Deck 4: Internal Analysis: Resources, Capabilities, and Activities

Question 1

A firm can try to protect and sustain its competitive advantage by making it costly for rivals to imitate its capabilities.

Answer 1

True
Explanation: Making it costly for rivals to imitate firm resources or capabilities is one way that a firm can try to protect and sustain its competitive advantage(s).

Question 2

Core competencies are built through the interplay of several firm attributes.These attributes include a firm's:

A) Resources, capabilities and activities.
B) Size, age and demographics.
C) Investments, industry and political climate.
D) All of these

Answer 2

A
Explanation: Core competencies are built through an interplay of firm resources, capabilities and activities.

Question 3

According to the Ch.4 Opening Case on Circuit City,Best Buy was able to create competitive advantages partly due to receiving tacit knowledge about Circuit City's customer service and sales processes.

Answer 3

True
Explanation: Best Buy recruited Circuit City's top salespeople after they were laid off and this resulted in a transfer of important tacit knowledge underlying some of Circuit City's core competencies.

Question 4

A firm's dynamic capabilities can actually create changes in the market in which it competes.

Question 5

As noted in the Ch.4 Opening Case,Circuit City lost its market leadership in part because it laid off some of its most experienced and loyal salespeople.It can be said that Circuit City lost a resource that was:

A) valuable and common
B) valuable and rare
C) intangible and common
D) easy-to-imitate

Question 6

Crocs Shoes lost its competitive advantage because patents did not protect the firm from direct imitation.

Question 7

Intangible resources are more likely than tangible resources to help a firm create and sustain competitive advantage(s).

Question 8

Resource stocks are important to a firm because they are tangible and can be converted into capital quickly.

Question 9

Performance differences that exist between rivals within the same industry are based primarily on the external environment.

Question 10

Unique strengths that are embedded deep within a firm that allow a firm to differentiate itself and create higher value for customers is a:

A) Competitive advantage
B) Core competency
C) Resource competency
D) Value chain

Question 11

Value-creating activities need to be upgraded by managers periodically in order for strategic activity systems to be responsive to changing environments.

Question 12

Knowledge diffusion can make a resource less rare.

Question 13

Under the SWOT analysis framework,factors that are external to the organization are more threatening to firm performance than are factors that are internal to the organization.

Question 14

When a firm combines __________ and ___________ it builds core competencies.

A) resources; capabilities
B) activities; processes
C) capabilities; skills
D) knowledge; information

Question 15

Achieving dynamic capabilities is important to a firm because the rate of change in the external environment is accelerating.

Question 16

Under the VRIO framework,it is important to develop as many core competencies as possible because it allows the firm to compete in many markets simultaneously.

Question 17

Under the VRIO framework,direct imitation is a bigger threat to a firm's competitive advantage than is the threat of substitution.

Question 18

One assumption made under the resource-based model is that resources do not move easily from firm to firm.

Question 19

The general lesson from the Ch.4 Opening Case on Circuit City is the importance of ______________ to a firm when it is attempting to gain and sustain competitive advantages.

A) tangible resources
B) core competencies
C) the economy
D) socio-cultural factors

Question 20

Under the value chain concept only primary activities add incremental value.

Question 21

Firm resources such as intellectual property and brand equity are important to a firm because:

A) Having such resources allows for a firm to achieve competitive parity.
B) Once created, maintaining such resources takes little managerial effort.
C) They are intangible, costly to imitate and can lead to sustained competitive advantage(s).
D) They are tangible and have a high degree of resource mobility.

Question 22

One of the assumptions under the resource-based model made about Southwest Airlines is that SWA has been able to sustain a competitive advantage because its resources and capabilities are difficult to imitate and do not easily leave the firm.What is this assumption called?

A) Intangible immobility
B) Resource immobility
C) Managerial mobility
D) Resource ambiguity

Question 23

Which of the following statements regarding the resource-based view is accurate?

