Question 1

Which of the following statements regarding competitive parity and competitive advantage is accurate?

Accepted Answer

Option A correctly states that some firms can develop a competitive advantage by being efficient second movers and improving on the innovations of other existing firms. Option B is incorrect because benchmarking does not always result in a competitive advantage. Option C is incorrect because being a first mover is not always advantageous as it also comes with risks and uncertainties. Finally, option D is incorrect because creating the same value as competitors does not necessarily result in a competitive advantage; a firm must have a unique value proposition to differentiate itself from competitors.

Question 2

Resources and capabilities that are valuable,rare,and costly to imitate are best described as

Accepted Answer

Resources and capabilities that are valuable, rare, and costly to imitate are sustainable distinctive competencies. These are the resources and capabilities that provide a company with a long-term competitive advantage over its rivals. They are valuable because they allow the company to perform better than its competitors, rare because they are not possessed by many other firms in the industry, and costly to imitate because other firms find it difficult or expensive to replicate them.

Question 3

The range of formal and informal mechanisms to ensure that managers are behaving in ways consistent with a firm's strategies are referred to as

Accepted Answer

Management control systems include both formal and informal mechanisms to ensure managers are behaving in ways consistent with a firm's strategies. These mechanisms can include performance evaluations, budgets, targets, and information systems, among others. Formal reporting structures, organizational charts, and compensation policies are all components of management control systems, but they do not fully encompass the range of mechanisms available to ensure strategic consistency.

Question 4

Resources that generate a temporary competitive advantage are

Accepted Answer

The answer of Resources that generate a temporary competitive advantage...

Question 5

Resources and capabilities,such as relations among managers and a firm's culture,that may be costly to imitate because they are beyond the ability of firms to systematically manage and influence are referred to as

Accepted Answer

Socially complex resources and capabilities are difficult or impossible for other firms to imitate, as they are built on the relationships and interactions among individuals within a firm, and cannot be replicated simply through strategy or management decisions.

Question 6

Any actions a firm takes that have the effect of reducing the level of rivalry in an industry that also do not require firms in an industry to directly communicate or negotiate with each other can be thought of as

Accepted Answer

Tacit cooperation refers to any actions a firm takes that have the effect of reducing the level of rivalry in an industry, without requiring firms in the industry to directly communicate or negotiate with each other. This can include actions such as investing in product innovation or improving the quality of goods/services, which can raise the overall level of competition in the industry and benefit all firms involved. Tacit cooperation is not the same as explicit collusion, which involves firms directly communicating and coordinating with each other to reduce competition and increase profits. Competitive parity refers to the situation where firms in an industry are roughly equal in terms of market share and competitive position.

Question 7

Southwest Airlines' strong internal culture that helps ensure that employees act in ways consistent with the company's strategy is an example of a(n)

Accepted Answer

A strong internal culture is an example of an informal management control, which relies on shared values, norms, and beliefs to influence employee behaviors and actions. It is not a formal control mechanism such as a compensation policy or reporting structure.

Question 8

Which of the following statements regarding patents is accurate?

Accepted Answer

While patents are designed to increase the costs of imitation by granting exclusive rights to the inventor for a period of time, they may also decrease the costs of imitation in some cases. For example, when a firm is uncertain about the legal validity of a new technology or invention, the existence of a patent may reduce the legal costs of acquiring the necessary expertise to develop and commercialize the technology. Additionally, patents may facilitate technology transfer by providing a mechanism for the licensee to gain access to the licensor's technology and avoid costly disputes over intellectual property ownership.

Question 9

Which of the following statements regarding the resource-based view is accurate?

Accepted Answer

The statement that competitive advantage is too important to remain the sole property of senior management accurately reflects the resource-based view. This theory emphasizes that a firm's resources and capabilities are the source of its competitive advantage, and that these resources and capabilities can reside at any level of the organization. Therefore, it is important for all employees to be involved in creating, nurturing, and exploiting these resources and capabilities, rather than leaving it solely up to senior management. Option A is incorrect because valuable resources and capabilities can be found throughout the organization, not just under the control of general managers. Option B is incorrect because all employees need to accept a responsibility for creating and exploiting resources, not just lower-level employees. Option C is incorrect because employees should define their jobs in terms of how they contribute to the firm's competitive advantage, not just functional terms.

