ECON 136 Chapter 2

Which of the following should a company consider doing when it has competitive strengths in areas where its rivals are weak?

Taking offensive moves

What technique is most useful for helping a company analyze how its competitors deliver products or services that their customers want at an attractive price?

Value chain analysis

Most of a firm's organizational capabilities can be characterized as being either of which two of the following?

Being based on knowledge Existing in a firm's processes and systems

True or false: A value chain system is defined as a company's own value chain combined with those of its suppliers but not those of its wholesale distributors, who deal with finished products.

False

What can be learned through value chain analysis? (Choose every correct answer.)

How each activity of a rival delivers value to customers The differences in how competitors perform specific activities The competitive differences among rivals

Which of the following issues might be included in a manager's priority list of problems? (Choose every correct answer.)

How to deal when rivals reduce prices How to respond to foreign competitors Whether to acquire a rival company

To be considered legitimate, a best practice must be unusually effective in which of the following ways? (Choose every correct answer.)

In improving performance In enhancing safety In lowering costs

Which of the following are key components of a company's competitive strategy? (Choose every correct answer.)

Information technology Human resources Marketing

Which of the following are criteria of VRIN tests for evaluating the competitive advantage of a resource or capability? (Check all that apply.)

Inimitability Rarity

Which company resources and capabilities reflect a high level of social complexity? (Choose every correct answer.)

Internal company culture Trust-based relations with customers Interpersonal relationships between managers

Which of the following are characteristics of a company's core competence? (Choose every correct answer.)

It contributes to the company's profitability. It is competitively valuable. It is central to a company's strategy.

What can managers do to improve a company's cost competitiveness? (Choose every correct answer.)

Outsource activities Implement best practices throughout the company Use new technologies to redesign products

Which activities make up the primary value chain in the pulp and paper industry? (Choose every correct answer.)

Papermaking Timber farming Logging

The value of performing a detailed competitive strength assessment is that it allows a company to do which of the following? (Choose every correct answer.)

Pinpoint competitors' relative weaknesses Address vulnerabilities Plan offensive and defensive strategies

Detailed examination of a company's value chain, including its customer value proposition and business model, allows for evaluation of which of the following? (Choose every correct answer.)

Profit margin Cost structure and pricing Capabilities that enhance differentiation

A competitive strength assessment would most likely use information obtained through which of the following? (Choose every correct answer.)

Resource and capability analysis Benchmarking SWOT analysis

What analytic tools are helpful in evaluating the competitiveness of a company's costs and customer value proposition? (Choose every correct answer.)

Benchmarking Value chain analysis

What techniques can a company use to identify its cost or value disadvantages when compared to key competitors? (Choose every correct answer.)

Benchmarking Value chain analysis

Which of the following are external factors that pose threats to a company's profitability and competitive well-being? (Choose every correct answer.)

Burdensome new regulations Unfavorable demographic shifts The emergence of lower cost or improved technologies

How can managers improve a firm's customer value proposition and enhance differentiation? (Choose every correct answer.)

By adopting best practices By reallocating resources By introducing new technologies

How can a company improve cost competitiveness on the distribution side of its value chain? (Choose every correct answer.)

By changing to a more cost-effective distribution strategy By collaborating with distributors to find win-win cost reduction strategies By encouraging forward channel allies to reduce their costs and markups

How can a company use its supplier relationships to bolster its customer value proposition? (Choose every correct answer.)

By integrating suppliers into the design process By offering suppliers quality-based incentives By choosing suppliers that have higher standards

How can a company enhance differentiation at the forward end of the value chain system? (Choose every correct answer.)

By offering incentives to downstream partners to enhance customer value By participating in cooperative advertising By setting standards and train channel partners to implement them

How can a company reduce cost disadvantages associated with supplier-related value chain activities? (Choose every correct answer.)

By switching to less expensive substitute inputs By negotiating lower prices from suppliers By identifying ways the company and supplier can both reduce costs

Which of the following are companies that have successfully managed their value chains to produce cost-based market advantages? (Choose every correct answer.)

Carrefour Nucor Steel Ryanair

What would likely be part of the value chain for a service-based business, such as a packaging-design firm? (Choose every correct answer.)