A) Resources and capabilities are very similar across firms within the same industry
B) Resource heterogeneity and resource immobility are two critical assumptions that strategists must keep in mind.
C) Resource immobility dictates that that resources are difficult to redeploy within the firm
D) Resource heterogeneity is in reference to tangible assets.

Question 24

If a manager is listing out resources which can be used to drive competitive advantage which item below would NOT be on the list:

A) The buildings
B) The economy
C) The equipment
D) The intellectual property

Question 25

Assets that a firm can draw on that are both tangible and intangible are:

A) resources
B) capabilities
C) dependent
D) immobile

Question 26

The resource-based view is in sharp contrast to which model of industry competition (from Chapter 3).

A) Perfect Competition
B) Monopoly
C) Oligopoly
D) Monopolistic Competition

Question 27

The assumption under the resource-based model that firm resources and capabilities differ across firms and this leads to performance differences is referred to as:

A) Resource homogeneity
B) Resource mobility
C) Resource valuability
D) Resource heterogeneity

Question 28

A firm's superior performance in the marketplace affords it the luxury of

A) a majority of market share
B) a higher value on the PESTEL scale
C) reinvesting retained earnings back into the firm's capabilities and resources
D) consolidation of core competencies

Question 29

Which of the following is true when it comes to a firm's capabilities:

A) They are the organizational and managerial skills within a firm.
B) They are found in the firm's structure, routines and processes.
C) They are used to deploy a firm's resources to orchestrate core competencies.
D) All of these

Question 30

Intangible assets add great value to a firm because:

A) A firm's reputation and brand equity are accumulated quickly and can be leveraged easily.
B) A firm's culture, knowledge and intellectual property take time to develop and are generally difficult to imitate.
C) Tangible assets require a high degree of capital; intangible assets do not.
D) All of these.

Question 31

Amazon is known for superior IT systems and customer service.UPS provides superior supply chain management services at low cost.Both Amazon and UPS have leveraged their _______________ which has led to competitive advantages for both firms.

A) Mobility resources
B) Core competencies
C) Economic equity
D) Core complements

Question 32

Core competencies are important to a firm because of all of the following EXCEPT:

A) They help to create competitive advantage(s).
B) They need to be continuously nourished or they will lose their competitive ability.
C) They need to be benchmarked from a firm with the competitive advantage.
D) They are derived from resources and capabilities which must be effectively bundled together.

Question 33

All of the following are tangible resources EXCEPT:

A) Production equipment
B) Distribution centers
C) A firm's reputation
D) A firm's headquarters building

Question 34

_________ implies that for a given business activity,some firms may be more skilled than others in accomplishing it.

A) Resource homogeneity
B) Resource mobility
C) Resource heterogeneity
D) Resource immobility

Question 35

When a successful firm exhibits resource immobility,

A) It has difficulty redeploying resources to respond to strategic needs.
B) Resource differences between the firm and a rival are hard to replicate.
C) The likelihood of competitive advantage is lessened.
D) Resource differences between the firm and a rival are easy to replicate.

Question 36

Competitive advantage occurs when there is a high utilization of which type of assets?

A) Tangible
B) Intangible
C) Heterogeneous
D) Homogeneous

Question 37

Within the resource-based model,what is the meaning of the term "resource heterogeneity"?

A) bundles of resources and capabilities are fundamentally the same across firms within the same industry.
B) bundles of resources and capabilities differ across firms
C) resources don't move easily from firm to firm
D) resources move easily from firm to firm

Question 38

Google's fixed assets,including its headquarters ("The Googleplex")and server farms are valued at $5 billion while the Google brand is valued at over $100 billion.Apple's physical attributes are valued at $2 billion while its brand is valued at over $63 billion.What can be derived from this?

A) Physical attributes are not effective resources in the quest for competitive advantage.
B) Intangible assets, while invisible, contribute more to competitive advantage than do tangible assets.
C) There is a high degree of resource mobility in this strategic group.
D) Google will have a sustained competitive advantage over Apple.

