3830 ch. 4

The resource-based view is in sharp contrast to which model of industry competition (from Chapter 3). A. Perfect competition B. Monopoly C. Oligopoly D. Monopolistic competition

Perfect competition

Amazon compensated for their lack of valuable and rare resources by implementing a new distribution system to reduce operating costs. This is referred to as: A. Strategic ambivalence. B. Strategic activity system. C. Strategic equivalence. D. Strategic immobility.

Strategic equivalence

When a firm possesses resources and capabilities that are valuable but not rare, it has a: A. Competitive disadvantage. B. Competitive parity. C. Temporary competitive advantage. D. Resource immobility.

Competitive parity

Strategic activity systems that are socially complex are: A. Tangible resources. B. Difficult to imitate. C. Challenging to leverage. D. Customer-oriented.

Difficult to imitate

When a firm enjoys a competitive advantage, it attracts a significant amount of attention and its products or services can be at risk due to: A. Social complexity. B. Value erosion. C. Causal ambiguity. D. Direct imitation or substitution.

Direct imitation or substitution

Under the resource-based view of competitive advantage, firm resources such as intellectual knowledge and plant equipment are: A. Assets that are key to superior firm performance. B. Assets that may aid a firm but are not as important as the firm's strategic group. C. Needed in order to achieve economies of scale. D. Less important to competitive advantage than are resource immobility. Under the resource-based view of competitive advantage, firm resources are the key to superior firm performance.

Assets that are key to superior firm performance.

Which of the following is a question that managers must ask concerning internal firm factors when conducting a SWOT analysis? A. How can we use our resource base and core competencies to take advantage of an opportunity? B. What additional resources and capabilities are needed to take advantage of external opportunities? C. What resources and capabilities do we need to mitigate external threats? D. All of these.

All of these

Which of the following is true when it comes to a firm's capabilities? A. They are the organizational and managerial skills within a firm. B. They are found in the firm's structure, routines, and processes. C. They are used to deploy a firm's resources to orchestrate core competencies. D. All of these.

All of these

An upscale jeweler ordered several thousand ounces of gold a few years ago when gold was priced at $650 an ounce. As of 2011, gold was averaging about $1,700 an ounce. This jeweler will be able to protect his competitive advantage, at least temporarily, due to which condition? A. Better expectations of future resource value B. Path dependence C. Causal ambiguity D. Social complexity

Better expectations of future resource value

Within the resource-based model, what is the meaning of the term "resource heterogeneity"? A. Bundles of resources and capabilities are fundamentally the same across firms within the same industry. B. Bundles of resources and capabilities differ across firms. C. Resources don't move easily from firm to firm. D. Resources move easily from firm to firm.

Bundles of resources and capabilities differ across firms.

All of the following are intangible resources EXCEPT: A. Capital. B. Dynamic capabilities. C. Patents. D. Social complexities.

Capital

If a firm's resources and capabilities are costly to imitate because imitating firms do not understand the relationship between the resources and capabilities controlled by the firm, this firm's competitive advantage is protected from imitation by _________________. A. Path dependence B. Dependence complexity C. Causal ambiguity D. Social complexity

Casual ambiguity

It is difficult to pinpoint the underlying cause of Apple's phenomenal success. Gaining a deep understanding of exactly why Apple has done so well is difficult because of which situation? A. Competitive dependence B. Causal ambiguity C. Strategic luck D. The substitutability of Apple's competencies

Casual ambiguity

Amazon is known for superior IT systems and customer service. UPS provides superior supply chain management services at low cost. Both Amazon and UPS have leveraged their _______________, which has led to competitive advantages for both firms. A. Mobility resources B. Core competencies C. Economic equity D. Core complements

Core competencies

The general lesson from the Chapter 4 opening case on Circuit City is the importance of ______________ to a firm when it is attempting to gain and sustain competitive advantages. A. Tangible resources B. Core competencies C. The economy D. Sociocultural factors

Core competencies

Unique strengths that are embedded deep within a firm that allow it to differentiate itself and create higher value for customers is a ____________. A. Competitive advantage B. Core competency C. Resource competency D. Value chain

Core competency

Strategy Highlight 4.2 discusses how IBM was able to rebound because CEO Lou Gerstner refocused the company on satisfying market needs through IT services as opposed to mainframe and mini-computers. This strategic highlight shows that IBM's current success is partially based on: A. Creating a new strategic fit for IBM through the utilization of static capabilities. B. Utilizing the resources of the mainframe hardware business. C. Creating a new strategic fit for IBM through the utilization of dynamic capabilities. D. The power of its brand equity.

