MGT 187 Midterm Chapter 2

Charmed by Claire is a successful retail boutique that sells women's accessories. Claire, the owner/manager, knows that women have many options when buying jewelry. When customers enter her store they are greeted by name and given prompt, friendly attention. Customers return to the store because the service is excellent. Claire says the most important decision she makes is hiring the best staff because customer service is vital to her business. Customer service is

A core competency.

Which of the following is NOT an external event that reveals the "dark side" of core capabilities?

A firm changes its focus to a new core competence.

All of the following are tangible resources EXCEPT

A firm's reputation.

______ is the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context.

A global mind-set

All of the following were traditional sources of competitive advantage EXCEPT

A highly educated labor market.

All competitive advantages have

A limited life

Value consists of

A product's performance characteristics and attributes for which customers are willing to pay.

Compared to tangible resources, intangible resources are

A superior source of capabilities.

Value chain activities are

Activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers.

Valuable capabilities

Allow the firm to exploit opportunities or neutralize threats in its external environment.

One reason executive judgment can be a particularly important source of competitive advantage is that judgment

Allows a firm to build a strong reputation.

A decision that results in failure

Allows for learning

Which of the following is NOT a component of internal analysis leading to competitive advantage?

Analysis of supplier power

Capabilities

Are often developed in specific functional areas.

Tangible resources include

Assets that can be observed and quantified.

To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT

Be technologically innovative.

Internal analysis enables a firm to determine what the firm

Can do.

Because

Capabilities are often based on developing, carrying, and exchanging information and knowledge through the firm's human capital.

Which of the following is a true statement about capabilities?

Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.

Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the firm's internal functioning and technology as it can legally, yet Gamma cannot understand why Ardent has a competitive advantage over it. The source of Ardent's success is

Causally

Capabilities typically come from

Combining resources.

_____can be viewed as the capacity to take action.

Core competencies

Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above- average returns from its core competencies?

Core competencies must be internationalized.

Innovation, consumer understanding, brand-building, go-to-market, and scale are activities that P&G performs well and are examples of the company's

Core competencies.

McDonald's culture, with an emphasis on cleanliness, consistency, service, and the training that reinforces the value of these characteristics, illustrates which of the following criteria for sustainable competitive advantage?

Costly

Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other airlines cannot, such as jokes on flights or the cooperation between gate personnel and pilots. These examples illustrate which of the following criteria for sustainable competitive advantage?

Costly to imitate

Capabilities that other firms cannot develop easily are classified as

Costly to imitate.

A food bank in Florida was struggling to serve its customers. It asked Wal-Mart for help. Wal-Mart sent a team of managers who reorganized storage and transportation. The food bank was able to increase the number of clients served by tenfold. Wal-Mart shared its expertise in

Distribution

A firm's core competencies, integrated with an understanding of the results of studying the conditions in the external environment, should

Drive the selection of strategies.

Firms that achieve competitive parity can expect to

Earn average returns.

_______Is an example of a capability that is based in the functional area of distribution.

Effective use of logistics management techniques

Which of the following is NOT a reputational resource?

Employees' opinion of the firm as a terrible place to work

When firms lay off employees, they are

Eroding the organization's knowledge resources.

A major reason outsourcing is effective is that?

Few firms possess superior capability in all primary and support activities.

By emphasizing core competencies when formulating strategies, companies learn to compete primarily on the basis of

Firm-specific differences

Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should

Focus on developing Acme's future competitive advantages.

Examples of support activities include all of the following EXCEPT

Follow-up service.

If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm will

Have a temporary competitive advantage.

A product's value is created by each of the following EXCEPT

High cost and highly differentiated features.

In the television show Mad Men, Don Draper is in charge of the creative department at an advertising agency. He appears to spend most of his time drinking and relaxing, but occasionally he has a flash of insight that leads to a new ad campaign. He provides which valuable intangible resource?

Ideas

A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are

Imitable.

Samsung has core competencies in manufacturing its own components and components for other competitors, which help it to predict future innovations and bring them to market quickly. It is in direct competition with Apple in the smartphone market. Its competencies allow Samsung to Apple's innovations.

Imitate

_____May exist among managers making decisions as well as among those affected by the decisions.

Intraorganizatioinal

A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised

Judgment.

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT

Lack of scientific transference.

Compared to tangible resources, intangible resources are_____ and______.

Less visible; more difficult to copy.

The critical executive skill of the current business age is the ability to

Manage human intellect.

Value chain activities include all of the following EXCEPT

Management information systems.

Compared to intangible resources ______constrained because they are______ than , tangible resources are leverage.