Question 39

All of the following are intangible resources EXCEPT:

A) Capital
B) Dynamic capabilities
C) Patents
D) Social complexities

Question 40

Under the resource-based view of competitive advantage,firm resources such as intellectual knowledge and plant equipment are:

A) Assets that are key to superior firm performance.
B) Assets that may aid a firm but are not as important as the firm's strategic group.
C) Needed in order to achieve economies of scale.
D) Less important to competitive advantage than are resource immobility.

Question 41

Resources and capabilities that generate a temporary competitive advantage are:

A) Valuable, rare and costly to imitate.
B) A Core Competency
C) Organized to capture value
D) Integral to the value chain

Question 42

Creating resources that meet the VRIO criteria are strategically important to a firm because:

A) These resources can be easily deployed throughout the firm.
B) Firms that possess these types of resources may be able to experience a temporary competitive advantage.
C) It creates the heterogeneity essential for competitive parity.
D) Firms that possess these types of resources may be able to experience a sustained competitive advantage.

Question 43

Which of the following is NOT a criterion for a strategically important resource?

A) Difficult to imitate
B) Not everyone has it
C) Valuable
D) Tangible

Question 44

One way that a firm can create a sustainable competitive advantage is by:

A) Managing value chain activities better than its rivals
B) Cutting value chain support activities
C) Reducing strategic activity systems relative to competitors
D) Keeping activity systems static

Question 45

When only a few firms can perform a capability in the same unique way this capability is considered to be:

A) Valuable
B) Costly to imitate
C) Rare
D) Non-substitutable

Question 46

British conglomerate EMI developed and launched the invention of the CAT scanner.This paved the way for follow-up innovations like nuclear magnetic resonance imaging (MRI).Despite its initial success,EMI lost out quickly in the marketplace to GE Medical Systems.GE was able to reverse-engineer EMI's scanner.This is an example of what resource attribute?

A) EMI lost its social complexity
B) Direct substitution with an engineering work-around
C) This is undetermined due to causal ambiguity
D) Dynamic capabilities from EMI

Question 47

Under the VRIO framework,Crocs Shoes was unable to sustain its competitive advantage because its resources were:

A) Valuable but out of date
B) Not costly to imitate
C) Too cheap
D) Non-substitutable

Question 48

If Sony and Microsoft develop the same customer knowledge base and create gaming products that provide the same customer appeal as Nintendo then:

A) Sony and Microsoft will have a VRIO resource.
B) Nintendo will have a resource that is valuable but no longer rare.
C) Nintendo will still have a VRIO resource.
D) Nintendo will have a resource that is rare but no longer valuable.

Question 49

When firm has resources and capabilities that are valuable and rare only,then it has:

A) Competitive ambiguity
B) Competitive parity
C) Sustained competitive advantage
D) By definition, temporary competitive advantage

Question 50

When a firm possesses resources and capabilities that are valuable,but not rare then it has a:

A) Competitive disadvantage
B) Competitive parity
C) Temporary competitive advantage
D) Resource immobility

Question 51

Which framework can managers use to determine whether firm resources and capabilities are internal strengths or weaknesses?

A) The VRIO framework.
B) The PESTEL analysis
C) The five forces model
D) Support activities

Question 52

Under the value chain perspective,managers evaluate a firm's system of activities in order to:

A) Identify how competitive advantage flows from the inputs to outputs of the firm's distinct activities.
B) Determine how much value the firm has in the minds of shareholders.
C) Ensure that support activities add direct value to the firm.
D) Strategize whether it would be a competitive strength to integrate backward or forward.

Question 53

One of the strategic goals of management is to develop a resource base that is primarily:

A) Flexible, responsive and efficient
B) Variable, rare, costly to initiate, and orderly
C) Valuable, rare, costly to imitate and organized to capture value
D) Unique and difficult to imitate

Question 54

If the firm is not organized to capture the value from its resources it will not profit from the investment in the resources.In the 1980's Xerox's Palo Alto Research Center (PARC)developed many of the foundations for the ___________ industry.Yet these valuable and rare innovations were commercialized by other firms.