Question 10

If a firm's resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm's competitive advantage,this competitive advantage is said to be protected from imitation by

Accepted Answer

Casual ambiguity refers to the situation where an imitating firm may not fully understand the relationship between the resources and capabilities of a firm and its competitive advantage. This lack of clear understanding makes it difficult for the imitating firm to replicate the advantage, thereby protecting it from imitation.

Question 11

When tacit cooperation has the effect of reducing supply and increasing prices,it is known as

Accepted Answer

Tacit collusion occurs when firms in an oligopoly market indirectly coordinate their actions in a way that reduces supply and increases prices without explicit communication or agreement. This has the effect of reducing competition and increasing profits for the firms involved. Monopolistic competition refers to a market structure where many companies sell products that are similar but not identical, while explicit collusion involves explicit communication and agreement among firms to coordinate their actions. Competitive parity refers to a situation where two or more firms have roughly equal market share and similar competitive positions.

Question 12

Resources that are valuable but not rare can be categorized as

Accepted Answer

Resources that are valuable but not rare are still beneficial to an organization, and can be categorized as an organizational strength. These resources may include skilled employees, efficient processes, quality products, or strong brand reputation. While they may not be unique to the organization, they still provide an advantage and contribute to overall success.

Question 13

According to the research in strategic human resources management,

Accepted Answer

The research in strategic human resources management suggests that firms which are able to use human resource practices to develop socially complex human and organizational resources gain a competitive advantage over firms that do not engage in these practices. This is because socially complex resources are ones that are difficult to imitate or replicate, and are therefore a source of sustained competitive advantage. Firms that are able to develop such resources through HR practices are able to differentiate themselves from competitors and achieve better performance.

Question 14

The specific actions a firm takes to implement its strategies are known as

Accepted Answer

Tactics are the specific actions and plans that a firm uses to implement its strategies. Competitive advantages are the unique advantages a firm has over its competitors, objectives are the specific targets a firm sets to achieve its goals, and goals are the broad, long-term aspirations of a firm. Therefore, only tactics fit the definition of the specific actions a firm takes to implement its strategies.

Question 15

If a resource or capability is valuable and rare but not costly to imitate,exploiting this resource will generate a(n)

Accepted Answer

A resource or capability that is valuable and rare but not costly to imitate can lead to a temporary competitive advantage, as competitors can quickly imitate and replicate the resource or capability, eroding the advantage. However, if the firm is able to leverage the advantage during the brief period of protection, they may be able to gain market share and sustain the advantage in the long term.

Question 16

A process is said to be ________ when events early in the evolution of a process have significant effects on subsequent events.

Accepted Answer

Path dependency refers to situations where the outcome of a process is specific to the path taken to get there. Early events or decisions that seem minor at the time can have significant effects on the eventual outcome.

Question 17

If Delta Airlines were to significantly change its fare structure and flight schedule to enhance its competitive position in response to aggressive price cutting by Southwest Airlines,this would be an example of

Accepted Answer

Competitive dynamics refer to the actions and reactions of firms in a market to gain a competitive advantage. Delta Airlines changing its fare structure and flight schedule to compete with Southwest Airlines is an example of competitive dynamics, as it is a strategic move to improve its position in the market, rather than colluding with other airlines.

Question 18

If there is a conflict between the resources a firm controls and that firm's organization,________ should be changed.

Accepted Answer

It is easier and more practical to change the organization rather than changing the resources. Resources often require heavy investment and take longer to change or acquire, whereas the organization's structure and processes can be altered relatively easily. Therefore, if there is a conflict between the resources a firm controls and the organization, it is best to change the organization's structure or processes to align with the resources.

Question 19

Tacit cooperation is only a viable strategy when

Accepted Answer

The answer of Tacit cooperation is only a viable strategy...

Question 20

Which of the following is an example of formal management controls?

Accepted Answer

Budgeting and reporting activities are a form of formal management control as they involve setting specific financial targets and monitoring progress against those targets. Options A, B, and D are all examples of informal management controls, which rely on personal relationships and social norms to influence behavior.

Quiz 3: Evaluating a Firm's Internal Capabilities