Question 1

Which of the following is not true regarding a company's distinctive competencies?
A) They represent the unique strengths of the company.
B) They refer to company strengths that competitors cannot easily match or imitate.
C) They form the bedrock of a company's strategy.
D) They can be based in any of the value creation functions of the company.
E) They are shared by many firms in an industry.

Accepted Answer

Distinctive competencies are unique strengths that set a company apart from its competitors. Therefore, if they are shared by many firms in an industry, they cannot be considered distinctive.

Question 2

Competitive advantage typically leads to
A) an effective business model.
B) average profitability within an industry.
C) superior profitability.
D) making procedures routine.
E) flexibility in manufacturing.

Accepted Answer

Competitive advantage allows a company to differentiate itself from its competitors and offer a unique value proposition to customers, resulting in superior profitability. Having an effective business model, making procedures routine, and flexibility in manufacturing can all be components of achieving competitive advantage, but they do not necessarily lead to superior profitability in themselves. Average profitability within an industry suggests that a company is not maintaining a competitive advantage over its competitors.

Question 3

The intellectual property of an organization is a(n)
A) tangible resource.
B) tangible competence.
C) tangible capability.
D) intangible capability.
E) intangible resource.

Accepted Answer

Intellectual property refers to intangible creations of the human intellect, such as inventions, literary and artistic works, symbols, names, and images used in commerce. Therefore, the intellectual property of an organization is an intangible resource.

Question 4

The importance of reliability in building competitive advantage has increased dramatically over the past decade.

Accepted Answer

With the rise of e-commerce and online reviews, customers have come to expect products and services that consistently meet their expectations. Reliable products and services build trust and loyalty with customers, which can lead to a competitive advantage in the marketplace. Additionally, unreliable products and services can harm a company's reputation and lead to negative reviews and decreased sales. As a result, the importance of reliability in building competitive advantage has increased dramatically over the past decade.

Question 5

Competitive advantage is based on
A) distinctive competencies.
B) economic forces external to a company.
C) lack of government regulations controlling a firm's ability to make rapid adjustments in response to its changing environment.
D) all of these choices
E) none of these choices.

Accepted Answer

Competitive advantage is based on a company's distinctive competencies, which are unique strengths and abilities that allow it to outperform its competitors in the market. It is not solely based on economic forces or lack of government regulations.

Question 6

Capabilities refer to a company's
A) tangible resources.
B) intangible resources.
C) skills at coordinating its resources and putting them to productive use.
D) strategy as expressed in the firm's business model.
E) policies.

Accepted Answer

Capabilities refer to a company's skills at coordinating its resources and putting them to productive use. It is beyond just tangible or intangible resources, or expressed strategies or policies, but rather the company's ability to effectively use all of its resources to achieve its goals.

Question 7

Nene works in a factory where she picks crab meat from crabs.She is paid per day based upon the number of pounds of crab meat that she picks.Nene's daily number of pounds of crab meat can be referred to as her productivity.

Accepted Answer

The statement describes Nene's job and how she is paid based on her productivity, which is the amount of crab meat she picks in a day.

Question 8

Texas Instruments achieved early success through engineering excellence.But thereafter,they became so obsessed with engineering that they lost sight of market realities.This is an example of the Icarus Paradox.

Accepted Answer

The Icarus Paradox refers to a company becoming too successful and therefore becoming overconfident and complacent, leading to their downfall. This can include becoming too focused on their strengths and ignoring market realities. The example given of Texas Instruments becoming too focused on engineering and losing sight of market realities fits this pattern.

Question 9

Donna can make a chair for about $100,she charges customers $150 to buy the chair,and customers perceive that the chair is worth $225.In this case,the consumer surplus is
A) $50.
B) $75.
C) $125.
D) $150.
E) $225.

Accepted Answer

Consumer surplus is the difference between the perceived value and the price paid by the consumer. So, in this case, the consumer surplus is $225 - $150 = $75.

Question 10

The most successful firms are those that constantly learn and upgrade their distinctive competencies.

Accepted Answer

Constant learning and upgrading distinctive competencies help firms stay competitive in the market, adapt to changing trends, and improve their performance. Therefore, the statement is true.

