Deck 9: Appropriating It-Enabled Value Over Time

Question 1

How can IT resources help to create a sustained competitive advantage?

A) Because competitors who seek to replicate the initiative must first develop or acquire the needed IT resources
B) Because competitors who seek to replicate the initiative must overcome the preemptive mechanisms, such as complementary resources, enacted by the leader
C) Because IT resources are highly visible yet complex and unique, and those projects take more time to complete
D) Because the people that implement IT solutions are difficult to find and, when found, tend to stay with one employer.
E) There are no sustained competitive advantages, other than relationships between consumers that the company can capitalize on.

Answer 1

Because competitors who seek to replicate the initiative must first develop or acquire the needed IT resources

Question 2

The sustainability of a competitive advantage grounded in an IT-dependent strategic initiative is measured by:

A) An estimate of the likely time delay competitors will face in replicating the leader's initiative
B) The inverse of the number of response lag drivers associated with the barrier
C) An estimate of the amount of money competitors will lose before beginning to replicate the advantage
D) The amount of profit a firm loses in creating the advantage in the first place
E) Competitive advantages do not last long in hypercompetitive industries.

Answer 2

An estimate of the likely time delay competitors will face in replicating the leader's initiative

Question 3

The risks associated with an IT-enabled initiative are:

A) IT complexity, IT uniqueness, IT Visibility
B) Project size, technology experience, and organizational change
C) IT technical skills, IT management skills, and relationship assets
D) IT assets and IT capabilities
E) IT technical skills, IT management skills, and relationship assets.

Answer 3

Project size, technology experience, and organizational change

Question 4

Which are the five sub-dimensions of the IT project barrier?

A) Tangible Resources, Intangible Resources, Activity System, Business Process, and External Resources
B) IT complexity, IT uniqueness, IT Visibility, Process Complexity, & Process Change
C) IT infrastructure, Information Repositories, IT technical skills, IT management skills, and relationship assets
D) Co-specialized tangible investments, Co-specialized intangible investments, relationship exclusivity, value system structure, and concentrated value-system links
E) Firm infrastructure, HR management, technology development, procurement, IT support

Question 5

The two major components of the IT resources barrier are:

A) IT technical skills and IT management skills
B) IT technical skills, IT management skills, and relationship assets
C) IT assets and IT capabilities
D) IT infrastructure and information repositories
E) Software, Hardware, and Networks

Question 6

According to the class discussion of "IT doesn't matter," IT managers should:

A) Spend less in IT investment because it is difficult to gain competitive advantage though IT as the commoditization of IT continues
B) Not invest in new IT as waiting will decrease the risk of buying something technologically flawed or doomed to rapid obsolescence
C) Focus their attention on IT-dependent strategic initiatives rather than IT investments.
D) Focus on vulnerabilities, not opportunities, when contemplating IT investments
E) All of the above

Question 7

Is IT an indistinct commodity?

A) Yes, because IT is a transportation mechanism, which carries digital information just as railroads carry goods
B) No, because IT ranges from extremely complex technology (e.g., large data warehouses, infrastructure projects), to small applications (e.g., a personal web site)
C) Yes, because information technology is just one of the support activities in creating value
D) No, because companies are spending more and more money in IT investment

Question 8

Response lag is

A) A measure of the delay of competitive response to an IT-dependent strategic initiative
B) The time and cost it takes to identify whether IT investments can be used to generate added value
C) One of the four barriers to erosion of IT-dependent competitive advantage
D) All of the above
E) Only A and B

Question 9

Why can IT resources help to create a sustainable competitive advantage?

A) Developing IT infrastructure generally takes more than five years
B) The trust and respect between the IS function and business managers take time to be accumulated
C) A firm's brand and reputation usually develop over time
D) Only A and B
E) Only A and C

Question 10

Which of the following are response-lag drivers associated with the complementary resources barrier?