More; harder

Judgment is the capacity for making a successful decision when

No obviously correct model or rule is available

Organizational culture is

Not easily imitable.

The challenge and difficulty of making effective decisions are implied by preliminary evidence that of organizational decisions fail.

One-half

Government agencies are known for having so many layers and rules that decisions are made slowly and inefficiently. In this case the______ resource is a detriment to taxpayers using and paying for the bureaucracy.

Organizational

Tools such as help the firm focus on its core competencies as the source of its competitive advantages.

Outsourcing

Which of the following is TRUE about outsourcing?

Outsourcing allows firms to concentrate on those areas in which they can create value.

A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors also provide these services. The veterinary practice is gaining competitive

Parity.

Amazon is building a new distribution facility in Robbinsville, New Jersey. It is immediately off the exit of a major road. This is an example of a (n) resource.

Physical

Outsourcing is the

Purchase of a value-creating activity from an external supplier.

One capability that can be learned from failure is when to

Quit.

A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price, and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is

Research and development.

The most numerous of the following organizational characteristics are

Resources.

. _____ Are the source of a firm's_______ , which are the source of the firm's _______.

Resources; capabilities; core competencies

Core competencies have the potential to become core

Rigidities

Borders had a competitive advantage in physical location. However, Amazon fundamentally changed customer-buying habits, and Borders' competitive advantage became a core

Rigidity.

Firms that have strong positive relationships with suppliers and customers are said to have ingredient to creating value.

Social capital

Knowledge transfer and access to resources within the value chain are enhanced by

Social capital.

A financial management firm has existed for more than 70 years. Some of its original clients' grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other's families. This firm has capabilities that would be costly to imitate because of its

Social complexity

Supply and demand impacts the level at which people are paid. If there are few people with a proven record of using judgment effectively then they will be in high demand and offered high compensation. CEOs are valued for their judgment as

Strategic leaders.

Many firms outsource the payroll function of paying employees to firms such as ADP. Payroll is a (n)

Support function.

The corporate research division of Siemens files, on average, 25 patents a day. The patents are a (n)_____ Resource.

Technological

A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely on organically raised chicken and beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be

Temporary.

An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef, and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. What should the investor consider when making a decision?

The investor will find that the restaurant's financial statements undervalue the true value of its resources.

Today, a substantially slimmed-down Polaroid is introducing a number of new products, including GL20 Camera Glasses which have a built-in camera and LCDs. This wave of new product development is explained by

The learning that occurred from making earlier mistakes.

Which of the following is NOT a factor affecting sustainability of a competitive advantage?

The length of time the core competence has existed

It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and

The rapid development of the Internet's capabilities

Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many customers go to the restaurant just for the appetizer, and it was at the center of a recent highly positive review by a food critic. Preparation involves common ingredients and average culinary skills but requires a very high oven temperature, which significantly increases utility costs. Several competing restaurants have since added their own version of the appetizer to their menu. Which criterion for assessing capabilities/core competencies is met?

The restaurant has the capability to develop something that is valuable.

ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed circuit-board technology. ACME has protected its market leadership with continued advancements in this technology, which it patents. A competitor has developed a radio for this market with equal performance but uses a software-based technology instead of circuit boards. ACME's technology leadership fails which capability test?

The substitutability test

All of the following are true about the strategic decisions managers make about their firm's internal organization EXCEPT that

They are directly correlated to executive compensation.

To build social capital whereby resources such as knowledge are transferred across organizations requires_____ between the parties.

Trust

The three conditions that characterize difficult managerial decisions concerning resources, capabilities, and core competencies are

Uncertainty, complexity, and intraorganizational conflicts

Subscriptions to the New York Times have been decreasing as more customers receive their news through other media. At the same time, advertisers have shifted portions of their spending to other media. The NYT's managers are making decisions under

Uncertainty.

Value chain analysis is a tool used to

Understand the parts of the firm's operation that create value and those that do not.

From a customer's point of view, for an organization's capability to be a core competence it must be

Valuable and unique.

In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are_____ but no longer______.

Valuable; rare.

The ________capabilities used to create the sustainability/green initiatives at Wal-Mart and Target are to be but less likely______.

Valuable; rare.

The key to achieving competitiveness, earning above-average returns, and remaining ahead of competitors in the long run is to manage current core competencies

While simultaneously developing new ones.

The proper matching of what a firm can do with what it might do

Yields insights the firm requires to select its strategy.

The ________are those with the potential to be formed into core competencies as the foundation for creating value.

"Right" resources