Question 1

Firms that have strong positive relationships with suppliers and customers are said to have _________________, an essential ingredient to creating value.
A) customer value
B) social capital
C) effective marketing
D) an attractive industry

Accepted Answer

The concept of strong positive relationships with suppliers and customers is known as social capital. This is important in creating value because it leads to mutual trust, shared knowledge, and cooperation between firms and their partners, which can improve efficiency and innovation.

Question 2

Which of the following is NOT an external event that reveals the "dark side" of core capabilities?
A) A new competitor figures out a better way to serve the firm's customers.
B) New technologies emerge and replace those used by the firm.
C) A firm changes its focus to a new core competence.
D) Political or social events shift the foundation of current core capabilities.

Accepted Answer

A firm changing its focus to a new core competence is an internal event, not an external event, and is therefore not one of the external events that can reveal the "dark side" of core capabilities. The other options (A, B, and D) are external events that could potentially challenge a firm's core capabilities.

Question 3

Value chain analysis is a tool used to
A) analyze a firm's external environment for value-creating opportunities.
B) analyze a firm's value chain activities and support functions in isolation from its competitors' value chain.
C) understand the parts of the firm's operation that create value and those that do not.
D) identify the firm's core competencies in each of the primary activities of the firm.

Accepted Answer

Value chain analysis is a tool used to understand the parts of a firm's operation that create value and those that do not. It involves breaking down the firm's activities into primary and support functions and analyzing each one to identify areas where value can be added or costs can be minimized. It does not focus on analyzing the external environment for value-creating opportunities, isolating a firm's activities from its competitors, or identifying core competencies in each primary activity.

Question 4

Examples of support activities include all of the following EXCEPT
A) Finance.
B) Human Resources.
C) Follow-up Service.
D) Management Information Systems.

Accepted Answer

Finance, Human Resources, and Management Information Systems are all examples of support activities as they do not directly involve the production of goods or services, but rather provide essential support functions. Follow-up Service, on the other hand, is a primary activity as it directly involves providing services to customers after the sale of goods or services.

Question 5

Describe the importance of internal analysis to the strategic success of the firm.

Accepted Answer

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Question 6

A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is
A) operations.
B) research and development.
C) supply-chain management.
D) distribution.

Accepted Answer

If the company's main competitive advantage lies in its development of innovative toys and games, outsourcing research and development could undermine their ability to innovate and develop new products. It would be better to look for cost savings in other areas that do not affect their core competency.

Question 7

To build social capital whereby resources such as knowledge are transferred across organizations requires _________between the parties.
A) a contract
B) determination
C) confidence
D) trust

Accepted Answer

Trust is essential for the transfer of knowledge and other resources in building social capital. Without trust, organizations may not be willing to share information or cooperate with each other, which would hinder the development of social capital. While a contract and determination may play a role in building social capital, they are not as critical as trust. Confidence may help, but it is not sufficient for building social capital.

Question 8

Case Scenario : Heartsong LLC.
Heartsong LLC is a designer and manufacturer of replacement heart valves based in Peoria, Illinois. While a relatively small company in the medical devices field, it has established a worldwide reputation as the provider of choice high-quality, leading-edge artificial heart valves. Most of its products are sold to large regional hospital systems and research hospitals. Specialty heart centers are another emerging, but fast-growing, market for its valves. While Heartsong would like to grow quickly, its growth is constrained by the need to finance larger production runs and then carry this additional inventory. For products like those of Heartsong, vendors typically do not collect payment until the unit is actually used in surgery. Moreover, heart valves are usually required on short notice which means that they must be either onsite, or inventoried at a nearby location. If nearby, then transport of the unit to a hospital or heart center occurs within a matter of hours, and sometimes minutes. For this reason, accelerated growth would require Heartsong to both finance increased production of its heart valves, along with carrying increased levels of inventory that are in fact sitting on their customers' shelves. In fact, inventory-carrying cost is its single largest cost outside of research and development. While profitable growth is necessary if Heartsong is to continue extending its competitive advantage through increasingly greater investments in basic heart valve R&D, it is not clear that the company can internally support all these increased financial commitments (R&D, manufacturing, and inventory). Doc Watson, the CEO of Heartsong, is considering an outside contractor, EdFex, to handle the inventorying, warehousing, and delivery of its valves. EdFex has secure, high-tech warehouses in most major population centers around the country, and can ensure delivery of a product to these markets from its warehouses in less than one hour.
-(Refer to the above Case Scenario ) What value-chain activities appear to underlie Heartsong's competitive advantage?

Accepted Answer

The answer of Case Scenario : Heartsong LLC.
Heartsong LLC is...

Question 9

It is possible that Borders' core competencies of store locations and a desirable physical environment for customers became core rigidities eventually leading to the filing of bankruptcy as a result of
A) changing political events.
B) changing social events.
C) a new technology emerging and changing customer shopping patterns .
D) failure to accurately analyze the value chain.

Accepted Answer

A new technology emerging and changing customer shopping patterns is the most plausible reason for Borders' core competencies becoming core rigidities, as customers shifted to online platforms for book purchases and digital reading devices. Borders failed to adapt to this change, leading to their bankruptcy. Choices A, B, and D are not as relevant to the specific industry challenges faced by Borders.

Question 10

Outsourcing is the
A) spinning off of a value-creating activity to create a new firm.
B) selling of a value-creating activity to other firms.
C) purchase of a value-creating activity from an external supplier.
D) use of computers to obtain value-creating data from the Internet.

