Management 464 CHAPTER 4
19. In the context of the resource-based model of competitive advantage, if a successful firm exhibits resource immobility it means that the: A. rival firms have better accessibility to quality resources. B. firm will have a sustained competitive advantage because of its unique resources. C. competitors can easily replicate or copy the firm's resource bundles and capabilities. D. resources of the firm cannot be effectively deployed within its own organization.
B
2. _____ are best described as unique strengths, embedded deep within a firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost. A. Resource leverages B. Core competencies C. Capital gains D. Equity reserves
B
25. The competitive advantage that one firm has will be short-lived in an industry where: A. resource immobility is high. B. perfect competition exists. C. resource heterogeneity is high. D. capabilities of a firm are not easily replicable.
B
27. If a resource is common: A. competitive advantage will persist with one firm for a long period of time. B. it will result in perfect competition. C. it will result in greater resource immobility. D. competitive parity will cease to exist.
B
30. The "Gold Crisps" potato wafers manufactured by True Foods Inc. have been the highest selling wafers in the market. Though the market for wafers is flooded with competitors, True Foods Inc. has been able to maintain its market position for a long time. This is mainly attributed to the unique taste of the wafers that comes from the unique natural flavoring used by the company. This competency of True Foods Inc. will be considered as a(n) _____ resource in the VRIO framework. A. inexhaustible B. rare C. intangible D. virtual
B
32. TrueCandy Inc., a confectionery manufacturing company, lost its competitive advantage when its strategy of placing kiosks at prominent locations throughout the state was followed by most of its competitors. In this scenario, TrueCandy Inc.'s loss of competitive advantage can be primarily attributed to _____. A. resource immobility B. knowledge diffusion C. divergent production D. technology convergence
B
35. With regard to the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were: A. invaluable and common. B. easy to imitate. C. extremely expensive. D. non-substitutable.
B
60. True Autos Inc. has been trying to directly copy the strategies of Red Autos Inc. Even though it is evident that Red Auto's Inc.'s success comes from its just-in-time inventory system, True Auto's Inc. has not been able to effectively apply the system in the same way. This is because the organizational structures, employees, cultures, and the overall business systems of both the companies vary from each other. Which of the following barriers to imitation does this scenario best illustrate? A. Path dependence B. Social complexity C. Resource mobility D. Resource homogeneity
B
70. Which of the following resources is a firm's resource stock? A. Cash at bank B. Reputation for quality C. Land and building D. Plant and machinery
B
75. Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn Autos Inc., a rival company. What does this imply? A. The resource stock of Bass Automobiles Inc. increased. B. Bass Automobiles Inc. faced resource leakage. C. The resource flow into Unicorn Autos Inc. reduced. D. Bass Automobiles Inc.'s tangible assets decreased.
B
76. The value chain describes the: A. competitive challenges a firm faces in a highly dynamic external environment. B. internal activities a firm engages in when transforming inputs into outputs. C. current consequences a firm experiences due to its decisions in the past. D. strategic advantages a firm experiences when its resources lack causal ambiguity.
B
81. _____ allows managers to synthesize insights obtained from an internal analysis of a company's strengths and weaknesses with those from an analysis of external opportunities and threats. A. The VRIO framework B. The SWOT analysis C. The break-even analysis D. Ansoff's matrix
B
84. Which of the following management tools will help determine whether a firm's resources, capabilities, and competencies are strengths or weaknesses? A. Porter's five forces analysis B. PESTEL analysis C. VRIO framework D. Ansoff's matrix
C
87. In the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity? A. An increase in its financial resources B. An increase in its brand equity C. An increase in its customers' disposable income D. An increase in its employee productivity
C
88. Which of the following is a drawback of the SWOT analysis? A. The SWOT analysis takes into account only the internal environment of a firm, ignoring the equally important external environment. B. This framework is only applicable to the manufacturing industries; it is ineffective when applied to the service firms. C. A problem with this framework is that a strength can also be a weakness, and that an opportunity can also simultaneously be a threat. D. A drawback of this framework is that it allows managers to merely evaluate a firm's current situation, and not its future prospects.
