Question 1

_____ are the competencies or skills that a firm employs to transform inputs into outputs.
A) Tangible resources
B) Intangible resources
C) Reputational resources
D) Organizational capabilities

Accepted Answer

Organizational capabilities refer to the competencies or skills that a company uses to convert inputs into outputs effectively and efficiently. These include processes, systems, and methodologies that allow the firm to utilize its resources optimally.

Question 2

How should managers assess changes in their firm's competitive position in their industries during a period of unusual economic growth?
A) Compare the firm's financial ratios with ratios of firms in other strategic groups in the industry.
B) Compare the firm's financial ratios over the most recent one-year period.
C) Compare the financial ratios of all firms in the country's industry-some of whom serve very diverse market segments and have specialized accordingly.
D) Compare the financial ratios of firms in the company's strategic group.

Accepted Answer

Comparing the financial ratios of firms within the same strategic group allows managers to assess their competitive position accurately, as these firms target similar customers and have comparable resources and capabilities. This comparison provides a relevant benchmark for performance during periods of unusual economic growth.

Question 3

A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain
A) no competitive advantage.
B) competitive parity.
C) a temporary competitive advantage.
D) a sustainable competitive advantage.

Accepted Answer

A resource that is valuable and rare can provide a temporary competitive advantage, but if it is not difficult to imitate and there are substitutes, it cannot sustain that advantage over time.

Question 4

A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of
A) social complexity.
B) path dependency.
C) physical uniqueness.
D) causal ambiguity.

Accepted Answer

Path dependency refers to how the decisions one faces for any given circumstance are limited by the decisions one has made in the past, even though past circumstances may no longer be relevant. In this context, the inability to replicate a successful technology due to cumulative research findings suggests that the development of the technology followed a specific path that cannot be easily retraced or duplicated by another firm starting from a different point.

Question 5

A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon
A) social complexity.
B) path dependency.
C) physical uniqueness.
D) tangible resources.

Accepted Answer

These competitive advantages stem from social complexity, as they involve intricate social structures and relationships within the firm that are difficult to replicate or imitate.

Question 6

A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics
A) Physical uniqueness, path dependency, causal ambiguity, and social complexity.
B) Psychographic uniqueness, path dependency, causal ambiguity, and substitutability.
C) Rarity, path dependency, causal ambiguity, and social substitutability.
D) Geographic uniqueness, cause dependency, social ambiguity, and path complexity.

Accepted Answer

A competitive advantage based on inimitability can be sustained if it involves physical uniqueness (something that cannot be easily replicated), path dependency (historical unique conditions), causal ambiguity (unclear how the advantage was achieved), and social complexity (complex social relationships). These factors make it difficult for competitors to replicate the advantage.

Question 7

The following are examples of socially complex organizational phenomena, except
A) a firm's culture
B) interpersonal relations among a firm's managers
C) complex physical technology
D) reputation with suppliers and customers

Accepted Answer

Complex physical technology is not considered a socially complex organizational phenomenon because it relates to the technical or mechanical aspects of an organization rather than the social interactions, culture, or relationships that characterize social complexity. Socially complex phenomena typically involve human interactions, cultural norms, and relationships within or associated with an organization.

Question 8

A meaningful ratio analysis
A) must go beyond the calculation and interpretation of financial ratios.
B) is based primarily on leverage ratios.
C) involves only liquidity ratios.
D) involves profitability ratios at a single point in time.

Accepted Answer

A meaningful ratio analysis encompasses more than just calculating and interpreting financial ratios; it requires understanding the context, comparing ratios over time, and considering other financial and non-financial information to gain a comprehensive view of a company's performance and financial health.

Question 9

Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations?
A) Leverage ratios
B) Profitability ratios
C) Activity ratios
D) Liquidity ratios

Accepted Answer

Liquidity ratios measure a company's ability to meet its short-term financial obligations, indicating how easily a company can convert its assets into cash to pay off liabilities due within a year.

Question 10

For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have the following four attributes
A) Rare, valuable, mobile, and nonsubstitutable.
B) Rare, inimitable, physically unique, and nonsubstitutable.
C) Rare, valuable, inimitable, and nonsubstitutable.
D) Rare, valuable, physically unique, and causally ambiguous.

Accepted Answer

C) Rare, valuable, inimitable, and nonsubstitutable. These attributes ensure a resource can provide a sustainable competitive advantage by being hard to copy and irreplaceable, adding unique value.

Question 11

Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of Gillette's
A) tangible resources.
B) intangible resources.
C) organizational capabilities.
D) strong primary activities.

Accepted Answer

Organizational capabilities refer to a company's ability to manage, integrate, and coordinate various resources and processes to achieve desired outcomes. Gillette's success in combining different technologies to dominate the wet shaving industry illustrates its organizational capabilities in integrating diverse knowledge areas and technologies to innovate and maintain a competitive edge.

Question 12

The best measure of a company's ability to meet imminent financial obligations is known as the
A) current ratio.
B) total asset turnover.
C) debt ratio.
D) profit margin.

