Deck 3: Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Question 1

The more a resource is fmu-specific and difficult to imitate, the more likely a company holding that resource is said to have a distinctive competency.

Answer 1

True

Question 2

Lucy is an entrepreneur who is interested in opening her own bakery.She is concerned with obtaining money for equipment for the bakery such as ovens, pots and pans, and display cabinets.Lucy is trying to obtain intangible resources for her business.

Answer 2

False

Question 3

A value chain is a sequence of activities for transforming inputs into outputs that are valued by customers.

Answer 3

True

Question 4

Distinctive competencies are finn-specific strengths that allow a company to differentiate its products and achieve substantially lower costs than its rivals.

Question 5

A company's profitability depends on the value customers place on the company's products

Question 6

At Adam's bicycle repair shop, the primary value chain activity of production occurs each time a customer's bicycle is repaired.

Question 7

Employee productivity is a common measure of efficiency.

Question 8

Internal analysis is concerned with identifying a company's opportunities and threats.

Question 9

If a company's profitability is higher than the industry average, it has a competitive advantage.

Question 10

Together with an analysis of the company's external environment, internal analysis gives managers the information they need to choose the business model and strategies that will enable their company to attain a sustained competitive advantage.

Question 11

When a company has differentiated products, they have less pricing options.

Question 12

The price a company charges for a good or service is typically more than the utility placed on that good or service by the customer.

Question 13

The importance of reliability in building competitive advantage has increased dramatically over the past decade.

Question 14

Unfortunately, quality-as-excellence and quality-as-reliability are concepts that apply to goods but not services.

Question 15

Nene works in a factory where she picks crab meat from crabs.She is paid per day based upon the number of pounds of crab meat that she picks.Nene's daily number of pounds of crab meat can be referred to as her productivity.

Question 16

Tangible resources include experiential knowledge and technological know-how.

Question 17

In the fashion industry, the time required to take a new product from design inception to placement in a retail store is
known as customer response time.

Question 18

At the heart of any company's business model is the combination of congruent strategies aimed at creating distinctive competencies that differentiate its products and result in a lower cost structure.

Question 19

The primary activities of the value chain include the design, creation, and delivery of the product, the product's marketing, and its support and after-sales service.

Question 20

The building blocks of competitive advantage are turnover, quantity, and profitability.

Question 21

Benchmarking is a practice in which a company's performance is compared against that of competitors and the historic performance of the company itself.

Question 22

Which of the following is true of the impact of high product quality on competitive advantage?

A)It decreases the utility of the products.
B)It lowers unit costs of the products.
C)It adversely affects employee productivity.
D)It limits the company's ability to differentiate its products.
E)It increases the need for after sales services.

Question 23

Imitating a company's capabilities tends to be more difficult than imitating its tangible and intangible resources.

Question 24

Anna bakes cookies for about $10 per batch, she charges customers $15 to a batch, and customers perceive that the cookies are worth $25 per batch.Anna's profit margin is:

A)$5.
B)$7.5.
C)$10.
D)$15.
E)$25.

Question 25

Which of the following is not true regarding a company's distinctive competencies?

A)They represent the unique strengths of the company.
B)They refer to company strengths that competitors cannot easily match or imitate.
C)They form the bedrock of a company's strategy.
D)They can be based in any of the value creation functions of the company.
E)They are shared by many firms in an industry.

Question 26

Resources:

A)are only the tangible assets available to a company.
B)can be both tangible and intangible.
C)are harder for a company to copy than capabilities are.
D)do not include patents, copyrights, and trademarks.
E)are considered valuable only if they increase a company's costs.

Question 27

The more utility a company creates for its customers, the more flexibility it has in determining prices.

Question 28

Donna can make a chair for about $100, she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225.In this case, the consumer surplus is:

A)$50.
B)$75.
C)$125.
D)$150.
E)$225.

Question 29

The intellectual property of an organization is a(n):

A)tangible resource.
B)strategic commitment.
C)tangible capability.
D)barrier to change.
E)intangible resource.

Question 30

The Icarus paradox suggests that those factors that led to a company's success will continue in the future because the competitors cannot imitate them.

Question 31

Competitive advantage is based on:

A)distinctive competencies.
B)the Icarus paradox.
C)higher cost structure.
D)prior strategic commitments.
E)barriers to change in a company.

Question 32

IBMs investment in mainframe computers, that proved disadvantageous when the market shifted to smaller personal computers, is an example of a prior strategic commitment.

Question 33

The ability of established competitors to imitate the competitive advantage of a rival is not limited by factors such as existing strategic commitments and low absorptive capacity.

Question 34

Texas Instruments achieved early success through engineering excellence.But thereafter, they became so obsessed with engineering that they lost sight of market realities.This is an example of the Icarus Paradox.

Question 35

The most successful fmns are those that constantly learn and upgrade their distinctive competencies.

Question 36

Kodak possesses the leading imaging technology.This technology has allowed the company to differentiate its products from those offered by rivals.Imaging technology is Kodak's:

A)distinctive competence.
B)profit.
C)support activity.
D)value chain.
E)retired product.

