BA 405: Chapter 3 Homework

A company's functional activities transform its inputs into outputs, and: a. customers purchase products to meet their needs regardless of the price. b. profitability is improved only through support activities in the value chain. c. value is added to the product at each stage in the value chain. d. functional success is measured by the consumer surplus.

c. value is added to the product at each stage in the value chain.

Compare the identified resources for each of the following four companies. Which company's resource could be considered valuable, rare, inimitable, and organized? a. Nike's swoosh logo b. Coca-Cola's aluminum can c. Delta Air Lines' flights to and from Chicago O'Hare Airport d. Charles Schwab's online trading software

a. Nike's swoosh logo

A grocery store chain makes a decision to limit its size and scope by offering only what it considers to be the best product in each food category, reducing the options available to its customers. It employs and recruits a highly paid team of tasters who travel the world evaluating foods to introduce on its shelves. It has attracted a team with an excellent track record of identifying top sellers and earned a reputation for delivering high-quality goods. This is an example of: a. a distinctive competency. b. intellectual property. c. a basic factor of production. d. a poorly organized resource.

a. a distinctive competency.

Compare the resources for each of the following four companies. Which resource represents an advanced factor of production, specifically a competency in process knowledge? a. Starbucks' locations in downtown areas b. Toyota's lean manufacturing systems c. Kellogg's food processing equipment d. General Motors' union workforce

b. Toyota's lean manufacturing systems

A description of Sidney's management job is to lower the cost of procurement, production, and distribution to create more profit. Sidney is involved in: a. customer service, a primary activity in the value chain. b. human resources, a support activity in the value chain. c. materials management, a support activity in the value chain. d. human resources, a primary activity in the value chain.

c. materials management, a support activity in the value chain.

A division of a large corporation is presenting its financial results for the year to the board of directors for the parent company. The company has achieved a competitive advantage and would like to report on its profitability. Which of these financial results provides the best indicator of the company's success? a. Net sales of $350 million b. Invested capital of $18 million c. 65% cost of goods sold d. 20% return on invested capital

d. 20% return on invested capital

The best-selling gaming system consistently performs the function it was designed for, performs it well, and rarely, if ever, breaks down. Therefore, this gaming system possesses: a. greater capital productivity. b. quality as excellence. c. employee productivity. d. quality as reliability.

d. quality as reliability.

Which of these describes a marketing and sales activity contributing value in the personal care industry? a. The Dove campaign for real beauty, which revealed results about women's assumptions about beauty, sparked increased sales of the company's products within months of the campaign's launch. b. Crest launched Crest Complete mouthwash developed by its team with new ingredients designed not only to clean mouths but to protect teeth in between brushings from tartar build-up. c. The cosmetics company Aveda adopted a strategy of environmental sustainability in its formulation of cosmetic products. d. Avon utilizes its direct seller, home party approach to empower sales people in every city and neighborhood to share its products with friends and family.

a. The Dove campaign for real beauty, which revealed results about women's assumptions about beauty, sparked increased sales of the company's products within months of the campaign's launch.

A firm can develop its competitive advantage through its resources. Resources include: a. both the physical elements of production, such as machines and workforce, and the knowledge and expertise of how to make and sell a product or service. b. only inputs that are bought and sold on the open market at fair and reasonable prices. c. the competitors within an industry who seek to serve the same group of customers and serve the same customers' needs. d. the customers who choose to buy products or services from a company.

a. both the physical elements of production, such as machines and workforce, and the knowledge and expertise of how to make and sell a product or service.

Process knowledge and organizational architecture that are path dependent and consequences of the history of the company would be categorized as: a. rare resources. b. production outputs. c. part of the blue-collar workforce. d. marketing primary activities.

a. rare resources.

Customer responsiveness includes: a. serving customers quickly with quality products, meeting their after-sale service and follow-up needs, and developing new products to fill unmet customer needs. b. the development of new processes for manufacturing products. c. the output of a company's production workforce. d. the price a customer is willing to pay for a product based on the customer's perceived value

a. serving customers quickly with quality products, meeting their after-sale service and follow-up needs, and developing new products to fill unmet customer needs.

Sasha is a manager for an ice cream company. The company recently developed a delicious, low-calorie version of its product. At current volumes, the per-gallon cost is the same to produce this new line as to produce its traditional ice cream, and the new ice cream is produced on the same equipment. The company could improve profitability by: a. setting the price for this product line higher than that of its typical offering because of the increased perceived value by customers. b. marketing the product line as better tasting than the existing ice cream line. c. eliminating its other product offering entirely and focusing only on this new, low-calorie option. d. setting the price for this product at less than that of the traditional ice cream because the new product has fewer calories and a smaller audience.

a. setting the price for this product line higher than that of its typical offering because of the increased perceived value by customers.