Accepted Answer

Outsourcing refers to the process of purchasing a value-creating activity from an external supplier, rather than creating it in-house. This can be for a variety of reasons, such as cost savings or increased efficiency. Option A refers to spin-offs, Option B refers to selling a value-creating activity altogether, and Option D refers to gathering data from the Internet using computers.

Question 11

Describe the four specific criteria that managers can use to decide which of their firm's capabilities have the potential to create a sustainable competitive advantage.

Accepted Answer

The answer of Describe the four specific criteria that managers...

Question 12

Define capabilities and how they affect the firm's strategic success.

Accepted Answer

The answer of Define capabilities and how they affect the...

Question 13

What are the differences between tangible and intangible resources? Which category of resources is more valuable to the firm?

Accepted Answer

The answer of What are the differences between tangible and...

Question 14

Describe a value chain analysis. How does a value chain analysis help a firm gain competitive advantage?

Accepted Answer

The answer of Describe a value chain analysis. How does...

Question 15

Knowledge transfer and access to resources within the value chain are enhanced by ________.
A) guidelines for sharing knowledge and resources
B) social capital
C) penalties for not sharing knowledge and resources
D) training employees on how to cooperate

Accepted Answer

Social capital refers to the relationships and networks built between individuals and organizations in a specific industry or market. These connections can be leveraged to share knowledge and resources, leading to improved collaboration and more efficient value chain management. While guidelines and training may also have a role in enhancing knowledge transfer and resource sharing, social capital is likely the most influential factor. Penalties for not sharing knowledge and resources may actually hinder collaboration and impede value chain efficiency.

Question 16

Which of the following is TRUE about outsourcing?
A) Outsourcing allows firms to be more flexible, and requires minimal coordination.
B) Outsourcing allows firms to concentrate on those areas in which they can create value.
C) Outsourcing strengthens the creative and innovative functions within the firm.
D) Outsourcing is only effective when it includes all support activities.

Accepted Answer

Outsourcing allows firms to focus on their core competencies and areas where they can create value, while delegating non-core activities to outside vendors. This increases productivity and efficiency, and can lead to cost savings. Option A is incorrect, as outsourcing requires coordination and management of the vendor relationship. Option C is incorrect, as outsourcing typically involves delegation of routine or standardized tasks, rather than creative or innovative functions. Option D is incorrect, as outsourcing only specific support activities can also be effective.

Question 17

A major reason outsourcing is effective is that
A) it increases the innovative potential of the firm.
B) few firms possess superior capability in all primary and support activities.
C) it permits unlimited access to capital resources.
D) competitors do not have access to the same external sources.

Accepted Answer

Outsourcing allows firms to focus on their core competencies while contracting out non-core activities to external vendors who possess superior capability in those areas. This improves efficiency and reduces costs, leading to increased competitiveness. Access to capital resources and preventing competitors from accessing the same external sources are not major reasons for outsourcing. While outsourcing may lead to innovation in some cases, it is not a major reason for its effectiveness.

Question 18

The owner of a store retailing fine quality fabrics for home-sewers bewails the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics available and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of
A) the hazard of competitors being able to imitate a firm's core competency.
B) the need for firms to stick to their core competencies through temporary downturns in market demand.
C) the lack of intangible resources undermining the core competencies of the firm.
D) core competencies that have become core rigidities.

Accepted Answer

The decline in demand and profits for the store suggests that their core competency in providing technical advice and running sewing classes is no longer valuable or relevant to their target market. This may indicate that their core competencies have become core rigidities, preventing the store from adapting to changing market demands and customer preferences.

Question 19

Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should
A) concentrate on maintaining Acme's present core competencies.
B) focus on developing Acme's future competitive advantages.
C) place more emphasis on tangible resources which are less vulnerable to obsolescence than intangible resources.
D) recognize that core competencies derived from human resources are more subject to becoming core rigidities than are core competencies based on other types of resources.

Accepted Answer

The question is asking what the owner of Acme Auto Repair can do for continued long-term success. The best answer is to focus on developing Acme's future competitive advantages. This indicates that the owner needs to continually assess the business landscape and implement changes accordingly to achieve long-term success. While maintaining present core competencies is important, it is not enough to ensure continued success in the long-term. Additionally, placing more emphasis on tangible resources may not be enough to remain competitive in a rapidly evolving marketplace. Finally, while core competencies based on human resources can become rigidities, they are still valuable assets for the business if they are managed effectively.

Question 20

Why is it important to prevent core competencies from becoming core rigidities?

Accepted Answer

The answer of Why is it important to prevent core...

Quiz 3: The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Firms that have strong positive relationships with suppliers and customers are said to have _________________, an essential ingredient to creating value.

Which of the following is NOT an external event that reveals the "dark side" of core capabilities?

Value chain analysis is a tool used to

Examples of support activities include all of the following EXCEPT

Describe the importance of internal analysis to the strategic success of the firm.

To build social capital whereby resources such as knowledge are transferred across organizations requires _________between the parties.

It is possible that Borders' core competencies of store locations and a desirable physical environment for customers became core rigidities eventually leading to the filing of bankruptcy as a result of

Outsourcing is the

Describe the four specific criteria that managers can use to decide which of their firm's capabilities have the potential to create a sustainable competitive advantage.

Define capabilities and how they affect the firm's strategic success.

What are the differences between tangible and intangible resources? Which category of resources is more valuable to the firm?

Describe a value chain analysis. How does a value chain analysis help a firm gain competitive advantage?

Knowledge transfer and access to resources within the value chain are enhanced by ________.

Which of the following is TRUE about outsourcing?

A major reason outsourcing is effective is that

Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should

Why is it important to prevent core competencies from becoming core rigidities?