C
90. How did McDonald's leverage internal strengths in brand name and consistency to minimize the external threat of easy-to-prepare grocery items? A. By developing an offensive strategic option to launch new restaurants in China and Mexico B. By launching a chain of premium restaurants that offered customers a healthy food menu C. By launching a McDonald's line of frozen foods in grocery stores D. By developing a defensive strategic option and shutting down all its drive-thru outlets
C
12. Coral Think Inc. is a new company in the publishing industry. It has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Coral Think Inc. to acquire using its capital? A. Inventory B. Tools and equipment C. Land and building D. Brand name
D
4. Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as _____. A. tangible resources B. reserves C. capital gains D. capabilities
D
89. To make the SWOT analysis an effective management tool, a strategist must first: A. distinguish a firm's resources, competencies, and capabilities from each other. B. separate a firm's primary activities from support activities. C. analyze the pros and cons of strategic options. D. scan a firm's internal and external environments.
D
26. Onyx Tech Inc.'s competency in designing and manufacturing efficient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-in-time manufacturing system, has enabled Onyx Tech Inc. to increase its profitability by lowering its production costs. Thus, Onyx's competency in designing and manufacturing microprocessors will be considered a(n) _____ resource in the VRIO framework. A. valuable B. inexhaustible C. tangible D. perishable
A
33. When the knowledge of a valuable and rare resource diffuses throughout an industry, the: A. firms in the industry will be better positioned to achieve competitive parity. B. ability to sustain a competitive advantage will be restricted to one firm. C. mobility and homogeneity of the resource will decrease. D. structure of the industry will no longer be perfectly competitive.
A
43. Pulse Mobiles Inc. is a cell phone manufacturing company. Its latest range of smartphones bears a straight resemblance to the Y-series range of smartphones from Talkie Gen Inc., in terms of its shape and look-and-feel. Which of the following strategies has Pulse Mobiles Inc. used to replicate the valuable and rare resource of Talkie Gen Inc.? A. Direct imitation B. Strategic equivalence C. Substitution D. Innovation
A
46. The share price of Groupon, a daily-deal website, fell by 90 percent just a year after its successful initial public offering. The firm was not able to sustain its competitive advantage because of the emergence of other daily-deal sites that were able to better serve the needs of local markets and specific population groups. Which of the following is the most accurate inference from this example? A. Groupon's competency was not hard to imitate. B. Groupon's competency was built more on an intangible resource than on a tangible one. C. Groupon operated in an industry where the barriers to entry were high. D. Groupon invested in resources that were invaluable and common.
A
49. Path dependence rests on the notion that: A. time cannot be compressed at will. B. strategic decisions are easily reversible. C. rare resources can be built in a short period of time. D. competitive advantage can be sustained indefinitely.
A
51. Vior Systems Inc. took many decades to build its core competencies, and these competencies were based primarily on the decisions made by the company's top management in the past. This process is called: A. path dependence. B. dependence complexity. C. causal dependence. D. path immobility.
A
55. Due to path dependence: A. strategic decisions have long-term consequences. B. the occurrence of time compression diseconomies becomes rare. C. competitors can easily imitate or create core competencies quickly. D. past decisions of a firm do not affect its current situation.
A
56. Microsoft's eventual industry dominance is largely credited to the: A. initial breaks that Bill Gates got when starting Microsoft, which were leveraged for several decades through an effective strategy. B. firm's strong financial resources and market position during the initial stages of the industry. C. firm's effective organizational structure and coordinating systems that helped the company capture value. D. ability of Microsoft to pursue an unrelated diversification strategy in different industries.
A
58. How does causal ambiguity act as an isolating mechanism for organizations? A. It makes it difficult for the competitors to understand why a company has been so successful. B. It creates a situation in which different social and business systems interact with one another. C. It makes it difficult for competitors to deploy their resources by creating ambiguity within their organizational structures. D. It makes it difficult for competitors to imitate core competencies quickly due to time compression diseconomies.