A) Structural resources, such as a great location or a great property for a hotel company
B) The characteristics of the IT core, such as IT uniqueness or visibility
C) IT assets, such as an infrastructure or a data repository
D) IT technical skills and IT management skills
E) None of the above

Question 11

The complexity of the technology is:

A) The extent to which competitors can observe the enabling technology of an IT-dependent strategic initiative
B) A function of the size and scope of the IT project
C) A function of the bundle of skills and knowledge necessary to effectively design, develop, implement, and use it
D) All of the above
E) None of the above

Question 12

When you have been successful in generating competitive advantage with an IT-dependent strategic initiative what must you, as a manager, do in order to try and maintain such advantage?

A) Plan to continuously remain ahead of competition by looking to reinvigorate and reinforce the barriers to erosion associated with your initiative
B) Consider if it is possible for your firm to sustain the competitive advantage as a binary condition and invest only when it is possible to sustain
C) Invest in proprietary IT so that nobody can imitate
D) All of the above
E) Only A and B

Question 13

The process by which a firm accrues or builds up a resource over time is important for you to recognize as it is often the basis for rejuvenating barriers to erosion. Such process is called:

A) Asset-stock accumulation
B) Value-system link concentration
C) IT infrastructure investing
D) Capability development
E) None of the above

Question 14

The process by which an organization is able to improve its performance over time by developing its ability to use available resources for maximum effectiveness is known as:

A) Asset-stock accumulation
B) Value-system link concentration
C) IT infrastructure investing
D) Capability development
E) None of the above

Question 15

Switching costs are a fundamental response lag driver of which barrier to erosion?

A) IT project
B) Preemption
C) IT resources
D) Complementary Resources
E) Presumption

Question 16

The complexity of the technology is a function of the bundle of skills and knowledge necessary to effectively design, develop, implement, and use it.

Question 17

The two major aspects of sustainable competitive advantages are time and money.

Question 18

The three major components of the complementary resources barrier are structural resources, external resources, and capabilities.

Question 19

The two dynamics of sustainability are capability development and asset-stock accumulation.

Question 20

When the IT initiative will not likely create strong barriers to erosion and retaliation by competitors will degrade average industry profits, it must be shelved.

Question 21

In the Land's End case study, the complementary resources barrier for competitors were their established distribution chains.

Question 22

Search costs, learning costs, and loyalty costs are examples of preemption barriers.

Question 23

Reproducing IT is equivalent to reproducing an IT-dependent strategic initiative.

Question 24

When the IT initiative is unlikely to yield a sustainable competitive advantage, but it will improve overall profitability of the industry, it must be developed as part of a consortium.

Question 25

How do IT-resources help to create a sustainable competitive advantage?

Question 26

The characteristics of the technology, the firm, its competitors, or the value system in which the firm is embedded, that combine to make replication of the IT-dependent strategic initiative difficult and costly is called the ________________.

Question 27

How do management skills create obstacles for competitors?

Question 28

What are the three types of complementary firm resources and how do they affect the implementation of the IT initiative?

Question 29

To create and maintain a sustainable competitive advantage, what must you, as a manager do? What is an example of a firm creating and maintaining this advantage?

Question 30

The process by which an organization is able to improve its performance over time by developing its ability to use available resources for maximum effectiveness is known as what?

Question 31

Why is it important to be able to reduce uncertainty about the potential success of IT-dependent strategic initiatives?

Question 32

Even if a rival can replicate another's initiative, why may he still not be successful?

Question 33

The ability of a firm to maintain a sustainable advantage should not be thought of in terms of binary conditions (either possible or impossible), but rather as a continuum. What does this mean?

Question 34

Wal-mart Stores Inc. and Procter & Gamble's adopted the notion of continuous replenishment to implement an IT-dependent strategic initiative which features real-time scanner data transferring between Wal-mart and Procter & Gamble through its satellite-based network infrastructure. As a result, Wal-mart will be able to provide low cost products to its customers. (a) Do you think Wal-mart can sustain this competitive advantage? (b) If yes, which barrier to erosion is preventing the imitation? If no, why do you think Wal-mart cannot sustain its competitive advantage?

Question 35

Identify or invent an IT-dependent strategic initiative that you believe has the potential to be sustainable. For such initiative a) briefly describe it b) identify one barrier to erosion that you feel is substantial c) explain why such barrier to erosion will make it difficult for competitors to replicate the initiative