Delivering artwork to clients Hiring creative talent Brainstorming new ideas

What business practice is the most important factor that allows a company to seize the moment when a golden marketing opportunity presents itself?

Diligent market reconnaissance

True or false: Access to widely available resources and capabilities is one source of a firm's competitive advantage.

False

Which of the following are benefits of employing a third party to provide benchmarking data? (Choose every correct answer.)

It helps avoid ethical issues. It maintains anonymity.

A company can examine its value chain to analyze which of the following? (Choose every correct answer.)

Its cost structure Its business model Its customer value proposition

In addition to human resources, which of the following are a company's intangible assets?

Its reputation Its brands Its image

As a type of company resource, relationships include which of the following? (Choose every correct answer.)

Joint ventures Dealer networks Partnerships

Which of the following types of market opportunities are the most relevant for a company to pursue? (Choose every correct answer.)

Market opportunities that offer the best chances for profitability Market opportunities that offer the best chances for growth Market opportunities that match up with the company's competitive assets

Which of the following are profitability ratios that help determine a company's financial performance? (Choose every correct answer.)

Net return on total assets Total return on assets Net profit margin

Which statements about a company's capabilities are true? (Choose every correct answer.)

One method of identifying capabilities starts with a list of the company's resources. One method of identifying capabilities starts with a survey of the functions performed within the company.

A company's competitive assets are made up of which of the following? (Choose every correct answer.)

Resources Capabilities

Aggressive price-cutting to win customers away from a rival can be risky for which the following reasons? (Choose every correct answer.)

Rivals with stronger relative cost positions might be able to better survive a price war. Other competitors might interpret such a move as an attack.

The simplest tool for evaluating a company's overall market situation is known as ______ analysis.

SWOT

To appraise a company's strengths, managers determine how well the firm performs key aspects of the business, including which of the following? (Choose every correct answer.)

Sales and marketing Customer service Supply chain management

Which of the following are potential market opportunities that managers try to identify when tailoring strategy to a company's situation? (Choose every correct answer.)

Serving additional customer groups or market segments Expansion into new geographic markets Acquiring rival companies with attractive capabilities

What qualities help create differentiation based on quality, which improves a company's competitive advantage? (Choose every correct answer.)

Status Image Design Innovation

A company's tangible resources, typically defined as resources that can be easily quantified, include which of the following? (Choose every correct answer.)

Technological resources Organizational resources Financial resources

Which of the following are factors that help indicate the success of a company's business strategy? (Choose every correct answer.)

The company's stock price Sales and earnings growth The rate of customer retention

Which of the following are true of a company's core competencies? (Choose every correct answer.)

They can be leveraged to create new markets. They can be leveraged to create new product demand.

How can a company use the information it has gleaned from benchmarking and value chain analysis? (Choose every correct answer.)

To improve profitability To eliminate its own cost or value disadvantages To enhance competitiveness

True or false: The potential for competitive advantage exists when a company has resources and capabilities that are both valuable and rare.

True

When a company offers unusually low prices for high-quality products, its business model is based on having a competitive ______.

customer value proposition

Debt-to-equity, long-term debt-to-capital, and total debt-to-assets are all examples of ______ ratios.

leverage

For managers to guide a company's strategy successfully, they must first identify its ______.

market opportunities

The value chain of a company's suppliers is significant for which of the following reasons? (Choose every correct answer.)

A supplier's value chain costs correlate with a company's own competitiveness. Suppliers' activities and costs directly affect a company's own value chain activities. The quality of goods supplied affects the purchasing company's differentiation capabilities.

Which statements about gathering company benchmarking information are true? (Choose every correct answer.)

Comparing the costs of two companies can be misleading if the companies use different cost accounting principles. Some benchmarking information can be obtained from published reports by trade groups and industry research firms. Visiting the facilities of noncompeting companies is one way of gathering benchmarking information.

Which of the following are things that management must do to maintain the value of the company's resources and capabilities? (Choose every correct answer.)

Continually modify existing assets Watch for the chance to develop new capabilities

The clothing retailer Patagonia remains competitive with a customer value proposition that focuses on which of the following? (Choose every correct answer.)