A
63. An observer may conclude that the organizational culture of Zappos, an online retailer for shoes and clothing, might be the basis for its competitive advantage. However, reverse social engineering to crack Zappos' code of success might be much more difficult for a company trying to exactly imitate its strategy. Thus, the source of Zappos competitive advantage is said to be _____. A. socially complex B. inexhaustible C. non-substitutable D. non-ambiguous
A
64. _____ describes a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources over time in its quest for competitive advantage. A. Dynamic capability B. Resource immobility C. Resource heterogeneity D. Time compressed diseconomy
A
65. A firm will fail to create a sustained competitive advantage when the: A. fit between its internal strengths and the external environment is static. B. source of its competitive advantage is causally ambiguous. C. source of its competitive advantage is socially complex. D. resource bundles exhibit heterogeneity and immobility.
A
68. Which of the following statements fails to bring out the essence of the dynamic capabilities perspective? A. A firm's competitive advantage is derived from static resource or market advantages. B. A firm must be able to change its resource base as the external environment changes in order to sustain its competitive advantage. C. A firm should modify its core competencies to effectively compete in dynamic markets. D. A firm's external environment is rarely stable, and in many industries, change is fast and ferocious.
A
69. Onyxo Inc., a consumer electronics company, is the leading manufacturer of LCD televisions. LCD technology has been its core competency and the company holds 80 percent shares in that market. However, Onyxo Inc.'s competitors have now moved on to advance technologies like LED and 3D televisions. According to the dynamic capabilities perspective, what should Onyxo Inc. do? A. Onyxo Inc. should start working on LED and 3D television technologies to adapt its core competency to suit the external environment. B. Onyxo Inc. should stick to its existing core competency, that is LCD technology, as it is the best in that segment. C. Onyxo Inc. should take proactive steps to reduce the causal ambiguity and socially complexity of its core competency. D. Onyxo Inc. should work on enhancing the mobility of its core competency.
A
73. Which of the following statements accurately describes a firm's resource flow? A. It is the firm's level of investments to maintain or build a resource. B. It is the firm's current level of intangible resources. C. It is the firm's current level of tangible resources that are common to other firms. D. It is the firm's level of expertise to efficiently deploy a valuable resource.
A
74. Which of the following is an implication of high employee turnover in a company? A. It results in a reduction in the company's intangible-resource stocks. B. It makes the source of the company's competitive advantage causally ambiguous. C. It makes the source of the company's competitive advantage socially complex. D. It results in greater immobility and heterogeneity of the company's resources.
A
79. In a generic value chain, a firm's after-sales service will be referred to as its _____. A. primary activity B. support activity C. static resource D. resource flow
A
80. To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to: A. contribute to the firm's strategic position as either low-cost leader or differentiator. B. reduce the immobility and the heterogeneity of the firm's resources. C. create a static fit between the company's internal resources and the external environment. D. reduce the causal ambiguity and the social complexity of the firm's source of success.
A
83. In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength? A. Increase in a firm's customer loyalty B. Growth in the size of the market in which a firm operates C. Rise in the income of the demographic segment to which a firm caters D. Loss of a competitor's reputation
A
1. Nike has come a long way from its humble beginnings. It has been able to outperform adidas in sales and become the undisputed leader in the athletic shoe and apparel industry. Which of the following statements accurately explains one of the main reasons for Nike's success? A. It stopped spending money on celebrity endorsements and started restricting its expenditure for sponsoring only track and field sports stars. B. It made the unorthodox move to spend basically its entire budget for a specific sport on a single star athlete. C. It spread its marketing budget more widely. D. It focused on sponsoring future athletic superstars who embodied a likely success story.
B
10. Which of the following statements accurately brings out the difference between tangible and intangible resources? A. Tangible resources contribute to a company's competitive advantage, whereas intangible resources fail to do the same. B. Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased. C. Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily. D. Tangible assets are difficult to imitate, whereas intangible assets can be easily replicated.