Question 37

Patents typically provide the greatest barrier to imitation.

Question 38

Absorptive capacity refers to the ability of an enterprise to identify, value, assimilate, and use new knowledge.

Question 39

Competitive advantage typically leads to:

A)a defective business model.
B)average profitability within an industry.
C)superior profitability.
D)the Icarus paradox.
E)barriers to changes in the organization.

Question 40

Capabilities refer to a company's:

A)manufacturing equipment.
B)reputation.
C)skills at using resources effectively.
D)competitors who are capable of offering greater variety of products.
E)patents, copyrights, and trademarks.

Question 41

The concept of quality applies to:

A)all products produced by a finn.
B)products consumers believe to be high-quality; not low-quality.
C)only those products of a finn popular among a large customer base.
D)custom-made products only. e.only those products that have been redesigned.

Question 42

Research and development activities are concerned with:

A)design of products.
B)distribution of goods.
C)customer services.
D)analyzing financial performance.
E)marketing of products.

Question 43

Using the value chain model, which of the following primary activities is performed last, as inputs are transformed into outputs?

A)Research and development
B)Marketing and sales
C)Service and support
D)Production
E)Human resources

Question 44

Which of the following is an important attribute for a product from a quality-as-reliability perspective?

A)Styling
B)Aesthetic appeal
C)Level of after-sale service
D)Features e.Performance

Question 45

Mike works as a corporate trainer, teaching new employees how to perform manufacturing tasks.In which value chain activity does Mike work?

A)Research and development
B)Human resources
C)Materials management
D)Production
E)Company infrastructure

Question 46

Innovation refers to the act of:

A)seeking patent protection for new products.
B)creating new products and processes.
C)measuring time taken for a service to be provided.
D)measuring the output produced by an employee. e.identifying and satisfying the needs of a customer.

Question 47

Which of the following support activities in the value chain refers to the transmission of physical materials from procurement through production and into distribution?

A)Human resources
B)Information systems
C)Research and Development
D)Logistics
E)Operations

Question 48

Ray, a toymaker, knits a stuffed unicorn for Belle.Which function of the value chain is illustrated in this scenario?

A)Marketing
B)Distribution
C)Research
D)Production
E)Sales

Question 49

Cost accountants are responsible for gathering and monitoring data used for controlling the organization's costs.In which value chain activity do cost accountants work?

A)Research and development
B)Human resources
C)Materials management
D)Marketing and sales
E)Company infrastructure

Question 50

Which of the following best describes product innovation?

A)Transforming a quantity of inputs into a given output
B)Identifying and satisfying a customer's needs
C)Creating products that have superior attributes than existing products.
D)Developing a new process that focuses on quantity rather than quality.
E)Measuring the quantity of outputs produced per employee

Question 51

Using the value chain model, which of the following primary activities is performed first, as inputs are transformed into outputs?

A)Research and development
B)Marketing and sales
C)Human resources
D)Production
E)Service and support

Question 52

The simplest measure of efficiency is:

A)the amount of money the company has to work with in the short term.
B)the ratio of revenues divided by invested capital.
C)the net profit expressed as a percentage of sales.
D)the total costs of producing products. e.the quantity of inputs that it takes to produce a given output.

Question 53

One of the basic building blocks of competitive advantage is:

A)quantity.
B)logistics.
C)variety.
D)distribution. e.innovation.

Question 54

Ford Motors developed the Explorer sports utility vehicle, the number I selling sports utility vehicle in the United States, based on an extensive study of customer preferences.Which value chain activity of Ford conducted those studies?

A)Research and development
B)Human resources
C)Materials management
D)Marketing and sales
E)Company infrastructure

Question 55

consists of the electronic systems for managing inventory, tracking sales, pricing products, selling products, and dealing with customer service inquiries.

A)Information systems
B)Logistics
C)Barriers to imitation
D)Benchmark
E)Materials management

Question 56

Intel's invention of the microprocessor in the early 1970s, Cisco's development of the router for routing data over the Internet in the mid-1980s, and Apple's development of the iPod, iPhone, and iPad in the 2000s can be referred to as
Innovations.

A)process
B)product
C)customer
D)sector e.absorptive

Question 57

Customer response time is:

A)the time taken for value to be placed on a company's products by customers.
B)the time taken for development of a new process for producing products and delivering them to customers.
C)the time taken for given inputs to be converted into an output.
D)the time taken for development of products that have superior attributes to existing products.
E)the time taken for a good to be delivered or a service to be performed.

Question 58

Efficiency is:

A)defmed as the time it takes to produce a product.
B)the quantity of inputs required to produce an output.
C)independent of customers' perception of a product's value.
D)measured by looking at a product's price. e.lower when the output is high-quality.

Question 59

Which primary activity in the value chain is concerned with the design of products and production processes?

A)Research and development
B)Marketing and sales
C)Materials management
D)Production
E)Company infrastmcture

Question 60

The term value chain refers to the idea that a company is:

A)one of a series of units that comprise an industry segment.
B)the producer of a series of customer-valued products that are linked together.
C)a series of activities that transform inputs into products that customers value.
D)one of a series of economic functions.
E)a collection of various products and their attributes.

