Question 1

All of the following are assumptions of the industrial organization (I/O) model EXCEPT:

Accepted Answer

The I/O model assumes that resources are mobile across firms, not firm-specific and attached to firms over the long-term.

Question 2

Which of the following statements is most consistent with the I/O view? Performance of a firm is most directly attributable to:

Accepted Answer

The I/O view emphasizes that external factors, such as the industry structure in which a firm operates, are the primary drivers of a firm's performance. As such, the profitability of the industry in which a firm competes is the most consistent with the I/O view. Factors such as the power of financial market stakeholders and hypercompetition may contribute to a firm's performance, but they are not the primary drivers according to this perspective. B is misleading, as while resources are important, the I/O View emphasizes that they are not sufficient to explain a firm's performance without considering external factors.

Question 3

According to Hitt, the final responsibility for forming the organization's mission lies with the:

Accepted Answer

The CEO is ultimately responsible for the strategic direction and mission of the organization, as they have the authority and leadership role to guide and make final decisions.

Question 4

______ is a capacity for a set of resources to perform a task or an activity in an integrative manner.

Accepted Answer

A capability refers to the ability of a set of resources to work together in a coordinated and integrated manner to perform a specific task or activity. It is a key element in organizational strategy and can be a source of competitive advantage.

Question 5

An investor is considering in which of two start-up companies to invest. The investor has faith in the industrial organization model of above-average returns and is using that as a guideline to make a decision. Both start-up companies propose to manufacture health-focused foods with low salt, low sugar, high fiber, and no artificial additives. RexRich Foods has a business strategy of producing a differentiated product for which consumers will pay more. Green Pastures Foods is in the health-foods industry because of its internal culture and commitment to healthy lifestyles, but it does not have any executives with experience in food production. Which firm will the investor feel is most consistent with the model of industrial organization?

Accepted Answer

The I/O model emphasizes the importance of having a competitive advantage over rivals. RexRich Foods' strategy of producing a differentiated product indicates that they have identified a way to differentiate themselves from competitors and potentially achieve above-average returns. On the other hand, Green Pastures Foods' internal culture and commitment to healthy lifestyles may not provide a unique advantage in the competitive health-food industry. Additionally, Green Pastures Foods' lack of executives with experience in food production may hinder their ability to effectively compete. Therefore, the investor is likely to view RexRich Foods as the more consistent choice with the I/O model.

Question 6

The resource-based view of the firm:

Accepted Answer

The resource-based view of the firm emphasizes that a sustainable competitive advantage can be achieved by developing and utilizing unique and valuable resources and capabilities that are difficult for rivals to imitate or substitute. However, it also recognizes that simply possessing resources is not enough, and that firms must also effectively deploy and integrate them within their strategy to achieve success.

Question 7

Although Alibaba is competing in the internet services industry, it has improved its performance by focusing on innovation and service diversification. This improved performance is best explained by:

Accepted Answer

The resource-based model argues that a firm's resources and capabilities are key determinants of its performance. Alibaba's emphasis on innovation and service diversification suggests that it is leveraging its internal resources and capabilities, which is consistent with the resource-based model.

Question 8

Firms use the five forces model of competition to identify the ______ of the industry.  It is measured by its _______.

Accepted Answer

The five forces model of competition is used to identify the attractiveness of an industry, which is measured by its profitability.

Question 9

Research shows that approximately ______ percent of a firm's profitability is explained by the industry in which it competes, whereas ______ percent is explained by the firm's characteristics and actions.

Accepted Answer

Research indicates that about 20% of a firm's profitability is attributed to the industry it competes in, while 36% is explained by the firm's own characteristics and actions.

Question 10

A key purpose of a mission statement is to inform _________what a firm is, what it seeks to accomplish and who it seeks to serve.

Accepted Answer

A mission statement is primarily targeted towards stakeholders, including customers, employees, investors, and partners. It provides them with a clear understanding of what the company aims to achieve, who it serves, and what it stands for. CEOs, regulators, and former employees may benefit from the mission statement, but it is not specifically tailored to them.

Question 11

The goal of the organization's ______ is to point the firm in the direction of where it would like to be in the years to come.

Accepted Answer

The organization's vision statement outlines its aspirations and desired future state, providing direction and purpose to the organization. The mission statement, on the other hand, outlines the organization's purpose and core values, while the culture refers to the shared beliefs, values, attitudes, and behaviors of the members of the organization. Finally, the strategy refers to the plan of action for achieving the organization's goals and objectives.

Question 12

The resource-based model argues that:

Accepted Answer

The resource-based model argues that a firm's resources, specifically those that are valuable, rare, costly to imitate, and non-substitutable, form the basis of the firm's core competencies and a potential source of sustainable competitive advantage. The model does not suggest that all resources have the potential to be the basis of sustainable competitive advantage or that industry structure is the key to competitive success.

Question 13

In the resource-based model, which of the following factors would be considered a key to organizational success?

Accepted Answer

The answer of In the resource-based model, which of the...

Question 14

All of the following are resources of an organization EXCEPT:

Accepted Answer

Weak competitors are not a resource of an organization, but rather a factor in the external environment that can impact the organization's performance. The other options listed are all examples of resources that organizations can use to generate competitive advantage.

Question 15

When resources and capabilities serve as a source of competitive advantage for a firm, the firm has created a(n):

Accepted Answer

A core competence is a unique capability that creates a competitive advantage for a firm. It is a combination of resources, abilities, and knowledge that enables a firm to achieve superior performance in a specific area. By leveraging its core competencies, a firm can differentiate itself from competitors and create value for its customers.

Question 16

The Princeton Alliance Church states in its website that "PAC exists to help you live life to the fullest by knowing God, developing community and bringing hope." This pronouncement is most precisely a statement of organizational:

Accepted Answer

The statement "PAC exists to help you live life to the fullest by knowing God, developing community and bringing hope" is a statement of the church's vision. It describes the ultimate goal and purpose of the organization, which is to help individuals know God, develop community, and bring hope into their lives. While values and culture are related to the organization's beliefs and practices, respectively, and structure is related to the organization's design and processes, none of these concepts fully capture the idea expressed in the statement.

Question 17

A firm's mission:

Accepted Answer

A firm's mission statement defines the company's identity and purpose. It outlines the business it operates in and the customers it serves. It serves as a guide for decision-making and strategy development. The other options do not accurately describe a mission statement.

Question 18

All of the following are assumptions of the resource-based model EXCEPT:

Accepted Answer

The resource-based model assumes that capabilities are not highly mobile across firms, which is why they can be a source of sustained competitive advantage.

Question 19

The industrial organization (I/O) model argues that:

Accepted Answer

The I/O model argues that the key to success is choosing the correct industry in which to compete. This is because different industries have different levels of competition, entry barriers, and profit potential. Therefore, a firm needs to choose an industry with favorable characteristics to earn above-average returns on investment.

Question 20

To have the potential to become sources of competitive advantage, resources and capabilities must be non-substitutable, valuable, ______, and  ______.

Accepted Answer

To become sources of competitive advantage, resources and capabilities must be rare, which means they are not widely possessed by competitors. Additionally, they must be costly to imitate, meaning that competitors cannot easily replicate them even if they try. Resources and capabilities that are easy to imitate will not provide sustained competitive advantage as competitors can quickly match the firm's advantages. The options A, B, and D are incorrect because they do not encompass both rareness and costliness to imitate.

Quiz 1: Strategic Management and Strategic Competitiveness