Chapter 3
63) The culture of a firm also may be a resource that provides competitive advantage. Which of these companies might be a good example of this intangible resource? A) Google B) Kmart C) Wells Fargo D) Walmart
A) Google
98) The customer perspective of the balanced scorecard answers which of the following questions? A) How do customers see us? B) What must we excel at? C) How do we look to shareholders? D) Can we continue to improve and create value?
A) How do customers see us?
84) ________ ratios reflect whether a firm is efficiently using its resources, A) Turnover B) Leverage C) Liquidity. D) Profitability
A) Turnover
21) According to Michael Porter in his book, Competitive Advantage, a key concept used in analyzing the competitive position of a firm is creating value for A) buyers that exceeds the costs of production (i.e., margin). B) suppliers that exceeds the costs of production (i.e., margin). C) government that exceeds the costs of production (i.e., margin). D) employees that exceeds the costs of production (i.e., margin).
A) buyers that exceeds the costs of production (i.e., margin).
76) Amazon Prime is credited for helping to increase the Amazon stock price by nearly 300 percent from 2008 to 2010. This competitive advantage is known as A) causal ambiguity. B) product rarity. C) service validity. D) substitutability.
A) causal ambiguity.
32) According to value-chain analysis, which of the following would be considered part of the general administration in a firm? A) information systems B) technology development C) human resource management D) procurement
A) information systems
37) A marketing department that promises delivery faster than the ability of the production department to produce is an example of a lack of understanding of the A) interrelationships among value-creating activities within a firm. B) organizational culture and leadership. C) need to maintain the reputation of the company. D) synergy of the business units.
A) interrelationships among value-creating activities within a firm.
83) Which of these categories of financial ratios is used to measure the ability of a firm to meet its short-term financial obligations? A) liquidity ratios B) profitability ratios C) activity ratios D) leverage ratios
A) liquidity ratios
69) Ashley Furniture controls all steps of its distribution systems, developing specific competencies that are difficult to match. They are using ________ to build sustainable advantage. A) path dependency B) social complexity C) physical uniqueness D) tangible resources
A) path dependency
61) Which of the following is not a tangible resource? A) technical and scientific skills B) trade secrets, patents, copyrights C) state-of-the art machinery D) company borrowing capacity
A) technical and scientific skills
46) Accounting is a sort of transformation process that converts daily records of individual transactions into monthly financial reports. The ________ are the inputs, accounting is the operation that adds value, and ________ are the outputs. A) transaction records; financial statements B) financial statements; transaction records C) employee records; transaction records D) health records; transaction statements
A) transaction records; financial statements
10) Some firms find great value by not incorporating their customers into the value creation process.
Answer: FALSE
11) The resource-based view of the firm focuses solely on the internal analysis of the operations of the firm.
Answer: FALSE
13) Intangible resources of a firm refer to its capacity to deploy tangible resources over time and leverage those resources effectively.
Answer: FALSE
14) Financial resources such as cash and cash equivalents are intangible resources.
Answer: FALSE
17) Path dependency has no impact on the inimitability of resources.
Answer: FALSE
19) Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a complete guide to study companies.
Answer: FALSE
2) In value-chain analysis, value is measured by the market value of the total stock outstanding of the company.
Answer: FALSE
5) Managers should focus their attention on interrelationships among value-chain activities within the firm, not on relationships among activities within the firm and other organizations (such as suppliers and customers).
Answer: FALSE
6) Some leading-edge companies are applying the prosumer concept. Here, firms team up with their suppliers and alliance partners to satisfy their customer needs.
Answer: FALSE
7) Value-chain analysis can only be applied to manufacturing operations.
Answer: FALSE
1) Value-chain analysis assumes that the basic economic purpose of a firm is to create value, and it is a useful framework for analyzing the strengths and weaknesses of the firm.
Answer: TRUE
12) Tangible resources are assets that are relatively easy to identify such as financial and physical assets.
Answer: TRUE
15) Human resources and reputation resources are examples of intangible resources.
Answer: TRUE
16) Products and services that are difficult to imitate help firms sustain their profitability.
Answer: TRUE
18) Capabilities that exhibit causal ambiguity are difficult to imitate.
Answer: TRUE
20) A primary benefit of the balanced scorecard is that it complements financial indicators with operational measures of customer satisfaction, internal processes, and the innovation and improvement activities of the organization.
Answer: TRUE
3) Primary activities contribute to the physical creation of a product or service, its sale and transfer to the buyer, and its service after the sale.
Answer: TRUE
4) The value-chain concept assumes that both primary and support activities can produce value for customers.