Corporate environmental responsibility High quality

Changes in what factors contribute to the erosion of a company's competitive advantage over time? (Choose every correct answer.)

Customer preferences Distribution channels Technology

The value chains of a company's distribution-channel partners are significant because they directly affect which of the following? (Choose every correct answer.)

Customer satisfaction Retail prices Sales volumes

Information gleaned from a SWOT analysis can be used to create strategic actions that include which of the following? (Choose every correct answer.)

Defending against external threats Correcting significant weaknesses Matching the company's strategy to its internal strengths

Which of the following are considered internal weaknesses of a company? (Choose every correct answer.)

Deficiencies in intangible assets Unproven skills Inferior intellectual capital

To solidify a company's future financial and competitive success, managers can examine the results of broad industry analysis and internal company evaluations. What will this will help them understand? (Choose every correct answer.)

The company's strategic and competitive challenges What problems require their foremost attention Which of the company's competitive shortcomings need addressing

What are characteristics of resources that are both valuable and rare? (Choose every correct answer.)

They are competitively superior. They are true strategic assets.

Which of the following accurately reflect the relationship between a company's activities and its resources and capabilities? (Choose every correct answer.)

Value-creating activities contribute to the formation and development of capabilities. Prioritizing a competitive capability transforms it into a core competence. Continuous investment of resources in value chain activities leads to the creation of a competence.

When are resources and capabilities difficult for competitors to replicate? (Choose every correct answer.)

When they take time to build up When they require large-scale operations When they are unique

Which company pioneered the use of benchmarking not only of its rivals but also of any company regarded as "world class"?

Xerox

There are times, such as during the financial crisis of 2008-2009, when adverse market conditions can create ______ that plunges a company into crisis and put its future in jeopardy.

a sudden-death threat

When a company is able to maintain its competitive edge despite competitors' efforts to overcome it, the company is said to have achieved ______.

a sustainable competitive advantage

Of the four tests of a resource's competitive power, the most difficult is ______.

assessing the availability of substitutes

The process of comparing the performance of numerous value chain activities across multiple types of companies to assess the costs and effectiveness of these activities is called

benchmarking

The ability of a company to perform competently in carrying out a particular internal activity, such as product innovation or development, is called a ______.

capability

When a company's proficiency rises from that of mere ability to perform an activity to the point of being able to perform it consistently well and at an acceptable cost, it is said to have a(n) ___ or a true capability. (Enter one word in the blank.)

competence

To evaluate a firm's ___ power, it is necessary to identify the firm's capabilities and resources and then determine their quality.

competitive

Capabilities that utilize various resources and result from collaboration across multiple departments, such as R&D, marketing, sales, and manufacturing, are known as ______ capabilities.

cross-functional

If a company's competence level in some activity domain is superior to that of its rivals, it is known as a...

distinct competence

When a company continually recalibrates and upgrades its equipment and other resources, the firm has a competitive advantage called ______ capability.

dynamic

Although it is an important way for a company to evaluate its business practices relative to other firms, the greatest barrier to benchmarking is ______ the necessary information.

gaining access to

A company's sales revenues minus the cost of goods sold divided by the sales revenues is called the company's ______ margin.

gross profit

A company is better able to fend off the competition when it provides ______ than its rivals.

higher customer value

When Company A's rivals have much higher competitive strength, Company A is said to have a ___ ____ ___

net competitive disadvantage

The two main categories of activities in a company's value chain are ___ activities and support activities.

primary

A competitive asset owned or controlled by a company is referred to as a(n) ______.

resource

Closely integrated competitive assets that are tied to one or more cross-functional capabilities are called ___ bundles

resource

A two-step process that provides managers with a powerful tool for sizing up a company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace is known as...

resource and capability analysis

In a SWOT analysis, something a firm does well or a quality it has that increases its competitiveness in the marketplace is a ______.

strength

Patents and copyrights are types of resources that are part of a company's ______.

technological resources

A company's strategy should always be based on ______.

the company's internal strengths

The operating income of a company divided by its interest expenses is called the ______ ratio.

times-interest-earned

An activity that a company performs poorly in comparison to its competitors is an example of a competitive deficiency, or . (Enter one word in the blank.)

weakness