Ch 4 LearnSmart
______ are the firm's level of investments to maintain or build a resource.
Resource flows
One of the most popular tools used by firms to evaluate their current situation and future prospects is the ______.
SWOT analysis
According to the VRIO framework, a rare resource is ______ if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost.
costly to imitate
Which isolating mechanism is set up to legally prevent companies from copying products that give a firm a competitive advantage?
intellectual property protection
The ______ describes the internal activities a firm engages in when transforming inputs into outputs.
value chain
What are the characteristics of a strategic activity system as it applies to firms? (Check all that apply.)
- It consists of interconnected activities. - It is causally ambiguous. - It is socially complex.
The SWOT analysis should be used with caution because ______.
opportunities can be threats and strengths can be weaknesses
Competitive advantage is gained in the value chain through which of the following types of activities? (Check all that apply.)
- support - primary
What does the concept of resource immobility imply? (Check all that apply.)
- that reproducing the set resources from another company is difficult - that resource differences between firms can last a long time
______ suggests that sometimes even random events may have a large impacts on an outcome.
Path dependence
True or false: According to the resource-based model, a firm is assumed to be a unique bundle of resources, capabilities, and competencies.
True
True or false: To maintain a competitive advantage, a strategic activity system needs to change over time.
True
What are examples of intangible resource stock a company may have? (Check all that apply.)
- engineering expertise - reputation for quality - dynamic capabilities
Which of the following are examples of business activities? (Check all that apply.)
- invoicing customers - order taking - delivery of products
True or false: The value chain concept is applicable primarily to high-tech firms in rapidly changing environments.
False
______ do not have physical attributes.
Intangible resources
______ resources have physical attributes and are visible.
Tangible
A firm's network of interconnected activities is referred to a strategic activity system because activities that are interconnected are very difficult for competitors to copy effectively.
True
The ______ is a theoretical model that explains and predicts what resource attributes underpin competitive advantage. It identifies which types of resources are key to firm performance.
VRIO framework
What insights gained from a SWOT analysis would lead McDonald's to consider developing healthier food items for its menu?
a growing health consciousness among customers
A customized strategy that considers the unique resources of the company while considering the external environment creates ______.
a strategic fit between them
In the dynamic capabilities perspective, competitive advantage derives from ______.
actively modifying of the resource base
According to the dynamic capabilities perspective, competitive advantage stems from a firm's ability to ______.
agilely transform its resource base
Better expectations of future resource value ______ a firm's competitive advantage.
positively impact
The internal activities of a firm that for transforming inputs into outputs consist of ______ activities, which add value directly, and _____ activities, which add value indirectly.
primary, support
A resource is ______ if the number of firms that possess it is less than the number of firms required to reach a state of perfect competition.
rare
A resource is considered ______ if it helps a firm to deal with an external threat.
valuable
What do the best firms in an industry seek to identify and manage on an ongoing basis as sources to respond to their external environment? (Check all that apply.)
- resources - core competencies - capabilities
______ is a framework that allows mangers to synthesize insights obtained from internal and external analysis.
SWOT analysis
______ describes a situation in which different social and business systems interact with each other.
Social complexity
Why is competitive advantage more likely to spring from intangible rather than tangible assets?
Tangible assets can be bought on the open market.
Which of the following were resources and capabilities that helped Five Guys gain a competitive advantage and develop into a successful restaurant chain? (Check all that apply.)
- Focusing on such details as store layout and design - Carefully choosing the supplier of the potatoes for their fries
Primary activities include which of the following? (Check all that apply.)
- supply chain management - operations
Which of the following statements are true about the capabilities of a firm? (Check all that apply.)
- They include managerial skills. - They include organizational skills. - They concern the deployment of resources.
Which insights gained from a SWOT analysis could lead McDonald's to open new restaurants in China? (Check all that apply.)
- McDonalds' financial strength and brand name. - Growth in emerging economies and market share decline in developed economies.
Which of the following are situations in which a resource is considered valuable? (Check all that apply.)
- The resource helps a firm exploit an external opportunity. - The resource helps the firm increase its economic value creation (V-C).
The VRIO framework is used to evaluate a firm's resources. VRIO is an acronym for which of the following? (Check all that apply.)
- Valuable - Rare - Imitate
Which of the following can help a firm extend its competitive advantage? (Check all that apply.)
- better expectations of future resource value - intellectual property protection - path dependence
Which of the following are examples of resources for a firm? (Check all that apply.)
- cash - buildings - intellectual property
______ describes a situation where the cause and effect of a phenomenon are not readily apparent.
Causal ambiguity
The resource-based model views resources as ______.
the main driver of firm performance
A firm trying to compete with the leading firm in a competitive industry can try to negate the leading firm's competitive advantage through which of the following? (Check all that apply.)
