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

Question 1

The need to meet quarterly earnings numbers disciplines managers to accurately examine the firm's internal organization.

Answer 1

False

Question 2

Analyzing the internal environment enables a firm to determine what it can do by identifying resources,capabilities,and core competencies in the internal organization.

Answer 2

True

Question 3

Analyzing the internal environment enables a firm to determine what it might do by identifying what opportunities and threats exist.

Answer 3

False

Question 4

The value of tangible assets such as the firm's borrowing capacity and its physical plant is high because they can be easily leveraged to derive additional value.

Question 5

The foundation of many capabilities lies in the unique skills and knowledge of a firm's employees.

Question 6

Resources are the source of capabilities,some of which lead to the development of core competencies; in turn,some core competencies may lead to competitive advantage.

Question 7

Value is measured by the variable and fixed costs associated with the production and marketing of a particular product compared with the revenue and profits the product generates.

Question 8

Firms achieve strategic competitiveness and earn above-average returns by acquiring,bundling,and leveraging their resources for the purpose of taking advantage of opportunities in the external environment in ways that create value for customers.

Question 9

Resources must be combined to form capabilities,as illustrated by Subway,which linked its fresh ingredients with several other resources,including the continual training it provides to those running the firm's units as the foundation for customer service as a capability.

Question 10

The learning generated by making and correcting mistakes is generally unimportant to efforts to create new capabilities and core competencies.

Question 11

Firms should seek to continually develop new core competencies because all core competencies guarantee above- average profit.

Question 12

Technology is a critical resource for helping organizations learn how to continually innovate.

Question 13

Compared to tangible resources,intangible resources are an inferior source of core competencies.

Question 14

Capabilities of an organization emerge spontaneously through the interaction of tangible and intangible resources.

Question 15

By themselves,resources can allow firms to create value for customers as the foundation for earning above- average returns.

Question 16

Walmart uses core competencies such as information technology and distribution channels to create value for its customers through its "everyday low prices."

Question 17

Although an organization's good reputation is a valuable resource that takes years of superior marketplace competence to achieve,it is not a good basis for building a competitive advantage because it can be destroyed almost instantly by bad publicity.

Question 18

GE's brand name is a tangible source of competitive advantage for the company.

Question 19

Understanding how to leverage the firm's unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal organization.

Question 20

Creating customer value is the source of the firm's potential to earn above-average returns.

Question 21

Capabilities may be costly to imitate if firms have unique and valuable organizational cultures,are causally ambiguous,and socially complex.

Question 22

The firm with the most capabilities wins.

Question 23

At IBM,human capital is critical to forming and using the firm's capabilities in customer relationships,scientific and research skills,and technical skills in hardware,software,and services.

Question 24

Any core competency has the potential to lose its value-creating ability.

Question 25

Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals.

Question 26

Firms should never outsource a primary activity because of the danger of the activity being imitated by rivals.

Question 27

Apple has combined some of its tangible resources (such as financial resources and research laboratories)and intangible resources (such as scientists,engineers,and organizational routines)to create a capability in R&D which creates a core competence in innovation.

Question 28

Older employees are less valuable resources to firms than younger employees,because the older employees have lower stocks of knowledge. Consequently,employee reductions should begin with early-retirement inducements.

Question 29

Two concerns about outsourcing are the potential loss of a firm's innovative ability and the loss of jobs within companies that decide to outsource some of their work.

Question 30

One criterion for a resource or capability to be a source of competitive advantage is that it must allow the firm to perform a value-creating activity that competitors cannot perform.

Question 31

Capabilities are usually developed separately from specific functional areas such as manufacturing,R&D,and marketing.

Question 32

"Motivating,empowering,and retaining employees" is an example of a capability that resides within the human resources functional area.

Question 33

At the conclusion of the internal analysis,firms must identify their opportunities and threats in resources,capabilities,and core competencies.

Question 34

Valuable capabilities allow the firm to exploit strengths or neutralize weaknesses in the internal environment.

Question 35

A firm should outsource only activities where it cannot create value or where it is at a substantial disadvantage compared to competitors.

Question 36

A company can earn above-average returns only when the value it creates is less than the costs incurred to create that value.

Question 37

At Southwest Airlines,the complex interrelationship between its culture and human capital adds value for customers in ways that other airlines cannot,such as jokes on flights by flight attendants and cooperation between gate personnel and pilots.

Question 38

Costly-to-imitate capabilities are those which other firms cannot easily develop as they have no strategic equivalent.

Question 39

Value chain activities in the value chain create value,whereas support functions generate costs.