B
11. GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information? A. It is easier to buy intangible assets with cash than tangible assets. B. It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage. C. It takes longer time to build tangible assets than intangible assets. D. There is no resource heterogeneity between the two firms, BC Inc. and GN Corp. as they operate in the same industry.
B
13. Intangible assets add great value to a firm primarily because the firm's: A. reputation and brand equity are accumulated quickly and can be leveraged easily. B. knowledge and culture take time to develop and are generally difficult to imitate. C. tangible assets require a higher degree of capital than its intangible assets. D. capabilities are by nature typically tangible.
B
16. Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area where One Electro Inc. lacks. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated? A. Resource equality B. Resource heterogeneity C. Resource mobility D. Resource maturity
B
36. A firm's resource is most likely to be an internal strength and a core competency when the resource is: A. valuable but common. B. valuable and costly to imitate. C. easily accessible and mobile. D. easy to substitute.
B
37. If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products that provide the same customer appeal as Invoro, a market leader in consumer electronics, then: A. Finolo and Ethver will have a VRIO resource. B. Invoro will have a resource that is valuable but no longer rare. C. Invoro will have a sustainable competitive advantage in the industry. D. Invoro will have a resource that is rare but no longer valuable.
B
57. _____ describes a situation in which the cause and effect of a phenomenon are not readily apparent. A. Resource immobility B. Causal ambiguity C. Resource heterogeneity D. Social complexity
B
61. When evaluating the sustainability of a firm's competitive advantage, which of the following statements is NOT true? A. The competitive advantage will not be sustainable if there are substitutes for the firm's core competence. B. If managed effectively, existing core competencies can help sustain the competitive advantage indefinitely. C. Social complexity often leads to a competitive advantage that 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.
B
78. Talk Age Inc., a telecommunication company, had been drastically losing its market share due to tough competition in the industry. The management hired a reputed consulting firm to advice the company. The experts from the consulting firm pointed out that the company primarily lost out on its competitive advantage due to its tedious internal policies and procedures. These ineffective policies and procedures made the company operations, marketing, and after sales service inefficient. Talk Age Inc. can best solve its problem by working on its _____. A. immobile assets B. support activities C. resource flows D. resource stocks
B
20. Due to resource immobility, a critical assumption in the resource-based model of a firm, the: A. competitive advantage of a firm exists for a short period of time. B. resource bundles of a firm can be easily imitated by competitors. C. resource differences between firms last for a long time. D. competencies and capabilities of all firms in an industry are similar.
C
21. Trust Machines Inc. is a company that manufactures and markets consumer electronics. The unique microprocessors developed by the company contribute to its high resource immobility. According to the resource-based view of competitive advantage, which of the following is an implication of this situation? A. The competitive advantage of Trust Machine Inc. will soon be lost. B. The resource heterogeneity of Trust Machine Inc. is low within the industry. C. The resources of Trust Machine Inc. are difficult to replicate or imitate. D. The environment in which Trust Machine Inc. operates is closest to perfect competition.
C
24. How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure? A. In the resource-based model, resources are freely available and mobile, whereas in the perfectly competitive industry structure, resources are highly immobile. B. In perfect competition, it is extremely difficult to replicate the resource bundles of a firm, whereas in the resource-based model, it is extremely easy to imitate them. C. In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry. D. In the resource-based model, only physical assets of a firm are considered as resources, whereas in perfect competition, a firm's capabilities and competencies are also considered as resources.
C
29. If a resource is rare or unique to a particular firm, then: A. the industry in which the firm operates will experience perfect competition. B. the mobility of the resource will be high. C. the firm will be able to maintain a competitive advantage for a long period. D. it will be less costly for rivals to imitate the resource.