- substitution - direct imitation
A core competency can help a company achieve which of the following? (Check all that apply.)
- to create higher value for the consumer - to offer products of comparable value at lower cost than rivals can - to differentiate its products and services
Which of the following are intangible resources that can be protected as intellectual property?
- trade secrets - trademarks - copyrights
______ are the distinct and fine-grained business processes that enable firms to add incremental value by transforming inputs into goods and services.
Activities
______ describes a process in which the options one faces in the current situation are limited by decisions made in the past.
Path dependence
______ activities add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain.
Primary
Which of the following is true according to the assumption of resource heterogeneity?
Resource bundles vary from company to company.
______ refers to the assumptions that resources tend to be "sticky" and do not move easily from firm to firm.
Resource immobility
Time compression diseconomies occur when a firm ______.
attempts to reach an outcome in a reduced amount of time
According to the VRIO framework, to fully exploit the competitive potential of its resources, capabilities, and competencies, a firm must ______.
be organized to capture value
In order to be successful, a firm must have a resource that is valuable, rare, costly to imitate, and the firm must ______.
be organized to capture value
Susan is a consultant for a grocery store chain that wants to open several new stores in the St. Louis area. She has selected several sites for the company to consider based in part on projected population growth near those sites. What isolating mechanism does this best illustrate?
better expectations of future resource value
The organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically are called _____.
capabilities
A(n) ______ is a unique strength, embedded deep within a firm, that is critical to gaining and sustaining competitive advantage.
core competency
If a firm's resource is valuable, rare, costly to imitate, and the firm is organized to exploit it, this resource is a ______.
core competency
Javier, the owner of Javier's Tacos, has noticed that residents of his town are flocking to a new taco truck in increasing numbers. After doing some research, Javier learns that consumers enjoy the food truck because almost all the taco ingredients are locally sourced. Javier decides to add locally sourced ingredients to his menu. This is an example of ______.
direct imitation
For a firm to sustain any competitive advantage over time, the fit between its internal strengths and external environment needs to be ______.
dynamic
Enterprise Machinists is always improving upon its core competencies by training its machinists constantly so that they are equipped to deal with technological changes and advancements. Based on this information, this is an example of which concept?
dynamic capabilities
The purpose of a SWOT analysis is to ______.
form a strategy that is tailored to the firm's unique strengths and weaknesses and the opportunities and threats in its environment
If the problem with a business strategy results in causal ambiguity, managers will ______.
have a difficult time developing a theory to deal with the problem
Resource ______ and resource ______ are the key assumptions behind the resource-based model of the firm.
heterogeneity; immobility
A firm's culture, brand equity, and intellectual property are examples of ______.
intangible resources
When strategizing about possible competitive advantages, a major advantage of the SWOT analysis is that it allows managers to simultaneously consider ______.
internal and external factors
Strategic leaders use internal and external analyses in tandem to create a customized fit between a company's ______.
internal resources and external environment
Intellectual property protection and social complexity are examples of _____ mechanisms, which help a firm sustain a competitive advantage.
isolating
Core competencies of a business are generated by the interaction of ______.
resources and capabilities
The concept of social complexity suggests that ______.
social and business systems that work for one firm may be hard to imitate because of complex interactions between these systems
The culture of Zappos is hard to imitate because it consists of numerous, diverse interactions among its employees, processes, procedures, and norms, that create which of the following?
social complexity
The interaction of the many individual systems in the operation of a company often leads to causal ambiguity because of ______.
social complexity
Accounting and finance are ______ activities in a firm's value chain.
support
Research and development, information systems and human resources are examples of ______ activities.
support
In order to avoid making costly mistakes due to the potential shortcomings of the SWOT analysis, a manager should ______.
take results from the SWOT analysis with "a grain of salt"
Capital, land, buildings, and plants are examples of ______ resources.
tangible
Unlike capabilities, resources can be both ______.
tangible and intangible
The resource-based view classifies all resources as ______.
tangible or intangible
What does the concept of resource heterogeneity imply?
that each firm has different resources
What are ways that firms should change their strategic activity systems to maintain a dynamic competitive advantage? (Check all that apply.)
- removing activities that no longer serve a purpose - upgrading activities so that they do not become obsolete - adding new activities
______ has a greater chance of arising from intangible resources than from tangible resources.
Competitive advantage
According to the VRIO framework, in order for a firm to gain a temporary competitive advantage, a resource must be at least both ______.
rare and valuable
True or false: A competitive advantage is most often maintained indefinitely.
False
A firm's attempts to shorten the length of time a process takes, may lead to disappointing outcomes because of ______.
time compression diseconomies
Which of the following is not considered an isolating mechanism?
uncertainty about future resource value