Question 1

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

A capability of the firm is not related to the level of resources available. While resources may be necessary to develop and enable a capability, they are not the capability itself. A capability is the capacity to competently perform some internal activity, and it is considered a competitively valuable resource that is developed and enabled through the deployment of a company's resources or some combination of its resources. Therefore, the correct answer is E.

Question 2

The difference between a resource and a capability is a resource
A)is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently.
B)is a reserve supply or back-up supply function, whereas a capability is the ability to manage the resource function.
C)is a mechanism used for carrying out some responsibility, whereas a capability possesses the ability to monitor the resource.
D)represents the firm's fixed assets, whereas a capability defines whether the firm is competent to perform some function with these assets.
E)represents the firm's human assets, whereas a capability defines the skills and knowledge of these human resources.

Accepted Answer

A resource is a productive input or competitive asset, while a capability is the capacity of the firm to perform some internal activity competently. Therefore, option A accurately distinguishes between resources and capabilities. Options B, C, D, and E either inaccurately describe the definitions of resource or capability or do not provide a clear distinction between the two.

Question 3

Nestlé's brand management capabilities for its 2000-plus food, beverage, and pet care brands are
A)known as productive inputs or competitive assets, while human assets and intellectual capital are, which are considered capabilities or competencies.
B)representative of physical resources only.
C)part of an inventory or collection of the firm's strengths, weaknesses, opportunities, and threats.
D)categorized as tangible and/or intangible resources
E)intangible resources only, because they consist of patents, copyrights, and technological processes.

Accepted Answer

Nestlé's brand management capabilities are considered capabilities or competencies, which are intangible resources that provide a competitive advantage.

Question 4

Key functional strategies of a company include all of the following except
A)R&D, technology, and product design strategies.
B)production and information technology and supply chain management strategies.
C)human resource and finance strategies.
D)sales, marketing, and distribution strategies.
E)alliance and partnerships as well as merger and acquisition growth strategies.

Accepted Answer

Key functional strategies typically focus on areas directly related to the core operations and internal functions of a company, such as R&D, production, human resources, finance, and marketing. Alliance and partnerships, as well as merger and acquisition growth strategies, are more about external growth tactics and strategic positioning rather than internal functional strategies.

Question 5

Among W.L. Gore's tangible resources are
A)human assets and intellectual capital.
B)creativity, production technologies, and patents.
C)brand, image, and reputation.
D)relationships.
E)company culture.

Accepted Answer

Tangible resources are physical assets that can be seen and quantified. Creativity, production technologies, and patents are all tangible resources that W.L. Gore possesses.

Answer: E 
 Company culture is also considered a tangible resource as it is the way things are done in the organization and can affect the behavior of employees. This culture is seen and experienced by everyone and thus can be quantified as a tangible resource.

Question 6

A company's resources and capabilities represent
A)the firm's net working capital and related determinants for measuring operating performance and capabilities.
B)the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace.
C)whether the firm has the industry's most efficient value chain.
D)management's sources and uses of funding for new strategic initiatives.
E)positive trends with relevant cultural factors related to buyers' choices and product modifications.

Accepted Answer

A company's resources and capabilities are its competitive assets that determine its competitiveness and ability to succeed in the marketplace. It includes things like skilled employees, intellectual property, brand reputation, technology, and distribution channels. These assets give a company a competitive edge over its rivals and are essential for long-term success.

Question 7

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

By bundling resources that enable superior performance of cross-functional capabilities, a company can create a competitive advantage. This will allow them to leverage their resources in a way that supports their business model and strategy. Options A, B, and E may be helpful in certain situations but do not necessarily lead to a sustained competitive advantage. Option C can help in identifying resources, but it does not provide any actionable steps for creating a competitive advantage.

Question 8

Key financial ratios that could help analysts measure Whole Foods' profitability do not include
A)operating profit margin.
B)return on capital employed.
C)net return on assets.
D)inventory turnover.
E)return on stockholders' equity.

Accepted Answer

Inventory turnover is a measure of how efficiently a company manages its inventory rather than a direct measure of profitability. It indicates how many times a company has sold and replaced inventory over a period. In contrast, the other ratios (operating profit margin, return on capital employed, net return on assets, and return on stockholders' equity) are directly related to assessing a company's profitability.