Creating a new strategic fit for IBM through the utilization of dynamic capabilities.

If the firm is not organized to capture the value from its resources, it will not profit from the investment in the resources. In the 1980s, Xerox's Palo Alto Research Center (PARC) developed many of the foundations for the ____________ industry. Yet these valuable and rare innovations were commercialized by other firms. A. Photocopying B. Transportation C. Desktop computing D. Music

Desktop computing

To sustain competitive advantage, strategic activity systems need to: A. Increase the firm's activities. B. Decrease the firm's activities. C. Increase firm productivity. D. Evolve over time.

Evolve over time

In order for a firm's strategy to be effective, it must match all of the following EXCEPT: A. Resource strengths and weaknesses. B. Market opportunities. C. External threats. D. External value chain systems.

External value chain systems.

Creating resources that meet the VRIO criteria are strategically important to a firm because: A. These resources can be easily deployed throughout the firm. B. Firms that possess these types of resources may be able to experience a temporary competitive advantage. C. It creates the heterogeneity essential for competitive parity. D. Firms that possess these types of resources may be able to experience a sustained competitive advantage.

Firms that possess these types of resources may be able to experience a sustained competitive advantage.

One way that a firm can create a sustainable competitive advantage is by: A. Managing value chain activities better than its rivals. B. Cutting value chain support activities. C. Reducing strategic activity systems relative to competitors. D. Keeping activity systems static.

Managing value chain activities better than its rivals.

If Sony and Microsoft develop the same customer knowledge base and create gaming products that provide the same customer appeal as Nintendo, then: A. Sony and Microsoft will have a VRIO resource. B. Nintendo will have a resource that is valuable but no longer rare. C. Nintendo will still have a VRIO resource. D. Nintendo will have a resource that is rare but no longer valuable.

Nintendo will have a resource that is valuable but no longer rare

Under the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage because its resources were: A. Valuable but out of date. B. Not costly to imitate. C. Too cheap. D. Non-substitutable.

Not costly to imitate

Which of the following is NOT a condition that can help a firm sustain its competitive advantage? A. When managers have consistently better expectations about the future value of resources. B. The resource advantage can only be imitated after a long period of time. C. Past decisions constrain the current dynamic capabilities. D. The source of the competitive advantage is causally ambiguous.

Past decisions constrain the current dynamic capabilities

Both Honda and Sony took many decades to build their core competencies, and these competencies are based primarily by decisions made in the past. This process is called: A. Path dependence. B. Dependence complexity. C. Causal dependence. D. Path immobility.

Path dependence

The fact that the U.S. still uses a system of measurement from the 1820s instead of the metric system, and is at a disadvantage in certain cross-border transactions and negotiations, demonstrates that: A. Mistakes made early on have a negligible effect on final outcomes. B. Path dependence has limited influence on final outcomes. C. Time cannot be compressed at will. D. Path dependence can affect the ability to remain competitive.

Path dependence can affect the ability to remain competitive

Which of the following activities would be considered a primary activity in a firm's value chain? A. Research and development B. Human resources C. Finance D. Production

Production

When only a few firms can perform a capability in the same unique way, this capability is considered to be: A. Valuable. B. Costly to imitate. C. Rare. D. Non-substitutable.