A nonprofit organization dedicated to providing homeless people with hot meals served at a local church is reviewing its internal resources. The organization is seeking to invite and serve all homeless people within a 20-mile radius of the church. Which strategy best aligns with the goal for each option? a. Quality: The nonprofit is considering reducing the portion sizes of the meals to be able to serve more people. b. Efficiency: The nonprofit is seeking a partnership with a food pantry to purchase food at a discount compared to the supermarket supplier it has been using. c. Innovation: The nonprofit has a volunteer who is working on a cold-meal substitute that will be distributed on the streets instead of at the church. d. Customer responsiveness: The nonprofit is considering changing its policy and now requires everyone to stand outside in a line to receive their meals, rather than coming in and sitting down to be served.

b. Efficiency: The nonprofit is seeking a partnership with a food pantry to purchase food at a discount compared to the supermarket supplier it has been using.

An entrepreneur is starting a new online service for job seekers. He is assessing his internal resources to determine his distinctive competencies. He developed software capable of managing a large quantity of job applicants simultaneously without slowing down. The result is a system that operates more quickly than the competitors' systems. Which value chain activity does the software development represent? a. Sales and marketing b. Research and development c. Logistics d. Human resources

b. Research and development

Which of these companies in the news in recent years would have benefited from a strategy that enhanced quality to build and maintain its competitive advantage? a. Comcast was consistently criticized for its call center wait times and communications. b. Takata Corporation issued a recall for 34 million air bags installed on a variety of car models due to potential faults and defects. c. BlackBerry Limited worked to launch new smartphones but continued to fall behind Apple and Android sales because of a lack of Blackberry apps. d. Delta's cost per available seat-mile flown was $16.80 compared to rivals American Airlines' $15.84 and Southwest's $13.76.

b. Takata Corporation issued a recall for 34 million air bags installed on a variety of car models due to potential faults and defects.

A company's rare and valuable process knowledge elements can be hard to copy because they are often unwritten, spread among many team members, and kept secret within the firm. This is an example of: a. poorly organized inventory. b. causal ambiguity. c. organizational architecture. d. scarcity.

b. causal ambiguity.

Research and development is one area of the value chain dedicated to: a. the identification of new industries and ways to meet customers' needs through technology. b. developing new products, enhancing existing products, and improving processes to reduce the production cost for existing products. c. the description of customer markets and demographics to which companies can market existing products. d. the improvement of ways to support customers after they've purchased a product and require service.

b. developing new products, enhancing existing products, and improving processes to reduce the production cost for existing products.

Efficiency is a measure of the quantity of inputs required to produce a given output. It can be measured by: a. product price. b. employee productivity and capital productivity. c. overall profitability. d. customer satisfaction.

b. employee productivity and capital productivity.

Advanced factors of production are more likely to be rare and harder to imitate. Strategically, managers who have identified these advanced factors should: a. let these resources manage themselves as they are already working and don't require interference from a manager. b. take steps to protect these assets either formally or as a trade secret, optimize the company's use of them, and not outsource them to other firms. c. abandon them and start over to seek out different resources to develop, manage, and utilize to make the company more profitable. d. share them with competitors to improve the overall profitability of the industry.

b. take steps to protect these assets either formally or as a trade secret, optimize the company's use of them, and not outsource them to other firms.

A small brewery is working to determine the appropriate price for some of its products to achieve competitive advantage and greater profitability. In the past, the brewery released summer ale at the same price as its regular year-round beer. In the last three summers, the company sold out of the beer by early August. If the company raises its summer ale price and it continues to sell at a steady pace, this is a sign that: a. the company produces less of its summer ale than of its regular beer and therefore must increase prices on it to maintain profitability. b. the customer is assigning a greater value to the summer ale and the company can increase its price to gain profitability. c. the cost of the basic factors of production has increased, forcing the company to increase the price of all of its products. d. the company must address the cost of its inputs to improve profitability.

b. the customer is assigning a greater value to the summer ale and the company can increase its price to gain profitability.

A company's profitability depends on: a. only the industry, strategic group, and industry life-cycle stage in which the company operates. b. the value customers place on the company's products, the price it charges for its products, and the costs of creating its products. c. the demand for the product in the marketplace and the number of competitors providing similar products. d. the quality of the managers and employees a company hires to manage its resources. Hide Feedback

b. the value customers place on the company's products, the price it charges for its products, and the costs of creating its products.