Accepted Answer

The current ratio, calculated as current assets divided by current liabilities, is the best measure of a company's ability to meet short-term financial obligations. It provides a snapshot of the firm's liquidity and financial health in the near term.

Question 13

The primary challenge facing the firm in today's turbulent competitive environment is likely to be the realization that:
A) many of their current resources are not sustainable
B) the majority of their resources are inimitable
C) many of their current resources are accelerating toward obsolescence rapidly and their value to the firm is diminishing
D) Their resources may be inimitable because they lack social complexity

Accepted Answer

The primary challenge is that resources may become obsolete quickly due to rapid changes in technology, consumer preferences, and competitive strategies, diminishing their value to the firm.

Question 14

Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading
A) if the overall strategy of the firm is the same.
B) in periods of recession or economic boom.
C) if the firm shows constant growth.
D) if the firm's stock is publicly traded.

Accepted Answer

Historical comparisons can be misleading during periods of recession or economic boom because these periods represent extreme economic conditions that may not accurately reflect the firm's normal competitive position.

Question 15

The "balanced scorecard" provides top managers with a _____ view of the business.
A) detailed and complex
B) fast but comprehensive
C) simple and routine
D) long-term financial

Accepted Answer

The "balanced scorecard" is designed to give managers a fast but comprehensive view of the business, incorporating various perspectives such as financial, customer, internal business processes, and learning and growth.

Question 16

The three key types of resources that are central to the resource-based view of the firm are
A) tangible resources, intangible resources, and organizational structure.
B) culture, tangible resources, and intangible resources.
C) tangible resources, intangible resources, and organizational capabilities.
D) tangible resources, intangible resources, and top management.

Accepted Answer

The resource-based view of the firm identifies three main types of resources as central to a firm's strategic capability: tangible resources (physical and financial assets), intangible resources (brand reputation, intellectual property), and organizational capabilities (processes and routines that allow the firm to coordinate activities and leverage its resources effectively).

Question 17

Which of the following would be most difficult to assess?
A) The liquidity position of a firm
B) The legitimacy and reputation of a firm
C) Market share growth
D) The efficiency with which a firm utilizes its assets

Accepted Answer

The legitimacy and reputation of a firm are more subjective and intangible compared to the other options, making them more difficult to assess with quantitative measures.

Question 18

To create an intangible resource that cannot be easily copied, Canadian retailer Holt Renfrew combines
A) real estate and store fixtures.
B) brand name and experienced staff.
C) accumulated reputation for quality.
D) all of these answers are correct

Accepted Answer

Holt Renfrew combines real estate and store fixtures, brand name and experienced staff, and an accumulated reputation for quality to create an intangible resource that cannot be easily copied. These elements together contribute to a unique competitive advantage.

Question 19

The resource-based view (RBV) of the firm combines two perspectives
A) the primary and support activities of the firm.
B) the interrelationships among the primary activities of the firm and corporate management.
C) the internal analysis of the firm as well as the external analysis of the industry and competitive environment.
D) the industry and the competitive environment.

Accepted Answer

The resource-based view (RBV) of the firm emphasizes both the internal analysis of the firm (focusing on its resources and capabilities) and the external analysis of the industry and competitive environment. This approach suggests that a firm's sustainable competitive advantage is derived from its ability to assemble and exploit an appropriate combination of resources.

Question 20

The "balanced scorecard" developed by Kaplan and Norton helps to integrate
A) financial analysis and a firm's reputation.
B) intangible resources and operational measures.
C) financial analysis and stakeholder perspectives.
D) short-term perspectives and strategic positioning.

Accepted Answer

The balanced scorecard integrates financial analysis with stakeholder perspectives, providing a comprehensive view of organizational performance beyond just financial metrics.

Quiz 3: Analyzing the Internal Environment of the Firm

_____ are the competencies or skills that a firm employs to transform inputs into outputs.

How should managers assess changes in their firm's competitive position in their industries during a period of unusual economic growth?

A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain

A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. This is an example of

A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon

A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics

The following are examples of socially complex organizational phenomena, except

A meaningful ratio analysis

Which of these categories of financial ratios is used to measure a company's ability to meet its short-term financial obligations?

For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have the following four attributes

Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain unparalleled success in the wet shaving industry. This is an example of Gillette's

The best measure of a company's ability to meet imminent financial obligations is known as the

The primary challenge facing the firm in today's turbulent competitive environment is likely to be the realization that:

Historical comparisons provide information to managers about changes in a firm's competitive position. Historical comparisons are often misleading

The "balanced scorecard" provides top managers with a _____ view of the business.

The three key types of resources that are central to the resource-based view of the firm are

Which of the following would be most difficult to assess?

To create an intangible resource that cannot be easily copied, Canadian retailer Holt Renfrew combines

The resource-based view (RBV) of the firm combines two perspectives

The "balanced scorecard" developed by Kaplan and Norton helps to integrate