A) Photo copying
B) Transportation
C) Desktop computing
D) Music

Question 55

Toyota lost its competitive advantage when lean manufacturing became an industry standard as other firms learned about,and utilized this manufacturing process.These firms learned about lean manufacturing due to:

A) Resource heterogeneity
B) Knowledge diffusion
C) Resource immobility
D) Dynamic mobility

Question 56

When a firm enjoys a competitive advantage it attracts a significant amount of attention and its products or services can be at risk due to:

A) Social Complexity
B) Value erosion
C) Casual ambiguity
D) Direct imitation or substitution

Question 57

A risk to a firm that believes that its resources are costly to imitate is:

A) Rivals may employ substitution and work-around the original design.
B) Due to the dynamic nature of competition, all resources eventually get imitated.
C) A firm's products or services are shielded behind social complexity.
D) Resources that are costly to imitate are based on casual ambiguity.

Question 58

The Strategy Highlight 4.1 points out that Nintendo became the market leader of game consoles and was able to gain market leadership over Sony and Microsoft based on its knowledge of the casual gamer.This deep understanding,derived over many years,has enabled Nintendo to develop games that respond to customer preferences.Nintendo's knowledge of its customer is currently a(n):

A) VRIO resource.
B) Valuable but common resource.
C) Easily substitutable resource.
D) Core competency that has provided competitive parity.

Question 59

Amazon compensated for their lack of valuable and rare resources by implementing a new distribution system to reduce operating costs.This is referred to as:

A) Strategic ambivalence
B) Strategic activity system.
C) Strategic equivalence
D) Strategic immobility

Question 60

Currently,lean manufacturing is a _________ but _____________ resource which leads to competitive parity.

A) Valuable; rare
B) Common; tangible
C) Valuable; common
D) Rare; tangible

Question 61

The fact that the U.S.still uses a system of measurement from the 1820's instead of the metric system and is at a disadvantage in certain cross-border transactions and negotiations demonstrates that:

A) Mistakes made early on have a negligible effect on final outcomes.
B) Path dependence has limited influence on final outcomes
C) Time cannot be compressed at will
D) Path dependence can affect the ability to remain competitive.

Question 62

___________ refer to a firm's ability to reconfigure resources and create external market changes.

A) Dynamic equilibrium
B) Dynamic capabilities
C) Dynamic complexity
D) Dynamic programming

Question 63

Strategic activity systems that are socially complex are:

A) Tangible resources
B) Difficult to imitate
C) Challenging to leverage
D) Customer oriented

Question 64

An upscale jeweler ordered several thousand ounces of gold a few years ago when gold was priced at $650 an ounce.As of 2011 gold was averaging about $1,700 an ounce.This jeweler will be able to protect his competitive advantage,at least temporarily,due to which condition?

A) Better expectations of future resource value
B) Path dependence
C) Causal ambiguity
D) Social complexity

Question 65

All of the following are true concerning the importance of dynamic capabilities to a firm EXCEPT:

A) A firm is unable to create rare resources unless it is dynamic.
B) The firm must be able to change its resource base and activity systems when the external environment changes.
C) The firm must be able to modify, upgrade and reconfigure its resources as needed.
D) Possessing dynamic resource capabilities helps the firm to sustain competitive advantage(s) over time.

Question 66

According to Michael Porter,when it comes to a firm's value chain activities and the essence of strategy a firm should ask itself:

A) Which activities should be done and more importantly what should not be done?
B) Where can costs be minimized to reflect the greatest profitability?
C) What tangible assets can be acquired to increase competitive advantage?
D) What are the best practices of the closest competitor and can they be easily adapted by the firm?

Question 67

To sustain competitive advantage,strategic activity systems need to:

A) Increase the firm's activities
B) Decrease the firm's activities
C) Increase firm productivity
D) Evolve over time

Question 68

Intangible firm resources such as brand equity and corporate culture can be analyzed by what method?