Answer: TRUE
8) Information technology (IT) can also play a key role in enhancing the value that a company can provide its customers and, in turn, increasing its own revenues and profits. IT is an activity within the support activities of general administration.
Answer: TRUE
9) Campbell Soup uses electronic networks to improve the efficiency of outbound logistics. This is an example of relationships among activities within the firm and with other stakeholders that are part of the company expanded value chain.
Answer: TRUE
54) ________ are typically embedded in unique routines and practices that have evolved and accumulated over time such as effective work teams. A) Tangible resources B) Intangible resources C) Reputational resources D) Organizational capabilities
B) Intangible resources
66) Groupon offers online coupons for bargains at local shops and restaurants. Which of the following is a reason that rivals are limiting its growth? A) Its core capability is not easily imitated. B) Its core capability is easily imitated. C) Not many firms possess the same capability. D) There are few equivalent capabilities.
B) Its core capability is easily imitated.
99) The internal business perspective of the balanced scorecard answers which of the following questions? A) How do customers see us? B) What must we excel at? C) How do we look to shareholders? D) Can we continue to improve and create value?
B) What must we excel at?
73) A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain A) no competitive advantage. B) a temporary competitive advantage. C) competitive parity. D) a sustainable competitive advantage.
B) a temporary competitive advantage.
23) In assessing its primary activities, an airline would examine A) employee training programs. B) baggage handling. C) criteria for lease versus purchase decisions. D) the effectiveness of its lobbying activities.
B) baggage handling.
55) Harley-Davidson markets motorcycles, clothes, toys, and restaurants. It uses its strong ________, which is ________. A) financial position; an intangible resource B) brand image; an intangible resource C) brand image; a tangible resource D) technological resources; an intangible resource
B) brand image; an intangible resource
72) All of the following are examples of socially complex organizational phenomena except A) the culture of a firm. B) complex physical technology. C) interpersonal relations among managers of a firm. D) leadership and trust.
B) complex physical technology.
52) In the resource-based view of the firm, examples of tangible resources include A) financial resources, human resources, and firm competencies. B) financial resources, physical resources, and technological resources. C) financial resources, physical resources, and the capacity to combine intangible resources. D) outstanding customer service, innovativeness of products, and reputation.
B) financial resources, physical resources, and technological resources.
103) Managers must commit to a ________ use of the balanced scorecard if they expect sustained performance. A) short-term B) long-term C) interim D) rapid
B) long-term
90) A firm that takes on too much long-term debt to finance operations will see an immediate impact on its indicators of ________ financial leverage. A) short-term B) long-term C) relative D) comparable
B) long-term
53) Many firms are finding that high-tech, computerized training has dual benefits. It develops employees who are more effective and reduces costs at the same time. Employees at FedEx take computer-based job competency tests every 6 to 12 months. This is an example of a(n) ________ ________ tangible resource. A) financial B) organizational C) physical D) technological
B) organizational
59) The ability to hire, motivate, and retain human capital is an example of ________ capabilities in the resource-based view of the firm. A) tangible B) organizational C) management D) design
B) organizational
65) A competitive advantage based on inimitability can be sustained for at least some time, if it has the following characteristics: A) psychographic uniqueness, path dependency, causal ambiguity, and substitutability. B) physical uniqueness, path dependency, causal ambiguity, and social complexity. C) rarity, path dependency, causal ambiguity, and social substitutability. D) geographic uniqueness, cause dependency, social ambiguity, and path complexity.
B) physical uniqueness, path dependency, causal ambiguity, and social complexity.
24) Advertising is a ________ activity. Supply of replacement parts is a ________ activity. A) support; primary B) primary; primary C) primary; support D) support; secondary
B) primary; primary
102) If managers do not recognize from the beginning that the balanced scorecard is not a ________ and fail to commit to it long term, the organization will be disappointed. A) panacea B) quick fix C) marketing ploy D) cheap solution
B) quick fix
38) Campbell Soup uses electronic networks to improve the efficiency of outbound logistics. These networks also helped Campbell Soup manage the ordering of raw materials more efficiently, improve its production scheduling, and help its customers better manage their inbound logistics operations. This is an example of ________ A) interrelationships among activities within the firm B) relationships among activities within the firm and with other stakeholders that are part of the expanded value chain of the firm. C) relationships among activities outside of the firm D) interrelationships among activities outside of the firm.
B) relationships among activities within the firm and with other stakeholders that are part of the expanded value chain of the firm.