Rare

A firm's superior performance in the marketplace affords it the luxury of _____________. A. A majority of market share B. A higher value on the PESTEL scale C. Reinvesting retained earnings back into the firm's capabilities and resources D. Consolidation of core competencies

Reinvesting retained earnings back into the firm's capabilities and resources

When a successful firm exhibits resource immobility, _____________________. A. It has difficulty redeploying resources to respond to strategic needs B. Resource differences between the firm and a rival are hard to replicate C. The likelihood of competitive advantage is lessened D. Resource differences between the firm and a rival are easy to replicate

Resource differences between the firm and a rival are hard to replicate

The assumption under the resource-based model that firm resources and capabilities differ across firms and that this leads to performance differences is referred to as ____________________. A. Resource homogeneity B. Resource mobility C. Resource valuability D. Resource heterogeneity

Resource heterogeneity

_________ implies that for a given business activity, some firms may be more skilled than others in accomplishing it. A. Resource homogeneity B. Resource mobility C. Resource heterogeneity D. Resource immobility

Resource heterogeneity

Which of the following statements regarding the resource-based view is accurate? A. Resources and capabilities are very similar across firms within the same industry. B. Resource heterogeneity and resource immobility are two critical assumptions that strategists must keep in mind. C. Resource immobility dictates that resources are difficult to redeploy within the firm. D. Resource heterogeneity is in reference to tangible assets.

Resource heterogeneity and resource immobility are two critical assumptions that strategists must keep in mind.

One of the assumptions under the resource-based model made about Southwest Airlines is that SWA has been able to sustain a competitive advantage because its resources and capabilities are difficult to imitate and do not easily leave the firm. What is this assumption called? A. Intangible immobility B. Resource immobility C. Managerial mobility D. Resource ambiguity

Resource immobility

Intangible firm resources such as brand equity and corporate culture can be analyzed by what method? A. Benchmarking B. Resource stocks and resource flows C. Activities and incremental outputs D. A PESTEL analysis

Resource stocks and resource flows

Assets that a firm can draw on that are both tangible and intangible are __________. A. Resources B. Capabilities C. Dependent D. Immobile

Resources

Core competencies are built through the interplay of several firm attributes. These attributes include a firm's: A. Resources, capabilities, and activities. B. Size, age, and demographics. C. Investments, industry, and political climate. D. All of these.

Resources, capabilities, and activities

When a firm combines __________ and ___________, it builds core competencies. A. Resources; capabilities B. Activities; processes C. Capabilities; skills D. Knowledge; information

Resources; capabilities

A risk to a firm that believes its resources are costly to imitate is that: A. Rivals may employ substitution and work around the original design. B. Due to the dynamic nature of competition, all resources eventually get imitated. C. A firm's products or services are shielded behind social complexity. D. Resources that are costly to imitate are based on causal ambiguity.

Rivals may employ substitution and work around the original design.

Which framework most easily allows for the combination of both internal and external factors in the analysis of a firm's competitive advantage? A. A strategic activity system B. The VRIO framework C. SWOT analysis D. PESTEL analysis

SWOT analysis

Chapter 4 details actions that Vanguard took after 1997 to add customer segmentation as a new core activity because it was unable to provide quality service to targeted customer segments at the lowest possible cost. By changing its ________________, Vanguard was able to adapt to changing market conditions and sustain its competitive advantage in the investment industry. A. Technological system B. Strategic activity system C. Organizational system D. Market segmentation system

Strategic activity system

Which of the following SWOT factors are generated from internal resources, capabilities, and competencies? A. Opportunities and weaknesses B. Strength and threats C. Opportunities and threats D. Strengths and weaknesses

Strengths and weaknesses

Which of the following is NOT a criterion for a strategically important resource? A. Difficult to imitate B. Not everyone has it C. Valuable D. Tangible

Tangible

When a firm has resources and capabilities that are valuable and rare only, it has: A. Competitive ambiguity. B. Competitive parity. C. Sustained competitive advantage. D. Temporary competitive advantage.

Temporary competitive advantage.

Which framework can managers use to determine whether firm resources and capabilities are internal strengths or weaknesses? A. The VRIO framework B. The PESTEL analysis C. The five forces model D. Support activities

The VRIO framework

If a manager is listing out resources that can be used to drive competitive advantage, which one of the following would NOT be on the list? A. The buildings B. The economy C. The equipment D. The intellectual property

The economy

According to Michael Porter, when it comes to a firm's value chain activities and the essence of strategy, a firm should ask itself: A. Which activities should be done? And more importantly, what should not be done? B. Where can costs be minimized to reflect the greatest profitability? C. What tangible assets can be acquired to increase competitive advantage? D. What are the best practices of the closest competitor and can they be easily adapted by the firm?

