Deck 2: Competitive Advantage

Question 1

Sustainable competitive advantage is the set of factors or capabilities that allows firms to consistently outperform their rivals.

Answer 1

True

Question 2

"Structural" explanations for firm performance predict that firms in the same industry pursuing similar strategies in the same industry will have ____________ performance outcomes.

A) roughly comparable
B) identical
C) highly variable
D) uncorrelated
E) none of these

Answer 2

A

Question 3

Firms will enjoy a sustained competitive advantage only if their capabilities

A) are valuable.
B) are rare.
C) lack substitutes.
D) are difficult to imitate.
E) all of these

Answer 3

E

Question 4

If resources and capabilities are both valuable and rare, and also difficult for rivals to imitate, then those resources can be

A) a temporary source of competitive advantage
B) a sustained source of competitive advantage
C) a weak source of
D) competitive advantage
E) a permanent source of competitive advantage
F) none of these

Question 5

Which of the following criteria can provide an asymmetric competitive advantage?

A) valuable
B) rare
C) difficult to imitate
D) without substitutes
E) all of these

Question 6

A capability that is not difficult to imitate cannot provide an __________ competitive advantage.

A) absolute
B) asymmetric
C) attenuated
D) alternative
E) none of these

Question 7

The resource-based framework for competitive advantage suggests that as a resource begins to be diffused through an industry, firms can expect the resource to

A) offer a competitive advantage to all firms.
B) impose additional resource costs on other firms.
C) offer only competitive parity with other firms.
D) A and B
E) none of these

Question 8

___________ is the reason why venture capital tends to flow to start-up firms that have executives with proven track records.

A) "Path dependency"
B) "Golden parachutes"
C) "Success breeds success"
D) "The Pygmalion effect"
E) none of these

Question 9

___________ is the idea that poor decisions made by a firm at an earlier point in time will make certain current options viable while foreclosing its other options.

A) "The Pygmalion effect"
B) "Path dependency"
C) "Moral hazard"
D) "Ethical lapses"

Question 10

__________________ include reputation, culture, trust, and friendships among managers in an organization, teamwork among managers and workers, the knowledge of employees, and the learning embedded in organizational processes, routines, and standard operating procedures.

A) Integrative resources
B) Socially complex resources
C) Organizational juggernauts
D) Core competencies

Question 11

Why are Mickey Mouse and the other iconic Disney characters critical competitive assets to the Disney Company?

Question 12

How does a firm achieve an asymmetric competitive advantage?

Question 13

What makes resources and capabilities "causally ambiguous?"

Question 14

Why is investment important to the development of unique and valuable capabilities?

Question 15

What competitive characteristics of a firm create asymmetry as a critical step in a mental model concept of competitive advantage?

Question 16

The concept of economic rent assumes that over the long run, firms in competitive markets will

A) earn average economic rents of zero.
B) earn above-average economic rents .
C) earn increasingly fewer profits than rents.
D) earn average economic profits of zero.
E) none of these

Question 17

Capabilities and resources can be both causally ambiguous and difficult to imitate.

Question 18

Strategy content describes how a firm does what it does.

Question 19

Economists assume that, over the long run, firms in competitive markets will earn above-average economic profits (profits after all factors of production have been paid) of zero.

Question 20

Firms that earn above-average economic profits over the long run are said to enjoy economic rents.

Question 21

Strategies do not affect firm performance directly, but affect performance through the development of firm-specific resources and capabilities that can lead to both competitive advantage and high performance.

Question 22

Early studies of the impact of firm-specific factors and capabilities on firm performance showed that firms in the same industry pursuing the same strategies had similar levels of performance.

Question 23

Studies have shown that ideas and innovations are diffused through the economy in a pattern that resembles a slanted "M-shaped curve."

Question 24

Early grocery store pioneers in the adoption of scanning technology enjoyed only a short-lived competitive advantage over rivals.

Question 25

Imitation can help firms "catch-up," but imitation alone is unlikely to give firms a competitive advantage.

Question 26

Patents protect the ownership interests of firms that develop new products, services, and technologies by slowing the diffusion of innovations.

Question 27

Litigation cannot be used as a legal competitive tactic to slow the diffusion process.

Question 28

The value of time spent as a competitor in an industry is directly related to the amount of learning that occurs during that time.

Question 29

Path dependency is the idea that decisions made at an earlier point in time will make some current options viable while also foreclosing other options.

Question 30

Causal ambiguity is gained when competitors are able to determine how or why another firm is enjoying a competitive advantage.

Question 31

Strategy process can be thought of as what a firm does.

Question 32

Discuss how value chain analysis is closely tied to benchmarking.