58) Which of the following is not an example of organizational capabilities? A) outstanding customer service B) reputation with customers for quality and reliability C) innovativeness of products and services D) ability to hire, motivate, and retain human capital
B) reputation with customers for quality and reliability
47) A travel agent adds value by creating an itinerary that includes transportation, accommodations, and activities that are customized to your budget and travel dates. In terms of the value-chain analysis, this is an example of a ________ organization. A) retail B) service C) manufacturing D) travel
B) service
71) A wide variety of firm resources that are costly to imitate due to the social engineering that is required being beyond the capability of competitors include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon A) path dependency. B) social complexity. C) physical uniqueness. D) tangible resources.
B) social complexity.
33) Coca-Cola has developed data analytic technologies to produce orange juice that meets the taste demands of a global customer base. This is an example of using which value chain support activity? A) marketing and sales B) technology development C) human resource management D) procurement
B) technology development
96) The financial perspective of the balanced scorecard answers which of the following questions? A) How do customers see us? B) What must we excel at? C) How do we look to shareholders? D) Can we continue to improve and create value?
C) How do we look to shareholders?
57) ________ are the competencies or skills that a firm employs to transform inputs into outputs. A) Tangible resources B) Reputational resources C) Organizational capabilities D) Intangible resources
C) Organizational capabilities
27) ________ is/are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling. A) Services B) Inbound logistics C) Outbound logistics D) Operations
C) Outbound logistics
70) The root of the 3M innovation process is complex, hard to understand, and difficult to imitate.This is a competitive advantage based on A) path dependency. B) social complexity. C) casual ambiguity. D) availability.
C) casual ambiguity.
39) In terms of value-chain analysis, a telephone operating company would find that negotiating and maintaining ongoing relations with regulatory bodies are important activities for achieving A) inbound logistics. B) customer awareness. C) competitive advantage. D) better employees.
C) competitive advantage.
43) Regarding the value-chain concept, the most important interrelationship is between the organization and its A) board of directors. B) employees. C) customers. D) management.
C) customers.
64) For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes? A) rare B) valuable C) easy for competitors to substitute D) difficult for competitors to imitate
C) easy for competitors to substitute
45) In using crowdsourcing as a means to integrate the customer into the value chain, there are some perils to consider. Which of the following is not related to crowdsourcing perils? A) giving customers the opportunity to tarnish the company brand B) asking for consumer input when demand is highly uncertain C) eroding a low-cost competitive advantage of the firm D) repeatedly getting feedback from the same customer
C) eroding a low-cost competitive advantage of the firm
92) The balanced scorecard provides top managers with a ________ view of the business. A) detailed and complex B) simple and routine C) fast but comprehensive D) long-term financial
C) fast but comprehensive
93) The balanced scorecard, developed by Kaplan and Norton, helps to integrate A) financial analysis and the reputation of a firm. B) intangible resources and operational measures. C) financial analysis and stakeholder perspectives. D) short-term perspectives and strategic positioning.
C) financial analysis and stakeholder perspectives.
101) From the innovation and learning perspective, survival is dependent upon managers making ________ changes to existing products and services as well as introduce entirely new products with expanded capabilities. A) few B) no C) frequent D) rare
C) frequent
91) Apple Inc. reported revenues of 234 billion USD and net income of 53 billion USD in 2015. These figures represent a stunning annual growth in revenue and net income of 28 percent and 33 percent, respectively, for 2014. This information indicates the importance of using ________ to evaluate company financial performance. A) financial ratios B) industry norms C) historical comparisons D) competitor analysis
C) historical comparisons
34) Facebook, Intuit, AB InBev, and others empower their recruiters to make offers on the spot when they interview college students, without knowing what specific position they will fill.These firms search for candidates with attributes such as being a self-starter and a problem-solver, and make quick offers to preempt the market. This is an example of which value chain support activity? A) operations B) technology development C) human resource management D) procurement
C) human resource management
80) Historical comparisons provide information to managers about changes in the competitive position of a firm. Historical comparisons often are misleading A) if the overall strategy of the firm is the same. B) if the firm shows constant growth. C) in periods of recession or economic boom. D) if the firm's stock is publicly traded.
C) in periods of recession or economic boom.