A) Benchmarking
B) Resource stocks and resource flows
C) Activities and incremental outputs
D) A PESTEL analysis

Question 69

Both Honda and Sony took many decades to build their core competencies and these competencies are based primarily by decisions made in the past.This process is called:

A) Path dependence
B) Dependence complexity
C) Causal dependence
D) Path immobility

Question 70

Strategy Highlight 4.2 discusses how IBM was able to rebound because CEO Lou Gerstner refocused the company on satisfying market needs through IT services as opposed to mainframe and mini-computers.This strategic highlight shows that IBM's current success is partially based on:

A) Creating a new strategic fit for IBM through the utilization of static capabilities.
B) Utilizing the resources of the mainframe hardware business.
C) Creating a new strategic fit for IBM through the utilization of dynamic capabilities.
D) The power of its brand equity.

Question 71

When a firm is conceptualized as a network of socially complex,interconnected activities it is referred to as being:

A) A value oriented system
B) A strategic activity system
C) An adaptive organization
D) A firm with high resource utilization

Question 72

When evaluating the sustainability of a competitive advantage which of the following is NOT true?

A) The advantage will not be sustainable if there are substitutes for the firm's core competence.
B) If managed effectively, existing core competencies can sustain a competitive advantage indefinitely.
C) Path dependence and social complexity increase the time that the advantage is sustainable.
D) When expectations of future resource value turn out to be accurate, and can be repeated, than a sustained competitive advantage is realized.

Question 73

Which of the following activities would be considered a primary activity in a firm's value chain?

A) Research and development
B) Human resources
C) Finance
D) Production

Question 74

Chapter 4 details actions that Vanguard took after 1997 to add customer segmentation as a new core activity because it was unable to provide quality service to targeted customer segments at the lowest possible cost.By changing its _______________ Vanguard was able to adapt to changing market conditions and sustain its competitive advantage in the investment industry.

A) Technological system
B) Strategic activity system
C) Organizational system
D) Market segmentation system

Question 75

Which framework below is most effective at demonstrating the difficulty of imitating a firm with 25 interconnected activities?
A) Strategic activity system

A) If Firm B decides to imitate Firm A with a 90% accuracy rate, the probability of copying the whole system of 25 activities yields only a 7% accuracy rate.
B) VRIO framework
C) Value chain analysis
D) SWOT analysis
Using strategic activity systems a competitor can observe 25 activities of Firm

Question 76

According to Strategy Highlight 4.3,Microsoft's eventual industry dominance is largely credited to:

A) The lucky break that Bill Gates got when starting Microsoft leveraged into a highly effective strategy.
B) Microsoft's financial resources and market position during the time of market entry.
C) The attractiveness of the computing industry.
D) The ability of Microsoft to continuously innovate which is a rare resource in the computing industry.

Question 77

What pitfall does the use of strategic activity systems highlight when a competitor is considering imitating a rival firm?

A) Copyright infringement against copying the firm's processes
B) Compounding effect reducing of the probability of success copying each interconnected system activity
C) Path dependence of the core activities of the firm
D) Loss of competitive advantage due to reduction of VRIO

Question 78

Primary activities in the firm level value chain are:

A) The activities most likely to be substituted by competitors.
B) The core competencies of an organization.
C) Involved in a product's physical creation, its distribution, and its service after the sale.
D) The activities most crucial to implementing the firm's business strategy.

Question 79

Suppose several senior managers recently left Google and went to work at rival Microsoft.What part of the "stocks and flows" of resources does this represent for Microsoft?

A) Leakage
B) Resource stocks
C) Dynamic capabilities
D) Inflow of resources

Question 80

The purpose of a firm's ___________ is to add additional value through primary and support activities that competitors cannot easily replicate.

A) VRIO network
B) Resource network
C) Value chain
D) Strategic chain