Question 40

Interpersonal relationships,trust,friendships,and a firm's reputation are all examples of complex social phenomena that make capabilities easy to imitate.

Question 41

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

A)complexity, rarity, and human intellectual capital.
B)uncertainty, complexity, and intraorganizational conflicts.
C)imitability, complexity, and interorganizational conflicts.
D)imitability, comparability, and human intellectual capital.

Question 42

A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised

A)foresight.
B)judgment.
C)effective strategic thinking.
D)decisiveness.

Question 43

Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above-average returns from its core competencies?

A)Core competencies must be acquired.
B)Core competencies must be bundled.
C)Core competencies must be internationalized.
D)Core competencies must be leveraged.

Question 44

One reason executive judgment can be a particularly important source of competitive advantage is that judgment

A)allows a firm to build a strong reputation.
B)gains the loyalty of shareholders.
C)increases human intellectual capacity.
D)allows for superior bundling of resources.

Question 45

Supply and demand impacts the level at which people are paid. If there are few people with a proven record of using judgment effectively then they will be in high demand and offered high compensation. CEOs are valued for their judgment as

A)resource allocators.
B)capability counters.
C)strategic leaders.
D)core competency accumulators.

Question 46

By emphasizing core competencies when formulating strategies,companies learn to compete primarily on the basis of

A)intangible resources.
B)their primary activities.
C)firm-specific differences.
D)efficiency of production.

Question 47

Which of the following is NOT a component of internal analysis leading to competitive advantage?

A)tangible and intangible resources
B)analysis of supplier power
C)capabilities
D)core competencies

Question 48

It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and

A)the rapid development of the Internet's capabilities.
B)extensive use of outsourcing within the borders of the United States.
C)the declining number of inventions and patents developed by U.S.citizens.
D)the simultaneous erosion of the U.S.work ethic and the U.S.education system.

Question 49

Which of the following is NOT a factor affecting sustainability of a competitive advantage?

A)the availability of substitutes for a firm's core competence
B)the rate at which obsolescence of the core competence occurs because of environmental changes
C)the imitability of a core competence
D)the length of time the core competence has existed

Question 50

-------- is measured by a product's performance characteristics and its attributes for which customers are willing to pay

A)Competitive advantage
B)Profit potential
C)Contribution
D)Value

Question 51

In the television show Mad Men,Don Draper is in charge of the creative department at an advertising agency. He appears to spend most of his time drinking and relaxing,but occasionally he has a flash of insight that leads to a
New ad campaign. He provides which valuable intangible resource?

A)trust
B)ideas
C)brand name
D)capacity to innovate

Question 52

Internal analysis enables a firm to determine what the firm

A)can do.
B)should do.
C)will do.
D)might do.

Question 53

Today,a substantially slimmed-down Polaroid is introducing a number of new products,including GL20 Camera
Glasses which have a built-in camera and LCDs. This wave of new product development is explained by

A)the funds provided by a patent-infringement lawsuit won by Polaroid.
B)weaker competitors in its industry.
C)the learning that occurred from making earlier mistakes.
D)an easing of regulations governing intellectual property protection.

Question 54

A decision that results in failure

A)is a career-ending event because it is so unusual.
B)often results from lack of accountability.
C)fosters organizational inertia.
D)allows for learning.

Question 55

______are the source of a firm's______,which are the source of the firm's

A)Resources; capabilities; core competencies/
B)Capabilities; resources; core competencies.
C)Capabilities; resources; above-average returns.
D)Core competencies; resources; competitive advantage/

Question 56

The proper matching of what a firm can do with what it might do

A)balances the internal characteristics of the firm with the characteristics of the external environment.
B)overcomes the rigidity and inertia resulting from a history of success.
C)yields insights the firm requires to select its strategy.
D)develops core competencies based on human knowledge.

Question 57

The key to achieving competitiveness,earning above-average returns,and remaining ahead of competitors in the long run is to manage current core competencies

A)in a way that uniquely bundles and leverages the firm's existing resources.
B)while simultaneously developing new ones.
C)and imitate the core competencies of successful competitors.
D)in order to preserve and enhance them against the firm's competitors.

Question 58

Value consists of

A)a product's proprietary characteristics and attributes for which customers are willing to pay.
B)a product's performance characteristics and attributes for which customers are willing to pay.
C)a product's proprietary characteristics and attributes for which customers consider paying.
D)a product's performance characteristics and attributes for which customers consider paying.

Question 59

The challenge and difficulty of making effective decisions are implied by preliminary evidence that______of organizational decisions fail.