C
34. The "diagonal assembly system" was a production system pioneered by the automobile company Mova. During the period when diagonal assembly system was a rare resource, Mova was able to gain a temporary competitive advantage. Once competitors became aware of this unique competency and started applying it as an industry standard, Mova was unable to sustain its competitive advantage. This loss of Mova's competitive advantage can be attributed to _____. A. divergent production B. resource immobility C. knowledge diffusion D. resource ambiguity
C
44. Even though many valuable, rare, and inimitable resources were generated at Xerox's Palo Alto Research Center (PARC), the management at Xerox's headquarters failed to gain a competitive advantage by exploiting the breakthroughs in computing software and hardware. What is the most likely implication of this example? A. It is advisable to outsource research and development functions. B. Competitive advantage cannot be gained through unrelated diversification. C. A firm must be effectively organized to capture value. D. It is better to build competitive advantage on tangible assets rather than intangible assets.
C
45. _____ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy. A. Embargoes B. Cartel arrangements C. Isolating mechanisms D. Market niches
C
5. Amazon.com's ability to provide the largest selection of items online, combined with superior IT systems and customer service, can be referred to as its _____. A. equity reserve B. economic equity C. core competency D. capital gain
C
52. 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. When the resource advantage can only be imitated after a long period of time C. When past decisions act as constraints for the current dynamic capabilities D. When the source of the competitive advantage is causally ambiguous
C
53. A firm's resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm's competitive advantage is protected against imitation by _____. A. path dependence B. dependence complexity C. causal ambiguity D. social complexity
C
54. When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because most of its competitors had already been in the laptop market for five years. Blue Tech Inc's models were inferior to the ones in the market. In this scenario, Blue Tech Inc.'s failure can be best attributed to: A. causal ambiguity. B. diseconomies of scope and scale. C. time compression diseconomies. D. social complexity.
C
59. Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable resources, capabilities, or competencies. This is primarily because the source for the company's success has been unclear. The competitors are uncertain if Gene Electronics Inc.'s success is due to its strong leadership, the skills of its research and development team, or the timing of the company' s product introductions. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of _____. A. time compression diseconomies B. resource homogeneity C. causal ambiguity D. path dependence
C
6. Which of the following is an example of a firm's resources? A. Routine activities like order taking and invoicing customers, performed in a firm B. Assistance available from the government in the form of rules and regulations C. Assets such as land and building owned by a firm D. Liabilities such as bills payables and short-term debts
C
62. It is difficult even for Apple's managers to pinpoint the underlying cause of the company's phenomenal success. The term that best applies to this difficulty is known as _____. A. competitive dependence B. resource mobility C. causal ambiguity D. path dependence
C
71. Which of the following statements accurately describes a firm's resource stock? A. Resource stocks are a firm's level of resources that are common to competitors. B. Resource stocks are a firm's future estimate of both tangible and intangible resources. C. Resource stocks are a firm's current level of intangible resources. D. Resource stocks are a firm's level of investments to maintain or build a resource.
C
8. Which of the following is an example of a firm's intangible resources? A. The firm's cash at bank B. The firm's finished goods inventory C. The firm's organizational culture D. The firm's land and building
C
9. True Sync Inc. is a software company, which has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of True Sync Inc. will best enable it to gain and sustain a competitive advantage? A. The resources of the company that are mobile B. The capital raised by the company from its shareholders C. The expertise acquired by the employees in the company D. The headquarters owned by the company
C
91. Which of the following factors is most likely to lead to a loss of competitive advantage for Nike? A. An inability of the company to create heroes B. A marketing strategy that is completely without risks C. Too many public relations disasters combined with severe shortcomings of some of Nike's heroes D. Too much money spent on celebrity endorsements and too little spent on sponsoring athletes
C
18. Maroon Inc. is a leading international apparel company. Competitors across the globe have failed to imitate Maroon Inc.'s production models, supply chain systems, knowledge systems, and culture. These attributes have remained unique to Maroon Inc. for a long time. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate? A. Resource homogeneity B. Resource perishability C. Resource equality D. Resource immobility
D
22. In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility? A. AP Corp. has earned a good reputation among its shareholders by investing more in tangible assets over intangible assets. B. Two Triangle Inc. has lost its market share because its resources are not mobile, that is rigid, inflexible, and static. C. Blue Elixir Corp. has been able to gain a competitive advantage because of its ability to efficiently move its resources from one manufacturing unit to another. D. True 3 Inc. has been able to outperform its competitors because the uniqueness of its resources is difficult to replicate.