Question 9

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 its financial and strategic objectives and whether it is an above-average industry performer.
D)it is customarily a first-mover in introducing new or improved products (a good sign)or a late-mover (a bad sign).
E)it is subject to weaker competitive forces and pressures than close rivals (a good sign)or stronger competitive forces and pressures (a bad sign).

Accepted Answer

The most effective way to determine if a company's strategy is working is by examining if the company is achieving its financial and strategic objectives and if it is performing better than its competitors in the industry. This shows that the strategy is producing positive results and is effective. The other options are not necessarily indicative of a successful strategy.

Question 10

In evaluating how well a company's strategy is working, the best place to start is with a
A)SWOT analysis.
B)clear view of what that strategy entails.
C)value chain analysis.
D)competitive strength analysis.
E)financial ratio analysis.

Accepted Answer

The best place to start in evaluating how well a company's strategy is working is to have a clear view of what that strategy entails. Without an understanding of the strategy, it is impossible to evaluate its effectiveness. SWOT analysis, value chain analysis, competitive strength analysis, and financial ratio analysis all come after an understanding of the strategy is established.

Question 11

Tangible resources include
A)human assets and intellectual capital, which can include the talent of the work force and the creativity and innovativeness of certain personnel.
B)reputational assets, which can include the company's reputation for quality, service, and reliability as well as its reputation for fair dealings with suppliers.
C)relationships such as alliances that provide access to technologies, specialized know-how, or geographic markets.
D)technological assets such as patents, copyrights, and innovation technologies.
E)company culture and incentive system, which includes the norms of behavior and business principles.

Accepted Answer

Tangible resources are physical, measurable assets that contribute to a company's value. Technological assets like patents, copyrights, and proprietary technologies are examples of tangible resources.

Question 12

Organizational capabilities are virtually always
A)knowledge based, residing in people and in the company's intellectual capital, or in organizational processes and systems, which embody tacit knowledge.
B)more complex than resources and are exercised only through key personnel.
C)require constant evaluation to ensure cooperative support from management.
D)easier and less challenging to categorize than resources because there are fewer to be concerned about.
E)reflective of the industry's driving forces.

Accepted Answer

Organizational capabilities are primarily knowledge-based and reside in people and the intellectual capital of the organization. They also include organizational processes and systems that embody tacit knowledge, making option A the correct choice.

B) This statement is incorrect as organizational capabilities are not exercised solely through key personnel, but rather embedded within the organization as a whole.

C) While it is important to evaluate and ensure cooperative support from management, it is not the defining characteristic of organizational capabilities.

D) This statement is inaccurate as both resources and capabilities must be carefully considered when analyzing an organization's strengths and weaknesses.

E) Organizational capabilities are influenced by the industry's driving forces, but they are not necessarily reflective of them.

Question 13

________ is not a useful financial ratio indicating how well a company's strategy is working.
A)Return on stockholders' equity
B)The company's gross profit margin
C)Quick (or acid test)ratio
D)Market share
E)A long-term debt to equity

Accepted Answer

Market share is not a financial ratio, but rather a measure of a company's relative position in the market. While it can be important for assessing a company's competitiveness, it does not directly provide information about the effectiveness of its strategy in generating profits or growth. The other ratios listed are all commonly used financial metrics to evaluate a company's performance.

Question 14

Starbucks has hired you to make a systematic inventory of its competitive capabilities. To do so, you would conduct an assessment of Starbucks'
A)resources and functions.
B)competitive set via a strategy matrix.
C)sustainability initiatives and resource bundles.
D)cross-functional systems and collaborative resource methodology.
E)financial statements and managerial depth charts.

Accepted Answer

Conducting an assessment of Starbucks' resources and functions would provide a systematic inventory of its competitive capabilities. This would involve identifying the company's strengths and weaknesses in terms of its tangible and intangible resources, as well as its core functions such as marketing, operations, and human resources. This would give Starbucks insights into what it does well and where it may need to improve to maintain its competitive advantage.

Question 15

Tangible resources do not include
A)physical resources.
B)financial resources.
C)human assets.
D)technological assets.
E)organizational resources.

Accepted Answer

Tangible resources are those that have a physical form, such as buildings, machinery, and financial assets. Human assets, although valuable to an organization, are considered intangible because they represent skills, knowledge, and abilities that cannot be physically touched or measured in the same way as tangible assets.

Question 16

If you were asked to use a powerful analytical tool to size up Amazon's competitive assets and determine whether they can provide the foundation necessary for its competitive success in the marketplace, you would choose
A)VRIN tests.
B)SWOT analysis.
C)competitive strength matrix analysis.
D)financial and asset management analysis.
E)value chain analysis.