A building block of a competitive advantage can impact profitability by accomplishing one of three goals. Which of the following would NOT be included among those goals? a. Allowing the company to increase the price it charges b. Reducing the costs of producing products c. Reducing prices to levels that undercut its nearest competitor d. Increasing value as perceived by customers

c. Reducing prices to levels that undercut its nearest competitor

As vice president for sales and marketing, Carole conducts a survey asking customers their impressions of the product offering, the quality of the product, and their level of customer satisfaction. Carole can use the survey results to: a. determine the most effective hiring strategy for recruiting future employees. b. improve employee efficiency by identifying bottlenecks in the manufacturing process that slow down production and add cost. c. identify the building blocks of competitive advantage and develop strategies to use them to increase profitability. d. set pricing strategy for the company's upcoming product line offering.

c. identify the building blocks of competitive advantage and develop strategies to use them to increase profitability.

The price of a product or service is typically less than the customer's perceived value for the product because: a. companies operate as monopolies and can set the price at the minimum to meet the consumer's perception of value. b. prices are set at a random amount above the cost of producing the product. c. it is impossible to offer a product to each customer at the exact price at which he or she values it because customer definitions of value will vary. d. government regulations limit the maximum price that companies can charge in a given industry for their products and services.

c. it is impossible to offer a product to each customer at the exact price at which he or she values it because customer definitions of value will vary.

Candace is the research and development manager at a pharmaceutical company. The firm is in the process of developing a new heart medication that could be more effective than existing treatments for several heart conditions. To ensure the company's profitability after the new medication is cleared by the FDA, Candace should: a. work with the sales and marketing team to include all of the medication's chemical components in the sales literature. b. recruit additional research and development team members from a competitor's lab to attempt to imitate their heart medication research. c. supervise the filing of appropriate patent paperwork for the new medication to protect the company's intellectual property. d. fire all of the researchers who have been working on the new heart medication research.

c. supervise the filing of appropriate patent paperwork for the new medication to protect the company's intellectual property.

Innovation is the result of: a. reliable products that meet the needs of customers predictably and consistently. b. the acquisition of technologies from rivals through imitation and poaching of talent. c. work in research and development to create superior product attributes and/or superior processes for delivering products. d. improving the time it takes for a good to be delivered or a service to be performed.

c. work in research and development to create superior product attributes and/or superior processes for delivering products.

Linden begins a VRIO analysis of the quality of company resources within his company. Which of the following would be Linden's first step? a. Treat each resource identified as equally important to the company and develop a strategy that utilizes each one to achieve superior profitability. b. Evaluate each resource to determine whether it can help the company take advantage of opportunities in the industry, whether it's a resource that competitors don't have or would have trouble copying, and whether the company is managing the resource. c. Test each resource by removing it from production for a defined length of time and track productivity, sales, and profitability in each of those timeframes. Then, use the data collected to quantify how important each resource is to the company. d. Identify the land, labor, management, plant and equipment, organizational architecture, process knowledge, and intellectual property that make up the resources of the company.

d. Identify the land, labor, management, plant and equipment, organizational architecture, process knowledge, and intellectual property that make up the resources of the company.

The four building blocks of competitive advantage have an interdependent relationship. Which of the following describes a strategy that adds value to multiple factors as it goes through several activities in the value chain? a. A grocery store recognizes that its checkout lines are longest between 4 and 7 p.m. on weeknights. The company decides to add cashiers during these peak hours even though it results in a lower rate of sales per employee-hour. b. A sporting goods store recognizes the increased customer demand for running shoes in the early spring and implements a 5% price increase at the beginning of the season each year. c. A coffee shop replaces its espresso machines with newer models that utilize less energy but create the same quality of coffee drink. d. In response to requests from customers for healthier food on the menu, a restaurant tweaks its recipe for its most popular sandwich to replace processed ingredients with fresh vegetables.

d. In response to requests from customers for healthier food on the menu, a restaurant tweaks its recipe for its most popular sandwich to replace processed ingredients with fresh vegetables.

A competitive advantage is based on the possession of distinctive competencies. By definition, distinctive competencies are: a. resources available to all firms operating in a given industry and easily shared and copied by rivals. b. differences between companies in how they structure their companies and compensate their employees. c. characteristics, skills, or knowledge that cannot be written down and must be understood through experience or intuition. d. firm-specific strengths that allow a company to differentiate its products from rivals or achieve lower costs than rivals.

d. firm-specific strengths that allow a company to differentiate its products from rivals or achieve lower costs than rivals.

Activities such as the design, creation, and delivery of a product are part of a company's: a. logistics. b. price maximization. c. support activities. d. value chain.

d. value chain.