accessible to workers
B)supported by the top management team
C)valuable and non-substitutable
D)a stable feature of the firm's environment

Question 37

A firm's reputation for its goods and services is:

A)not an issue of principle concern for a firm
B)an example of an intangible resource that can provide a competitive advantage
C)a resource for the firm against which funds can easily be borrowed
D)an example of a tangible resource

Question 38

A firm's resources and capabilities:

A)are inherited, not created
B)are always core competencies
C)may be a source of incompetence
D)are all a firm needs to focus on

Question 39

Intangible resources include:

A)a firm's reputation for its goods and services
B)a firm's borrowing capacity
C)depreciated capital assets
D)manufacturing facilities

Question 40

Which of the following is not a condition of costly to imitate capability?

A)Social complexity
B)Causally ambiguous
C)Human skills
D)Unique historical conditions

Question 41

What causes core capabilities to become core rigidities?

A)Changes in the external and internal environment
B)Inertia and competition
C)Strategic myopia and inertia
D)Lack of knowledge and poor use of assets

Question 42

When selecting activities to outsource, firms should select activities that:

A)capture and create value
B)neutralise external threats
C)are critical to their success
D)are non-strategic capabilities

Question 43

Outsourcing does not work effectively without:

A)having value-creating support activities outsourced
B)building networks with outsourcing partners
C)extensive internal capabilities to coordinate external sourcing
D)having value-creating primary activities outsourced

Question 44

Explain the role of innovation in a firm's competitive advantage.

Question 45

Outsourcing involves:

A)selling a value-creating activity to other firms in an industry
B)selling a value-creating activity to other firms, regardless of their industry
C)purchasing a value-creating activity from an external supplier
D)using computers to obtain data from the internet

Question 46

Describe value chain analysis.

Question 47

Describe the four specific criteria that managers can use to decide which of their firm's capabilities have the potential to create a sustainable competitive advantage.

Question 48

Do competitive advantages last forever? Explain your answer.

Question 49

Value chain support activities include:

A)converting inputs into product
B)developing advertising and promotional campaigns
C)distributing the product to customers
D)recruiting, hiring and training personnel

Question 50

Describe the importance of internal analysis to the strategic success of a firm.

Question 51

Which of the following is not an essential skill that a manager needs to possess to manage outsourcing programs?

A)Change management
B)Extended diversification
C)Strategic thinking
D)Partnership governance

Question 52

Value-creating primary activities include:

A)purchasing raw materials and supplies
B)developing an appropriate corporate structure
C)selecting appropriate distribution channels
D)planning corporate strategy and setting goals

Question 53

Discuss the relationship between capabilities and core competencies.

Question 54

How can managers deal with conditions affecting decisions about resources, capabilities and core competencies?

Question 55

Discuss the risks of outsourcing.

Question 56

How do firms create value? How is value measured?

Question 57

Value chain activities can be:

A)analysed only in for-profit organisations
B)segmented into primary and support activities
C)segmented into resources and capabilities
D)analysed, but are of little use in building a competitive advantage for a firm

Question 58

Describe the various types of resources.