Question 1

Which of the following is not one of the five questions that comprise the task of evaluating a company's competitive strength and cost structure?
A) What are the company's most profitable geographic market segments?
B) How well is the company's strategy working?
C) Is the company's cost structure and customer value proposition competitive?
D) Is the company competitively stronger or weaker than key rivals?
E) What strategic issues and problems merit front-burner management attention?

Accepted Answer

While evaluating a company's competitive strength and cost structure, one of the questions is not related to geographic market segments. The other four questions include analyzing the effectiveness of the company's strategy, assessing its cost structure and customer value proposition, comparing the competitive strength with key rivals, and identifying strategic issues and problems that require management attention.

Question 2

In order to sustain the competitive power of resources and capabilities they must be
A) continually strengthened and nurtured.
B) broadened and deepened to cover emerging market opportunities.
C) refreshed, modified, or sometimes phased out and replaced in response to ongoing market changes.
D) difficult to imitate.
E) All of these.

Accepted Answer

To sustain the competitive power of resources and capabilities, all of the given actions must be taken. Resources and capabilities need to be continually strengthened and nurtured, broadened and deepened to cover emerging market opportunities, refreshed, modified, or sometimes phased out and replaced in response to ongoing market changes, and also must be difficult to imitate to maintain a competitive advantage. Therefore, option E is the best choice.

Question 3

The competitive power of a company resource or competitive capability hinges on
A) how hard it is for competitors to copy or imitate.
B) whether it is rare and, therefore, something rivals lack.
C) whether it is really competitively valuable.
D) how easily it can be trumped by the substitute resources/capabilities of rivals.
E) All of these.

Accepted Answer

The competitive power of a company's resource or capability depends on all of these factors: how difficult it is for competitors to copy or imitate, whether it is rare and unique, whether it is valuable in a competitive sense, and whether it can be easily replaced or surpassed by alternative resources or capabilities. Combining these factors will determine the firm's competitive advantage.

Question 4

Which one of the following is not a reliable measure of how well a company's current strategy is working?
A) Trends in the company's sales and earnings growth.
B) The company's development of human capital, organizational capital, and information capital.
C) Changes in the firm's image and reputation with its customers.
D) The company's overall financial strength.
E) Evidence of improvement in internal processes such as defect rate, order fulfillment, and employee productivity.

Accepted Answer

While developing human capital, organizational capital, and information capital is important, it is not a direct measure of how well a company's current strategy is working. The other options all provide insight into the financial and operational success of the company, which are key indicators of strategy effectiveness.

Question 5

A capability of the firm is not considered to be
A) the capacity of a firm to competently perform some internal activity.
B) referred to as a competence.
C) developed and enabled through the deployment of a company's resources or some combination of its resources.
D) a competitively valuable resource.
E) related to the level of resources available.

Accepted Answer

The statement "related to the level of resources available" is incorrect. A capability of the firm is defined as the ability to competently perform some internal activity, developed and enabled through the deployment of a company's resources or some combination of its resources, and a competitively valuable resource. However, it is not directly related to the level of resources available.

Question 6

One important indicator of how well a company's present strategy is working is whether
A) it has more core competencies than close rivals.
B) its strategy is built around at least two of the industry's key success factors.
C) the company is achieving gains in financial strength.
D) it has been able to create new industry demand through the use of a blue ocean strategy.
E) it is subject to weaker competitive forces and pressures than close rivals (a good sign).

Accepted Answer

The best indicator of how well a company's present strategy is working is whether it is achieving gains in financial strength. Ultimately, the goal of any strategic plan is to increase profitability, so financial gains are a strong measure of success. While the other options may also be important indicators of success, they are not as directly tied to financial performance.

Question 7

A resource-based strategy
A) focuses on exploiting a company's best-executed operating strategy.
B) is based upon efficient performance of the company's primary value chain activities.
C) concentrates on minimizing the costs associated with the design of a product or service.
D) attempts to exploit resources in a manner that offers value to customers in ways rivals are unable to match.
E) focuses on working with forward channel allies to develop capabilities to outmatch the capabilities of rivals.

Accepted Answer

A resource-based strategy aims to exploit a company's resources in a way that provides unique value to customers that competitors cannot match. Therefore, the correct choice is D. Choices A, B, C, and E do not fully capture the essence of a resource-based strategy.

Question 8

For a particular company resource to have meaningful competitive power and perhaps qualify as a basis for competitive advantage, it should
A) be competitively important, hard for competitors to copy or imitate, rare and something rivals lack, and not be easily trumped by the substitute resources/capabilities of rivals.
B) be something that a company does internally rather than in collaborative arrangements with outsiders.
C) be patentable.
D) be rooted in the company's organizational capital, information capital, or human capital.
E) have the potential for lowering the firm's unit costs.