D
28. Gene Craft Inc. is the market leader in the pharmaceutical industry. Though most of its resources are common to those of its competitors, a few rare resources have helped the company gain and sustain a competitive advantage. Which of the following assets of Gene Craft Inc. is most likely to be considered a rare resource that is best contributing to its competitive advantage? A. The company's land and buildings B. The company's plant and machinery C. The company's raw material supplies D. The company's chemical patents
D
3. Dandelions Max is a consumer electronics company. It has acquired an edge over its competitors through its ability to provide breakthrough technology at the lowest price in the market. This advantage of Dandelions Max best exemplifies a _____. A. markup B. resource flow C. capital gain D. core competency
D
31. Connect Plus Cellular is a leading mobile network operator. Since most of the resources used by Connect Plus Cellular is easily available, the company's brand name is the only resource that distinguishes it from the other operators. No other competitor in the industry has a strong brand name like that of Connect Plus Cellular. This unique asset that has helped the company gain a competitive advantage will be considered as a(n) _____ resource in the VRIO framework. A. tangible B. mobile C. imperishable D. rare
D
38. Sarah has recently started a restaurant in a commercial area where there are many other established restaurants and popular fast food chains. Sarah owns the plot on which her restaurant is located and this makes her cost of operations lower than the competitors. This factor allows her to offer her products at a competitive price. Sarah has also invested a huge amount on the interiors of the restaurant and in equipping the kitchen with the latest appliances used by her competitors. In this scenario, which of the following is the most valuable resource for Sarah's business? A. The investments made by Sarah on the restaurant's interiors B. The latest kitchen equipment that is at par with the restaurant's competitors C. The restaurant's late entry into the market D. The land owned by Sarah, which reduces cost of operations
D
39. Otion Inc. is a relatively new firm in the consumer electronics industry. The company's primary objective is to become the market leader in less than 5 years, for which it has to gain and sustain a competitive advantage. In the context of the VRIO framework, which of the following resources should Otion Inc. primarily focus on to achieve its objective? A. Quality standards, which are common and mandatory throughout the industry B. Inexpensive unskilled labor that is easily accessible by all companies C. Component parts that are sourced from competitors' suppliers D. Production systems that reduce costs by 30 percent below the current industry standards
D
40. True Moto Corp. (TMC) is a leading automobile company. The company has been able to sustain its competitive advantage primarily due to its high quality and efficient electric motors. Most of its competitors have failed to develop similar electric motors at a reasonable price. Which of the following resource attributes listed in the VRIO framework has helped TMC sustain its competitive advantage? A. Resource mobility B. Inexhaustible nature C. Intangibility of the company's resource D. High costs involved in imitation
D
41. During market testing, Elixir Cosmetics (EC) realized that the cosmetics industry was dominated with multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. A new entrant like EC would require a different business model to be successful. Thus, EC started selling its products through direct marketing. In this scenario, Elixir Cosmetics accomplished substitution primarily through _____. A. path dependence B. technology transfer C. knowledge diffusion D. strategic equivalence
D
42. Creating resources that meet the VRIO criteria is strategically important to a firm because it: A. helps the firm curb its resource heterogeneity and resource immobility. B. facilitates greater knowledge diffusion in the industry. C. leads to competitive parity within the industry. D. helps the firm to gain and sustain a competitive advantage.