Question 61

When Rollie's car wash began to lose business to rivals, Rollie read publications for car wash owners to learn the best practices in the industry.Then she implemented the best practices.Rollie is using to improve her car wash.

A)specialized assets
B)benchmarking
C)strategic commitments
D)inertia
E)the Icarus paradox

Question 62

Analyze the relationships among distinctive competitive advantage, distinctive competencies, resources, and capabilities.

Question 63

Which of the following factors does not determine the durability of a company's competitive advantage?

A)Barriers to imitation
B)Apathy in an industry
C)Capability of competitors
D)General level of dynamism in the industry
E)The rate of product innovation in an industry

Question 64

Dale's methods of fitting horseshoes save time and money for his employer at the local ranch.However, when Dale suggests that everyone use his method, his boss, Cedric, says, "No.That's not the way we've always done it around here." Cedric's resistance to change illustrates:

A)organizational inertia.
B)prior strategic commitments.
C)barriers to mobility.
D)lack of distinctive competencies.
E)the Icarus paradox.

Question 65

Give one example of a firm that has achieved a distinctive competency in efficiency and describe that competency.
Repeat for a finn with a distinctive competency in quality, innovation, and responsiveness to customers.

Question 66

A company's competitive advantage will not endure for long when that competitive advantage can be:

A)quickly or easily duplicated by other companies.
B)protected by patents.
C)protected by significant barriers to imitation.
D)shared with other companies in the industry.
E)shielded by copyrights.

Question 67

Industry dynamism refers to:

A)the gradual erosion of a company's customer base over time.
B)shifts in product profitability.
C)a rapidly changing industry envirornnent.
D)increasing per-unit costs.
E)a company's difficulty in changing its strategies and structure.

Question 68

Benchmarking can be defmed as the practice of:

A)monitoring activities related to the design, creation, and delivery of a product, its marketing, and its support and after-sales service.
B)developing products that are new to the world or have superior attributes to existing products in the market.
C)measuring the time that it takes for a good to be delivered or a service to be performed.
D)measuring a company against the products, practices, and services of some of its most efficient global competitors.
E)analyzing the financial position of a company and creating the income statements and the balance sheets.

Question 69

One of the most widely used measures of financial performance is:

A)return on invested capital.
B)net profit margin.
C)share value.
D)net sales. e.productivity.

Question 70

The ratio of net profit to invested capital is known as:

A)return on invested capital.
B)return on sales.
C)capital turnover.
D)cost of goods sold. e.sales, general, and administrative expenses.

Question 71

Kim's Apparel was a very popular clothing store.It made huge profits during the first two years of its establishment. However, the company failed to keep up with the changing needs of the customers and eventually had to be closed down.Which of the following concepts does the scenario illustrate?

A)Cycle time
B)Customer defection
C)Icarus paradox
D)Distinctive competency
E)Diseconomies of scale

Question 72

Which of the following is not a way that companies can avoid failure?

A)Benchmarking
B)Continuous learning
C)Developing distinctive competencies
D)Exploiting luck
E)Following rigid business processes

Question 73

Factors that make it difficult for a competitor to copy a company's distinctive competencies are known as:

A)barriers to imitation.
B)marketing know-how.
C)technological know-how.
D)support activities.
E)capabilities.

Question 74

Ted is an accountant at ABC Company.He calculates the difference between total revenues and total costs before tax.Ted calculates the:

A)net profit.
B)capital turnover.
C)cost of goods sold.
D)return on sales.
E)invested capital.

Question 75

The Icarus paradox suggests that:

A)companies should stick to a narrowly defined line of products.
B)better-than-average profitability is an elusive goal.
C)companies may become myopic and lose sight of market realities.
D)companies often pursue too many strategies at once.
E)companies should change strategies before strategies need changing.

Question 76

Which of the following determines the cost of goods sold?

A)The balance sheet
B)The fmancial position statement
C)The cash budget
D)The income statement e.The overhead expense statement

Question 77

According to Ghernawat, a strategic commitment is:

A)the factor that make it difficult for a competitor to copy a company's distinctive competencies.
B)the time that it takes for a good to be delivered or a service to be performed..
C)the set of activities related to the design, creation, and delivery of the product, its marketing, and its support and after-sales service.
D)the collection nonphysical entities such as brand names, company reputation, experiential knowledge, and intellectual property, including patents, copyrights, and trademarks..
E)a company's dedication to developing a particular set of resources and capabilities.

Question 78

A company's competitive advantage is more durable when:

A)barriers to imitation are low and there are few capable competitors.
B)barriers to imitation are high and there are many capable competitors.
C)barriers to imitation are high and the industry is stable.
D)the industry is stable and there are many capable competitors.
E)the industry is stable and barriers to imitation are low.

Question 79

Explain how tangible and intangible resources and capabilities can lead to distinctive competencies.Give specific examples.

Question 80

The argument states that companies find it hard to change their strategies and structures to adapt to changing competitive conditions.

A)inertia.
B)imitation.
C)barriers to mobility.
D)lack of resources.
E)lack of capabilities.