60) To be considered strategic resources that contribute competitive advantage, they must have several characteristics. Which of the following is not one of these? A) rare B) valuable C) inexpensive to imitate D) costly to substitute
C) inexpensive to imitate
41) German truck and trailer manufacturer, Schmitz Cargobull, mainly serves customers that are operators of truck or trailer fleets. What sets the company apart is its expertise in telematics (the integrated application of telecommunications data) to monitor the current state of any Schmitz Cargobull-produced trailer. This is an example of using ________ to enhance customer value and increase ________ position. A) sales; competitive B) operations; marketing C) information technology; competitive D) human resources; marketing
C) information technology; competitive
42) An executive states that HR must be a true partner of the business, with a deep and up-to-date understanding of business realities and objectives, and must ensure HR initiatives fully support them at all points of the value chain. This is an example of A) relationships among activities within the firm and with other stakeholders. B) relationships between firms. C) interrelationships among activities within the firm. D) interrelationships among firms.
C) interrelationships among activities within the firm.
78) Which of the following groups generally is charged with creating value through the process of organizing, coordinating, and leveraging employees as well as other forms of capital such as plant, equipment, and financial capital? A) unions B) boards of directors C) managers D) stakeholders
C) managers
95) An important implication of the balanced scorecard approach is that A) managers need to recognize that satisfaction of stockholder demands is their primary job. B) the emphasis on customer satisfaction and financial goals are only a means to that end. C) managers should not look at their job as primarily balancing stakeholder demands. D) gains in financial performance must come at a cost of employee satisfaction.
C) managers should not look at their job as primarily balancing stakeholder demands.
56) Apple combines and packages proven technology in new and innovative ways. This is an example of its use of A) tangible resources. B) intangible resources. C) organizational capabilities. D) strong primary activities.
C) organizational capabilities.
40) General administration is sometimes viewed as only ________, but it can be a powerful source of competitive advantage. A) income B) value C) overhead D) unimportant
C) overhead
49) For a firm such as Nordstrom that has no manufacturing operations, value is added by developing expertise in the procurement of finished goods and by displaying them in its stores in a way that enhances sales. In the value chain, procurement activities become the primary activity. This begins with ________ and ends with ________. A) purchasing goods; operating stores B) managing and distributing inventory; marketing and selling C) partnering with vendors; marketing and selling D) partnering with vendors; operating stores
C) partnering with vendors; marketing and selling
67) A crash R&D program by one firm cannot replicate a successful technology developed by another firm, when research findings cumulate. This is an example of A) social complexity. B) physical uniqueness. C) path dependency. D) causal ambiguity.
C) path dependency.
68) XYZ printing is building a dominant position as the low-cost leader in the 3D printer market. Three resources the firm can draw on to build a sustainable advantage are(1) an efficient supply chains and manufacturing system, (2) internal control systems to minimize cost, and (3) competencies in the R&D of electronic products. This set of competencies will make it harder for later movers to imitate. This is an example of using ________ conditions to build protection in the 3D printing market. A) social complex B) physical uniqueness C) path dependent D) causal ambiguity
C) path dependent
44) In contrast to ________ interactions, which allow the firm to gain insights on the needs of a particular customer, ________ offers the opportunity to leverage the wisdom of a larger crowd. A) consumer; sourcing B) prosumer; outsourcing C) prosumer; crowdsourcing D) marketing; crowdsourcing
C) prosumer; crowdsourcing
87) Comparing your firm with all other firms in your industry assesses ________ performance. A) excessive B) consistent C) relative D) non-comparable
C) relative
48) For an engineering services firm, ________ provides inputs, the transformation process is the engineering itself, and innovative designs and practical solutions are the outputs. A) experimentation B) customer support C) research and development D) human resource management
C) research and development
88) Making comparisons between a firm and its most direct rivals is useful because firms within the same strategic industry group have ________ strategies. A) different B) the same C) similar D) relative
C) similar
51) The three key types of resources that are central to the resource-based view of the firm are A) tangible resources, intangible resources, and organizational structure. B) culture, tangible resources, intangible resources. C) tangible resources, intangible resources, and organizational capabilities. D) tangible resources, intangible resources, and top management.
C) tangible resources, intangible resources, and organizational capabilities.
29) Which of the following is a support activity? A) inbound logistics B) customer service C) technology development D) operations
C) technology development
74) Employees will be able to obtain a proportionately high level of profits they generate (relative to the firm) if A) suppliers are loyal to the firm. B) their expertise is firm-specific. C) the cost to the firm of replacing them is high. D) the firm's resources are path dependent.
C) the cost to the firm of replacing them is high.
50) The resource-based view (RBV) of the firm combines the following two perspectives: A) the primary and support activities of the firm. B) the interrelationships among the primary activities of the firm and corporate management. C) the internal analysis of the firm and the external analysis of the industry and competitive environment. D) the industry and the competitive environment.
C) the internal analysis of the firm and the external analysis of the industry and competitive environment.