Which activities should be done? And more importantly, what should not be done?

British conglomerate EMI developed and launched the invention of the CAT scanner. This paved the way for follow-up innovations like nuclear magnetic resonance imaging (MRI). Despite its initial success, EMI lost out quickly in the marketplace to GE Medical Systems, which was able to reverse-engineer EMI's scanner. This is an example of what resource attribute? A. EMI lost its social complexity. B. Direct substitution with an engineering work-around. C. This is undetermined due to causal ambiguity. D. Dynamic capabilities from EMI.

Direct substitution with an engineering work-around

____________ refer(s) to a firm's ability to reconfigure resources and create external market changes. A. Dynamic equilibrium B. Dynamic capabilities C. Dynamic complexity D. Dynamic programming

Dynamic capabilities

What pitfall does the use of strategic activity systems highlight when a competitor is considering imitating a rival firm? A. Copyright infringement against copying the firm's processes B. A compounding effect, reducing the probability of successfully copying each interconnected system activity C. Path dependence of the core activities of the firm D. Loss of competitive advantage due to reduction of VRIO

A compounding effect, reducing the probability of successfully copying each interconnected system activity

All of the following are true concerning the importance of dynamic capabilities to a firm EXCEPT: A. A firm is unable to create rare resources unless it is dynamic. B. The firm must be able to change its resource base and activity systems when the external environment changes. C. The firm must be able to modify, upgrade, and reconfigure its resources as needed. D. Possessing dynamic resource capabilities helps the firm sustain competitive advantage(s) over time.

A firm is unable to create rare resources unless it is dynamic

Intangible assets add great value to a firm because: A. A firm's reputation and brand equity are accumulated quickly and can be leveraged easily. B. A firm's culture, knowledge, and intellectual property take time to develop and are generally difficult to imitate. C. Tangible assets require a high degree of capital; intangible assets do not. D. All of these.

A firm's culture, knowledge, and intellectual property take time to develop and are generally difficult to imitate.

All of the following are tangible resources EXCEPT: A. Production equipment. B. Distribution centers. C. A firm's reputation. D. A firm's headquarters building.

A firm's reputation

Which of the following frameworks is most effective at demonstrating the difficulty of imitating a firm with 25 interconnected activities? A. A strategic activity system B. The VRIO framework C. Value chain analysis D. SWOT analysis

A strategic activity system

When a firm is conceptualized as a network of socially complex, interconnected activities, it is referred to as being: A. A value-oriented system. B. A strategic activity system. C. An adaptive organization. D. A firm with high resource utilization.

A strategic activity system.

Under the value chain perspective, managers evaluate a firm's system of activities in order to: A. Identify how competitive advantage flows from the inputs to outputs of the firm's distinct activities. B. Determine how much value the firm has in the minds of shareholders. C. Ensure that support activities add direct value to the firm. D. Strategize whether it would be a competitive strength to integrate backward or forward.

Identify how competitive advantage flows from the inputs to outputs of the firm's distinct activities.

When evaluating the sustainability of a competitive advantage, which of the following is NOT true? A. The advantage will not be sustainable if there are substitutes for the firm's core competence. B. If managed effectively, existing core competencies can sustain a competitive advantage indefinitely. C. Path dependence and social complexity increase the time that the advantage is sustainable. D. When expectations of future resource value turn out to be accurate and can be repeated, then a sustained competitive advantage is realized.

If managed effectively, existing core competencies can sustain a competitive advantage indefinitely.

Competitive advantage occurs when there is a high utilization of which type of assets? A. Tangible B. Intangible C. Heterogeneous D. Homogeneous

Intangible

Google's fixed assets, including its headquarters ("The Googleplex") and server farms, are valued at $5 billion, while the Google brand is valued at over $100 billion. Apple's physical attributes are valued at $2 billion, while its brand is valued at over $63 billion. What can be derived from this? A. Physical attributes are not effective resources in the quest for competitive advantage. B. Intangible assets, while invisible, contribute more to competitive advantage than do tangible assets. C. There is a high degree of resource mobility in this strategic group. D. Google will have a sustained competitive advantage over Apple.