D
47. Brown Foods Inc., a leading chocolate producer, anticipated that the prices of cocoa beans would double in less than three years. This would disrupt the availability of cocoa in the industry. Thus, Brown Foods Inc. decided to purchase cocoa plantations in Ghana. As predicted, the prices of cocoa increased twofold. Because of the company-owned cocoa plantations, Brown Foods Inc. was able to sustain its competitive advantage in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate? A. Social complexity B. Causal ambiguity C. Time compression diseconomies D. Better expectations of future resource value
D
50. Mova Electronics, a leading pager manufacturer, recently declared itself bankrupt. This was attributed to a decision the company made in the past. While most of Mova's competitors were shifting their research focus toward cell phones, Mova invested most of its retained earnings on improvising its pagers. Once the pager market drastically declined, Mova Electronics was unable to capitalize on the new technology. Which of the following does this scenario best illustrate? A. Causal ambiguity B. Knowledge diffusion C. Social complexity D. Path dependence
D
66. According to the _____, competitive advantage is the outflow of a firm's ability to modify and leverage its resource base in a way that enables it to gain and sustain competitive advantage in a constantly changing environment. A. value chain perspective B. two-factor theory C. expectancy theory D. dynamic capabilities perspective
D
67. Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will only be successful today if its: A. competitive advantage is derived from static resource or market advantages. B. resource advantage is not causally ambiguous or socially complex. C. resource advantage is maintained for a short period of time. D. internal strengths change with its external environment in a dynamic fashion.
D
72. BioTree Inc. has used $350,000, from its total annual earnings of $1,250,000, to invest in the research and development of a multi-purpose vaccine. Its account receivable from customers is estimated to be $150,000 and accounts payable $80,000. In monetary terms, what would BioTree Inc.'s resource flows be? A. $1,250,000 B. $150,000 C. $80,000 D. $350,000
D
77. According to the value chain analysis, which of the following is a primary activity? A. Research and development B. Human resources management C. Accounting and finance D. Marketing and sales
D
82. Jeremy a manager at a multinational organization is trying to carefully scan and link the firm's internal environment to its external environment. The insights from this analysis will allow him to effectively leverage the company's internal strengths to exploit external opportunities, while mitigating internal weaknesses and external threats. In this scenario, which of the following managerial tools is Jeremy employing? A. Blake Mouton managerial grid B. Ansoff's matrix C. BCG analysis D. SWOT analysis
D
85. In the context of SWOT analysis, a firm can develop an offensive strategic option primarily by: A. combining an internal weakness with an external threat. B. leveraging its internal strengths to minimize external threats. C. leveraging an external opportunity to overcome an internal threat. D. using its internal strengths to exploit external opportunities.
D
86. In the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness? A. Fall in the purchasing power of the firm's customers B. Increased competition in the industry where the firm operates C. Irregularity in the raw materials supply throughout the industry D. Decline in the firm's market share
D
17. As a result of _____, a critical assumption in the resource-based model of a firm, the resource differences that exist between firms are difficult to replicate. A. resource immobility B. resource homogeneity C. resource perishability D. resource equality
A
23. The perfectly competitive industry structure differs from the resource-based model in its view that: A. all firms have access to the same resources. B. accessibility to bundles of resources differ across firms. C. resources tend to be "sticky." D. competencies differ across firms working in the same industry.
A
48. _____ describes a process in which the options one faces in a current situation are limited by decisions made in the past. A. Social complexity B. Path dependence C. Cannibalization D. Causal ambiguity
B
15. The resource-based view of a firm assumes that the: A. resources of firms are highly scarce and hence the government interferes to ensure equal distribution. B. resources of firms are highly exhaustible and hence they cannot contribute to their competitive advantage. C. resource bundles of firms competing in the same industry are unique to some extent and thus differ from one another. D. resource bundles of firms competing in the same industry tend to be highly mobile, moving easily from firm to firm.
C
14. True Home Inc., Super Cart Inc., and Daily Things Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Which of the following is an implication of the market condition indicated in this scenario? A. Resource immobility of the firms will be low. B. The industry structure will be far from perfect competition. C. Barriers to entry within the industry will be high. D. Any advantage that one firm has will be short-lived.
D
7. The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment? A. The company's copyrights B. The company's brand equity C. The company's patents D. The company's machinery
D