Accepted Answer

VRIN tests (which stands for Valuable, Rare, Inimitable, Non-substitutable) is a powerful analytical tool that helps to evaluate a company's resources and identify its competitive advantages. Amazon's competitive assets such as brand reputation, customer base, advanced technology, distribution network, and strong financial position can all be evaluated using the VRIN tests. This analysis can help to determine whether these assets are sustained sources of competitive advantage and whether they provide a foundation for Amazon's success in the marketplace.

Question 17

A superior indicator of how sound W.L. Gore's strategy is and whether or not the strategy signals strong execution is
A)falling short of its stated financial objectives, that is, its financial performance is well below the industry average, and its market share gains reflect short-term preferences for capacity maximization.
B)remaining inattentive to possible improvements in its functional areas, creating stretch business goals, and providing a product-focused value proposition to customers.
C)foregoing initiatives designed to build market share and to promote corporate responsibility.
D)achieving its stated financial and strategic objectives via improvements in its internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity.
E)undertaking new initiatives to promote corporate social responsibility.

Accepted Answer

Achieving stated financial and strategic objectives through improvements in internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity indicates strong execution of the strategy. This suggests that the company is effectively implementing its strategy and delivering on its promises, resulting in improved business performance.

Question 18

When strategic managers assess the competitive power of company resources, what matters is
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

When assessing the competitive power of company resources, strategic managers need to consider if the resource provides a competitive advantage by being valuable, rare, difficult to imitate, and if it can be trumped by other resources possessed by competitors. This analysis is essential to determine if the resource is a viable source of sustained competitive advantage. The other options may also be important considerations, but not the primary ones for assessing competitive power.

Question 19

Choose the analytical tool that does not evaluate how well Apple Inc.'s strategy and competitive approach are currently working.
A)resource and capability analysis
B)benchmarking
C)value chain analysis
D)Porter's three tests for evaluating diversification outside the core business
E)competitive strength assessment

Accepted Answer

Porter's three tests for evaluating diversification outside the core business are not directly related to assessing the current effectiveness of Apple Inc.'s strategy and competitive approach. These tests are mainly used to determine if a diversification strategy is likely to create value and provide a competitive advantage for the company. Other tools, such as resource and capability analysis, value chain analysis, and competitive strength assessment, are more suitable for evaluating the current performance of Apple's strategy and approach.

Question 20

When SunPower's managers engage in the process of developing a list of questions to evaluate their company's internal situation, which question does not address the task of evaluating SunPower's resources and competitive position?
A)What strategic issues and problems merit front-burner managerial attention at SunPower?
B)How well is SunPower's present strategy working?
C)Which are SunPower's least and most profitable geographic market segments?
D)Is SunPower competitively stronger or weaker than key rivals?
E)How do SunPower's value chain activities impact its cost structure and customer value proposition?

Accepted Answer

SunPower's least and most profitable geographic market segments do not directly evaluate the company's resources and competitive position.

Quiz 4: Evaluating a Companys Resources, Capabilities, and Competitiveness

A capability of the firm is not considered to be

The difference between a resource and a capability is a resource

Nestlé's brand management capabilities for its 2000-plus food, beverage, and pet care brands are

Key functional strategies of a company include all of the following except

Among W.L. Gore's tangible resources are

A company's resources and capabilities represent

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

Key financial ratios that could help analysts measure Whole Foods' profitability do not include

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

In evaluating how well a company's strategy is working, the best place to start is with a

Tangible resources include

Organizational capabilities are virtually always

________ is not a useful financial ratio indicating how well a company's strategy is working.

Starbucks has hired you to make a systematic inventory of its competitive capabilities. To do so, you would conduct an assessment of Starbucks'

Tangible resources do not include

If you were asked to use a powerful analytical tool to size up Amazon's competitive assets and determine whether they can provide the foundation necessary for its competitive success in the marketplace, you would choose

A superior indicator of how sound W.L. Gore's strategy is and whether or not the strategy signals strong execution is

When strategic managers assess the competitive power of company resources, what matters is

Choose the analytical tool that does not evaluate how well Apple Inc.'s strategy and competitive approach are currently working.

When SunPower's managers engage in the process of developing a list of questions to evaluate their company's internal situation, which question does not address the task of evaluating SunPower's resources and competitive position?