Intangible assets, while invisible, contribute more to competitive advantage than do tangible assets.

A SWOT analysis allows managers to evaluate a firm's current situation and future prospects by simultaneously considering _________ and __________ factors. A. Internal; external B. Intrinsic; extrinsic C. Present; future D. Core competency; dynamic capability

Internal; external

Primary activities in the firm level value chain are: A. The activities most likely to be substituted by competitors. B. The core competencies of an organization. C. Involved in a product's physical creation, its distribution, and its service after the sale. D. The activities most crucial to implementing the firm's business strategy.

Involved in a product's physical creation, its distribution, and its service after the sale

Toyota lost its competitive advantage when lean manufacturing became an industry standard as other firms learned about and utilized this manufacturing process. These firms learned about lean manufacturing due to: A. Resource heterogeneity. B. Knowledge diffusion. C. Resource immobility. D. Dynamic mobility.

Knowledge diffusion

Suppose several senior managers recently left Google and went to work at rival Microsoft. What part of the "stocks and flows" of resources does this represent for Google? A. Leakage B. Resource stocks C. Dynamic capabilities D. Inflow of resources

Leakage

The purpose of a firm's ____________ is to add additional value through primary and support activities that competitors cannot easily replicate. A. VRIO network B. Resource network C. Value chain D. Strategic chain

Value chain

According to Strategy Highlight 4.3, Microsoft's eventual industry dominance is largely credited to: A. The lucky break that Bill Gates got when starting Microsoft, which was leveraged into a highly effective strategy. B. Microsoft's financial resources and market position during the time of market entry. C. The attractiveness of the computing industry. D. The ability of Microsoft to continuously innovate, which is a rare resource in the computing industry.

The lucky break that Bill Gates got when starting Microsoft, which was leveraged into a highly effective strategy.

Firm resources such as intellectual property and brand equity are important to a firm because: A. Having such resources allows for a firm to achieve competitive parity. B. Once created, maintaining such resources takes little managerial effort. C. They are intangible, costly to imitate, and can lead to sustained competitive advantage(s). D. They are tangible and have a high degree of resource mobility.

They are intangible, costly to imitate, and can lead to sustained competitive advantages.

Core competencies are important to a firm because of all of the following EXCEPT: A. They help to create competitive advantage(s). B. They need to be continuously nourished or they will lose their competitive ability. C. They need to be benchmarked from a firm with the competitive advantage. D. They are derived from resources and capabilities that must be effectively bundled together.

They need to be benchmarked from a firm with the competitive advantage

Strategy Highlight 4.1 points out that Nintendo became the market leader of game consoles and was able to gain market leadership over Sony and Microsoft based on its knowledge of the casual gamer. This deep understanding, derived over many years, has enabled Nintendo to develop games that respond to customer preferences. Nintendo's knowledge of its customer is currently a(n): A. VRIO resource B. Valuable but common resource C. Easily substitutable resource D. Core competency that has provided competitive parity

VRIO resource

As noted in the Chapter 4 opening case, Circuit City lost its market leadership in part because it laid off some of its most experienced and loyal salespeople. It can be said that Circuit City lost a resource that was: A. Valuable and common. B. Valuable and rare. C. Intangible and common. D. Easy to imitate.

Valuable and rare

Currently, lean manufacturing is a __________ but ____________ resource, which leads to competitive parity. A. Valuable; rare B. Common; tangible C. Valuable; common D. Rare; tangible

Valuable, common

Resources and capabilities that generate a temporary competitive advantage are: A. Valuable, rare, and costly to imitate. B. A core competency. C. Organized to capture value. D. Integral to the value chain.

Valuable, rare, and costly to imitate

One of the strategic goals of management is to develop a resource base that is primarily: A. Flexible, responsive, and efficient B. Variable, rare, costly to initiate, and orderly C. Valuable, rare, costly to imitate, and organized to capture value D. Unique and difficult to imitate

Valuable, rare, costly to imitate, and organized to capture value