A)one-fourth
B)one-fifth
C)one-tenth
D)one-half

Question 60

All competitive advantages have

A)a limited life.
B)an expiration date.
C)the ability to earn above-average returns indefinitely.
D)the ability to lead to more competitive advantages.

Question 61

When firms lay off employees,they are

A)treating employees as an intangible resource.
B)recognizing the reduced value of labor in the value chain.
C)eroding the organization's knowledge resources.
D)temporarily sacrificing a tangible asset that is easily replaced.

Question 62

Compared to tangible resources,intangible resources are and

A)less visible; more difficult to copy.
B)less visible; less difficult to copy.
C)more visible; more difficult to copy.
D)more visible; less difficult to copy.

Question 63

An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef,and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. What should the investor consider when making a decision?

A)The investor will find that the success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future.
B)The investor will find that the restaurant's financial statements undervalue the true value of its resources.
C)The investor should be aware that intangible assets are difficult to leverage into additional business.
D)The investor should search for a firm which has competitive advantages based on tangible resources.

Question 64

______can be viewed as the capacity to take action.

A)Strategic assets
B)Human capital
C)Core competencies
D)Functional capabilities

Question 65

Tangible resources include

A)assets that are people-dependent, such as know-how.
B)assets that can be observed and quantified.
C)organizational culture.
D)a firm's reputation.

Question 66

Capabilities

A)tend to be developed through firm-wide interactions and reside in the firm as a whole.
B)tend to be concentrated in the support activities of the value chain.
C)tend to be concentrated in the primary activities of the value chain.
D)are often developed in specific functional areas.

Question 67

Capabilities typically come from

A)individual resources.
B)one unique resource.
C)several outstanding resources used independently.
D)combining resources.

Question 68

Samsung has core competencies in manufacturing its own components and components for other competitors,
Which help it to predict future innovations and bring them to market quickly. It is in direct competition with Apple in the smartphone market. Its competencies allow Samsung to Apple's innovations.

A)get a first-mover advantage over
B)prevent
C)block
D)imitate

Question 69

The most numerous of the following organizational characteristics are

A)resources.
B)capacities.
C)capabilities.
D)core competencies.

Question 70

Which of the following is NOT a reputational resource?

A)customer opinion that the firm's products are high quality
B)employees' opinion of the firm as a terrible place to work
C)suppliers' opinion that the firm pays its bills in a timely manner
D)customer opinion that using the firm's products makes them attractive

Question 71

Because firms combine tangible and intangible resources to create capabilities,

A)these capabilities are fragile and subject to sudden loss of value.
B)capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital.
C)capabilities are easily transferred from one firm to another as employees change jobs.
D)these types of capabilities are considered primary activities in the value chain.

Question 72

Judgment is the capacity for making a successful decision when

A)there are multiple decision criteria.
B)no obviously correct model or rule is available.
C)cognitive biases create barriers to rationality.
D)there are contradictions between the firm's vision and its implemented strategy.

Question 73

Compared to tangible resources,intangible resources are

A)of less strategic value to the firm.
B)less likely to be the focus of strategic analysis.
C)a superior source of capabilities.
D)more likely to be reflected on the firm's balance sheet.

Question 74

All of the following are tangible resources EXCEPT

A)production equipment.
B)distribution centers.
C)a firm's reputation.
D)formal reporting structures.

Question 75

The critical executive skill of the current business age is the ability to

A)manage technological innovation.
B)manage human intellect.
C)initiate change and overcome inertia.
D)coordinate tangible and intangible resources.

Question 76

Which of the following is a true statement about capabilities?

A)Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.
B)Valuable capabilities are based almost entirely on tangible resources.
C)Capabilities based on human capital are more vulnerable to obsolescence than other intangible capabilities because of the tendency for employee knowledge to become outdated.
D)The link between firm financial performance and capabilities is dependent on whether the capabilities are based on tangible or intangible resources.

Question 77

Compared to intangible resources,tangible resources are leverage.

A)less; easier
B)less; harder
C)more; harder
D)more; easier constrained because they are to

Question 78

______is an example of a capability that is based in the functional area of distribution.

A)Effective use of logistics management techniques
B)Effective control of inventories through point-of-purchase data collection
C)Effective organizational structure
D)Product and design quality

Question 79

Innovation,consumer understanding,brand-building,go-to-market,and scale are activities that P&G performs well and are examples of the company's

A)tangible resources.
B)intangible resources.
C)core competencies.
D)capabilities.

Question 80

To provide a sustainable competitive advantage,a capability must satisfy all of the following criteria EXCEPT

A)be technologically innovative.
B)be hard for competing firms to duplicate.
C)be without good substitutes.
D)be valuable to customers.