Accepted Answer

For a resource to be a meaningful source of competitive power and a potential basis for competitive advantage, it should possess certain characteristics such as being competitively important, rare, hard to copy, and not easily substituted by rivals' resources. A resource that can meet all of these criteria provides the company with a unique competitive advantage. The other options, such as being done in-house or being patentable, are not prerequisites for a resource to be a source of competitive advantage.

Question 9

A company that is at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals
A) should consider divesting assets and making future investments in promising new industries.
B) may be able to develop substitute resources that accomplish the same objective as the competitively valuable resource possessed by rivals.
C) can still marshal competitive power in the marketplace by incorporating product or service features desired by niche buyers.
D) is virtually blockaded from using offensive strategies and must rely on defensive strategies.
E) should abandon strategy elements that have caused its weakness in the marketplace.

Accepted Answer

A company at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals can consider developing substitute resources that accomplish the same objective as the competitively valuable resource possessed by rivals. This will help the company to level the playing field and compete effectively. Divesting assets or abandoning strategy elements may not always be the best approach, and relying solely on defensive strategies can limit growth opportunities. Incorporating product or service features desired by niche buyers is also a viable option, but it may not be enough to overcome a significant competitive disadvantage.

Question 10

A company's resources are competitive assets that are owned or controlled by the company and include
A) financial resources such as a company's credit rating and borrowing capacity.
B) tangible resources such as plants, distribution centers, and manufacturing equipment.
C) intangible assets such as brand recognition and buyer loyalty.
D) intangible assets such as having a results-oriented culture.
E) All of these.

Accepted Answer

The statement mentions various types of resources such as financial, tangible, and intangible which are all competitive assets owned or controlled by the company. Therefore, option E, which includes all of these, is the best choice.

Question 11

The common types of valuable resources and competitive capabilities that management should consider when crafting a strategy include
A) a skill, specialized expertise, or competitively important capability.
B) valuable physical and intangible assets.
C) valuable human assets and intellectual capital.
D) valuable organizational assets and competitively valuable alliances.
E) All of these.

Accepted Answer

All of the options listed are common types of valuable resources and competitive capabilities that management should consider when crafting a strategy. A skill or specialized expertise can give a company a competitive advantage, valuable physical and intangible assets such as property or patents can be used to differentiate a company from competitors, human assets and intellectual capital such as talented employees or unique knowledge can also give a company a competitive edge, and valuable organizational assets and alliances such as efficient operations or beneficial partnerships can help a company stay ahead of competitors.

Question 12

When a company performs a particular competitively important activity truly well in comparison to its competitors, it is said to have
A) a competence.
B) a strategic resource.
C) a distinctive competence.
D) a core competence.
E) a resource-based strategy.

Accepted Answer

When a company performs a particular competitively important activity truly well in comparison to its competitors, it is said to have a distinctive competence. This means the company has unique capabilities or strengths that distinguish it from its competitors and provide a competitive advantage. While a strategic resource or a core competence may also refer to a company's unique strengths, distinctive competence specifically refers to activities that create differentiation in the market. A resource-based strategy is a broader concept that refers to the use of a company's resources to create a competitive advantage.

Question 13

A core competence
A) makes a contribution to a company's success in the marketplace.
B) is typically knowledge-based, residing in a company's intellectual capital and not in its tangible physical assets on the balance sheet.
C) is often grounded in cross-department combinations of knowledge and expertise.
D) is a competitively relevant activity that a firm performs especially well in comparison to the other activities it performs.
E) All of the above.

Accepted Answer

All the options mentioned in the question are correct and contribute to the definition of a core competence. A core competence is a unique capability or skill that a company possesses, which enables it to outperform its competitors and achieve sustainable competitive advantage. It is usually a combination of knowledge, technology, intellectual property, and human capital, and contributes significantly to the company's success in the marketplace. It is also cross-functional, meaning it is not confined to a single department or function in the organization.

Question 14

A company that lacks a stand-alone resource that is competitively powerful may attempt to develop a competitive advantage through
A) improved employee training programs, new marketing promotions, or technological enhancements to production processes.
B) the development of a new business strategy that draws upon existing resource strengths.
C) extensive strategic planning and resource identification sessions involving managers at all levels of the organization.
D) bundled resources that enable superior performance of cross-functional capabilities that can be leveraged to support its business model and strategy.
E) devising clever approaches to turning resource weaknesses into resource strengths.

Accepted Answer

Option D suggests bundling resources to support cross-functional capabilities. This enables an organization to leverage its existing resources to create a competitive advantage. By combining various resources for complementary functions, a company can achieve superior performance, and improve its business model and strategy. In contrast, options A, B, and E address individual aspects but may not provide a complete solution for developing a competitive advantage. Option C mentions strategic planning, but it is not enough if the company lacks strong resources to support its efforts. Therefore, option D is the best choice.