Question 11

The Icarus paradox suggests that those factors that led to a company's success will continue in the future becuase the competitors cannot imitate them.

Accepted Answer

The Icarus paradox suggests that the factors that led to a company's success in the past may become the reasons for its failure in the future, as the company becomes overconfident and unwilling to adapt or change. It does not suggest that competitors cannot imitate the factors that led to the success, but rather that the company may not be able to maintain its competitive advantage.

Question 12

In the fashion industry,the time required to take a new product from design inception to placement in a retail store is known as customer response time.

Accepted Answer

Customer response time refers to the time taken to produce and deliver a product in response to the demand of customers.

Question 13

Donna can make a chair for about $100,she charges customers $150 to buy the chair,and customers perceive that the chair is worth $225.Donna's profit margin is
A) $50.
B) $75.
C) $100.
D) $150.
E) $225.

Accepted Answer

Donna's profit margin is the difference between the selling price and the cost price, which is $150 - $100 = $50.

Question 14

Resources
A) are the tangible assets available to a company.
B) can be tangible or intangible.
C) are harder for a company to copy than capabilities are.
D) are the products of a company's control systems.
E) refer to an organization's skills.

Accepted Answer

Resources can be tangible (such as equipment, buildings, and inventory) or intangible (such as intellectual property or brand reputation).

Question 15

Lucy is an entreprenuer who is interested in opening her own bakery.She is concerned with obtaining money for equipment for the bakery such as ovens,pots and pans,and display cabinets.Lucy is trying to obtain intangible resources for her business.

Accepted Answer

Equipment such as ovens, pots and pans, and display cabinets are tangible resources as they can be physically touched and are essential for the bakery's operations. Intangible resources include things like patents, trademarks, and intellectual property, which Lucy may also be interested in obtaining for her bakery.

Question 16

Unfortunately,quality as excellence and quality as reliability are concepts that apply to goods but not services.

Accepted Answer

Both concepts of quality - excellence and reliability - apply to services as well as goods. In fact, service industries such as hospitality, healthcare, and consulting rely heavily on the consistent delivery of high-quality services to maintain their reputation and attract and retain customers.

Question 17

Taken together,factors such as existing strategic commitments and low absorptive capacity limit the ability of established competitors to imitate the competitive advantage of a rival.

Accepted Answer

Existing strategic commitments and low absorptive capacity can both act as barriers to imitation for established competitors. Existing strategic commitments may restrict a firm's ability to make significant changes to its business model or infrastructure, while low absorptive capacity may limit a firm's ability to learn from and adopt new practices or technologies. Together, these factors can make it difficult for established competitors to replicate the competitive advantage of a rival.

Question 18

Benchmarking is a practice in which a company's performance is compared against that of competitors and the historic performance of the company itself.

Accepted Answer

Benchmarking is a practice of comparing a company's performance against its competitors and historical performance.

Question 19

IBM's investment in mainframe computers is an example of a prior strategic commitment.

Accepted Answer

IBM's investment in mainframe computers is a well-known example of a prior strategic commitment made by the company, which has continued to pay dividends over the years. This commitment allowed IBM to establish itself as a leader in the mainframe market and build a loyal customer base.

Question 20

Factors that help a company to build and sustain competitive advantage include which of the following?
A) Superior efficiency
B) Product quality
C) Innovation
D) Customer responsiveness
E) All of these

Accepted Answer

Building and sustaining competitive advantage involves a combination of superior efficiency, product quality, innovation, and customer responsiveness. Companies need to find ways to excel in all these areas to stay ahead of the competition over the long run. Superior efficiency means being able to produce goods or services at a lower cost than competitors. Product quality is critical because customers want products that meet their needs and expectations. Innovation is important because it allows companies to create new products or services that provide unique value to customers. Customer responsiveness is key because it involves listening to the needs and feedback of customers and adapting to meet their changing needs over time. A company that can excel in all these areas is more likely to build and sustain a competitive advantage over the long run.

Quiz 3: Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Which of the following is not true regarding a company's distinctive competencies?

Competitive advantage typically leads to

The intellectual property of an organization is a(n)

The importance of reliability in building competitive advantage has increased dramatically over the past decade.

Competitive advantage is based on

Capabilities refer to a company's