Question 1

The SWOT framework is sufficient as the primary basis for evaluating the external opportunities and threat of the company.

Accepted Answer

While we believe SWOT analysis is very helpful as a starting point, it should not form the primary basis for evaluating the internal strengths and weaknesses of the company or the opportunities and threats in the environment.

Question 2

Inbound logistics include all activities associated with transforming inputs into the final product form such as machining, packaging, assembly, equipment, testing, printing, and facility operations.

Accepted Answer

Inbound logistics is primarily associated with receiving, storing, and distributing inputs to the product. Operations include all activities associated with transforming inputs into the final product form, such as machining, packaging, assembly, testing, printing, and facility operations.

Question 3

Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value-chain analysis.

Accepted Answer

Service is a primary activity which includes all actions associated with providing service to enhance or maintain the value of the product, such as installation, repair, training, parts supply, and product adjustment.

Question 4

Toyota paid a heavy price for its excessive emphasis on cost control. By focusing on one strength exclusively, it suffered severe losses. This is an example of the limitations of a SWOT analysis.

Accepted Answer

Sometimes firms become preoccupied with a single strength or a key feature of the product or service they are offering and ignore other factors needed for competitive success. For example, Toyota, the giant automaker, paid a heavy price for its excessive emphasis on cost control. The resulting problems with quality and the negative publicity led to severe financial losses and an erosion of its reputation in many markets.

Question 5

The value-chain concept assumes that both primary and support activities are capable of producing value for customers.

Accepted Answer

Both types of activities can add value, either directly or through important relationships with other activities.

Question 6

In conducting a SWOT analysis, a risk for strategists is that they rely on traditional definitions of their industry and competitive environment and therefore focus too narrowly on current competitors.

Accepted Answer

Strategists who rely on traditional definitions of their industry and competitive environment often focus their sights too narrowly on current customers, technologies, and competitors. Hence they fail to notice important changes on the periphery of their environment that may trigger the need to redefine industry boundaries and identify a whole new set of competitive relationships.

Question 7

Primary activities contribute to the physical creation of a product or service, its sale and transfer to the buyer, and its service after the sale.

Accepted Answer

The five primary activities in the Porter value chain model (inbound logistics, operations, outbound logistics, marketing and sales, and service) contribute to the physical creation of the product or service, its sale and transfer to the buyer, and its service after the sale.

Question 8

The strengths and capabilities of a firm are enough to enable it to achieve a competitive advantage in the marketplace.

Accepted Answer

The strengths and capabilities of a firm, no matter how unique or impressive, may not enable it to achieve a competitive advantage in the marketplace. If a firm builds its strategy on a capability that cannot, by itself, create or sustain competitive advantage, it is essentially a wasted use of resources.

Question 9

The static nature of the SWOT assessment is a positive advantage for it as an evaluation framework.

Accepted Answer

A key weakness of SWOT is that it is primarily a static assessment. It focuses too much company attention on one moment in time. Essentially, this is like studying a single frame of a motion picture. You may be able to identify the principal actors and learn something about the setting, but it does not tell you much about the plot.

Question 10

In value-chain analysis, value is measured by the market value of the total stock outstanding of the company.

Accepted Answer

Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue, a reflection of the price the product of the firm commands and the quantity it can sell.

Question 11

Value-chain analysis assumes that the basic economic purpose of a firm is to create value and it is a useful framework for analyzing the strengths and weaknesses of the firm.

Accepted Answer

Value-chain analysis views the organization as a sequential process of value-creating activities. It provides greater insights into analyzing the competitive position of a firm than SWOT analysis does by itself.

Question 12

One advantage of SWOT analysis is that it helps managers to identify strengths that are almost always sources of sustainable competitive advantages.

Accepted Answer

The strengths and capabilities of a firm, no matter how unique or impressive, may not enable it to achieve a competitive advantage in the marketplace.

Question 13

Company strengths and weaknesses are tied to its stated goals and objectives.

Accepted Answer

Company strengths and capabilities, no matter how unique or impressive, may not enable it to achieve a competitive advantage in the marketplace. It is akin to recruiting a concert pianist to join a gang of thugs; even though such an ability is rare and valuable, it hardly helps the organization attain its goals and objectives.

Question 14

The SWOT framework is not sufficient as the primary basis for evaluating the internal strengths and weaknesses of a company.

Accepted Answer

While we believe SWOT analysis is very helpful as a starting point, it should not form the primary basis for evaluating the internal strengths and weaknesses of the company or the opportunities and threats in the environment.

Question 15

Top managers have learned not to rely on SWOT to stimulate self-reflection and group discussions about how to improve their firm and position for success.

Accepted Answer

SWOT analysis is a tried-and-true tool of strategic analysis. SWOT (strengths, weaknesses, opportunities, threats) analysis is used regularly in business to initially evaluate the opportunities and threats in the business environment as well as the strengths and weaknesses of a firm's internal environment. Top managers rely on SWOT to stimulate self-reflection and group discussions about how to improve their firm and position it for success.

Question 16

If a firm builds its strategy on a capability that cannot, by itself, create or sustain competitive advantage, it is wasting its time and resources.

Accepted Answer

If a firm builds its strategy on a capability that cannot, by itself, create or sustain competitive advantage, it is essentially a wasted use of resources.

Question 17

Encyclopedia Britannica lost competitive positioning due to a misunderstanding of the change in competitors, when the CD-based encyclopedia became popular for home computers.

Accepted Answer

Consider Encyclopedia Britannica, whose competitive position was severely eroded by a nontraditional competitor, the CD-based encyclopedias (e.g., Microsoft Encarta) that could be used on home computers followed by online encyclopedias (e.g., Wikipedia).

Question 18

The SWOT analysis can show managers how to achieve a competitive advantage.

Accepted Answer

SWOT has its limitations. It is just a starting point for discussion. By listing the company attributes, managers have the raw material needed to perform more in-depth strategic analysis. However, SWOT cannot show them how to achieve a competitive advantage. They must not make SWOT analysis an end in itself, temporarily raising awareness about important issues but failing to lead to the kind of action steps necessary to enact strategic change.

Question 19

Focusing too narrowly on current customers, technologies and competitors can lead a company to overlook periphery industry boundaries and a new set of competitive relationships.

Accepted Answer