Question 15

The competitive power of a company resource depends on
A) whether it helps differentiate a company's product offering from the product offerings of rival firms.
B) whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals.
C) whether customers are aware of the resource and view it positively enough to boost the company's brand name reputation.
D) whether the resource is something rivals are unable to perform, if it is an important differentiating product or service feature, how strongly it contributes to the company's brand image, and if it is the foundation of a cost-based advantage.
E) whether the resource is technology-based or based on superior marketing know-how.

Accepted Answer

The competitive power of a company resource depends on its value, rarity, imitability, substitutability and the strength of rival companies' capabilities. This is known as the VRIS framework and is a key tool in evaluating a company's resources and capabilities.

Question 16

Every organization has many resources, capabilities and routines however those few things the company does really well and are performed with a very high proficiency are termed
A) Core competencies
B) Distinct capabilities
C) Sustainable activities
D) Socially complex activities
E) Distributive factors

Accepted Answer

The answer of Every organization has many resources, capabilities and...

Question 17

Which of the following is not a component of evaluating a company's competitive strength and cost structure?
A) Evaluating how well the strategy is working
B) Scanning the environment to determine a company's best and most profitable customers
C) Assessing whether the company's costs and prices are competitive
D) Evaluating whether the company is competitively stronger or weaker than key rivals
E) Pinpointing what strategic issues and problems merit front-burner management attention

Accepted Answer

Scanning the environment to determine a company's best and most profitable customers is not a component of evaluating a company's competitive strength and cost structure. The other options (evaluating strategy, assessing cost and price competitiveness, evaluating competitive strength against key rivals, and pinpointing strategic issues) are all important components in evaluating a company's competitive position.

Question 18

When a company is good at performing a particular internal activity, it is said to have
A) a competitive advantage over rivals.
B) a competitive capability.
C) a distinctive competence.
D) a resource-based strategy.
E) a competence.

Accepted Answer

The answer of When a company is good at performing...

Question 19

The difference between a distinctive competence and a core competence is that
A) a distinctive competence refers to a company's best-executed functional strategy and a core competence refers to a company's best-executed business strategy.
B) a distinctive competence refers to a company's most strategically important resource whereas a core competence refers to the basis of a company's competitive advantage over rivals.
C) a distinctive competence is a competitively relevant internal activity that a firm performs especially well relative to other internal activities, whereas a core competence is a competitively important activity performed by key strategic allies.
D) a distinctive competence represents internal activity that is performed with a very high level of proficiency whereas a core competence is a proficiently performed internal activity that is central to a company's strategy and competitiveness.
E) a core competence usually resides in a company's technology and physical assets (state-of-the-art plants and equipment, attractive real estate locations, and so on) whereas a distinctive competence usually resides in a company's human capital, information capital, or organizational capital.

Accepted Answer

A distinctive competence refers to an activity that a company performs exceptionally well relative to other internal activities, while a core competence is an internal activity that is central to a firm's strategy and competitiveness. So, a distinctive competence represents internal activity that is performed with a very high level of proficiency, whereas a core competence is a proficiently performed internal activity that is essential to a company's strategy and competitiveness.

Question 20

A resource-based strategy
A) is often based on cross-department combinations of intellectual capital and expertise.
B) uses a company's valuable and rare resources and competitive capabilities to deliver value to customers that rivals have difficulty matching.
C) is typically based on a stand-alone resource strength such as technological expertise.
D) refers to a company's most efficiently executed value-chain activity.
E) uses industry key success factors to provide a company with a core competence that rivals cannot effectively imitate.

Accepted Answer

A resource-based strategy uses a company's valuable and rare resources and competitive capabilities to deliver value to customers that rivals have difficulty matching. It is not necessarily based on cross-department combinations of intellectual capital and expertise, a stand-alone resource strength, a company's most efficiently executed value-chain activity, or industry key success factors.

Quiz 4: Evaluating a Companys Resources, Cost Position, and Competitiveness

Which of the following is not one of the five questions that comprise the task of evaluating a company's competitive strength and cost structure?

In order to sustain the competitive power of resources and capabilities they must be

The competitive power of a company resource or competitive capability hinges on

Which one of the following is not a reliable measure of how well a company's current strategy is working?

A capability of the firm is not considered to be

One important indicator of how well a company's present strategy is working is whether

A resource-based strategy

For a particular company resource to have meaningful competitive power and perhaps qualify as a basis for competitive advantage, it should

A company that is at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals

A company's resources are competitive assets that are owned or controlled by the company and include

The common types of valuable resources and competitive capabilities that management should consider when crafting a strategy include

When a company performs a particular competitively important activity truly well in comparison to its competitors, it is said to have

A core competence

A company that lacks a stand-alone resource that is competitively powerful may attempt to develop a competitive advantage through

The competitive power of a company resource depends on

Every organization has many resources, capabilities and routines however those few things the company does really well and are performed with a very high proficiency are termed

Which of the following is not a component of evaluating a company's competitive strength and cost structure?

When a company is good at performing a particular internal activity, it is said to have

The difference between a distinctive competence and a core competence is that

A resource-based strategy