82) Which of the following would be most difficult to assess? A) the liquidity position of a firm B) market share growth C) the legitimacy and reputation of a firm D) the efficiency with which a firm utilizes its assets
C) the legitimacy and reputation of a firm
100) The internal measures should reflect business processes that have ________ impact on customer satisfaction. These include factors that affect cycle time, quality, employee skills, and productivity. A) the least B) variable C) the most D) potential
C) the most
62) Intangible resources are typically embedded in ________ routines and practices that have evolved and accumulated over time. A) common B) standard C) unique D) obvious
C) unique
97) The innovation and learning perspective of the balanced scorecard answers which of the following questions? A) How do customers see us? B) What must we excel at? C) How do we look to shareholders? D) Can we continue to improve and create value?
D) Can we continue to improve and create value?
25) Which of the following examples demonstrates how successful organizations manage their primary activities? A) Motorola has revised its compensation system to reward employees who learn a variety of skills. B) Wal-Mart implemented a sophisticated information system that resulted in reduced inventory carrying costs and shortened customer response times. C) National Steel improved its efficiency by reducing the number of job classifications. D) JIT inventory systems are vital to Toyota committing to fulfill new car orders within five days.
D) JIT inventory systems are vital to Toyota committing to fulfill new car orders within five days.
75) Which of the following is not a factor that helps to explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate? A) Employees have high bargaining power. B) The cost of employee replacement is high. C) The cost of exit is high for an employee. D) Managers have low bargaining power.
D) Managers have low bargaining power.
31) Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It supports A) only individual primary activities. B) mostly support activities but does have some impact on primary activities. C) only individual support activities. D) both individual primary and support activities and the entire value chain.
D) both individual primary and support activities and the entire value chain.
89) In making the decision to enter the pharmaceutical industry, a company would not need to consider which of the following? A) historical comparisons B) comparisons with industry norms C) comparisons with key competitors D) comparisons with non-competitors
D) comparisons with non-competitors
77) Four factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate. Which is not one of these factors? A) employee bargaining power B) employee replacement cost C) employee exit costs D) competitor bargaining power
D) competitor bargaining power
81) The best measure of company ability to meet imminent financial obligations is known as the A) debt ratio. B) profit margin. C) total asset turnover. D) current ratio.
D) current ratio.
94) The balanced scorecard enables managers to consider their business from all the following perspectives except A) customer perspective. B) internal perspective. C) innovation and learning perspective. D) ethical perspective.
D) ethical perspective.
35) In a telephone operating company, negotiating and maintaining ongoing relations with regulatory bodies can be among the most important activities for competitive advantage. What type of value-chain support activity is this? A) service B) technology development C) human resource management D) general administration
D) general administration
36) The Germany truck and trailer manufacturer, Schmitz Cargobull, mainly serves customers who are operators of truck or trailer fleets. What sets the company apart is its expertise in telematics (the integrated application of telecommunications data) to monitor the current state of any Schmitz Cargobull-produced trailer. What type of a value-chain support activity is this? A) service B) technology development C) human resource management D) general administration
D) general administration
79) Raymond Ozzie, the software designer who was critical in the development of Lotus Notes, was able to dictate the terms under which IBM acquired Lotus. This illustrates that he had ________ bargaining power based on the ________ cost required by the firm to replace him. A) low; low B) low; high C) high; low D) high; high
D) high; high
30) Which of the following lists consists of support activities? A) human resource management, technology development, customer service, and procurement B) human resource management, customer service, marketing and sales, and operations C) customer service, information systems, technology development, and procurement D) human resource management, technology development, procurement, and general administration
D) human resource management, technology development, procurement, and general administration
86) Financial ratio analysis measures the performance of the firm based on all but which of the following? A) balance sheet B) market valuation C) income statement D) industry comparison
D) industry comparison
26) Mercedes-Benz aggressively pushed for product placement in Hollywood movies. This is an example of which value chain primary or support activity? A) support activity: general administration B) primary activity: service C) support activity: procurement D) primary activity: marketing and sales
D) primary activity: marketing and sales
85) Which of the following is a profitability ratio? A) current ratio B) total debt ratio C) total asset turnover D) return on equity
D) return on equity
28) When Nordstrom, the Seattle-based department store chain, aids customers with after-sales support, it exemplifies which primary value-chain activity? A) operations B) outbound logistics C) inbound logistics D) service
D) service
22) Inbound logistics include which of the following? A) machining and packaging B) repair and parts supply C) promotion and packaging D) warehousing and inventory control
D) warehousing and inventory control
