CH. 3 ( T/F )
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.
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Inventory turnover is a measure of asset utilization.
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Leverage ratios provide measures of the capacity of a firm to meet its long-term financial obligations.
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Modern plant and facilities as well as favorable manufacturing locations are tangible resources.
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Porsche received a lot of negative feedback when it announced plans to release an SUV, but it went ahead anyway, and the Porsche Cayenne was a great success. This is an example of a peril of making decisions based on crowdsourcing.
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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.
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Products and services that are difficult to imitate help firms sustain their profitability
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Several pharmaceutical firms have seen the value of patent protection erode in the face of new drugs that are based on different production processes and act in different ways, but can be used in similar treatment regimes. This example illustrates the lack of sustainable competitive advantage being offered by the product.
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Strong brands are typically built through consistent, effective marketing, and companies need to weigh the potential for misbehaving customers to thwart their careful efforts.
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Tangible resources are assets that are relatively easy to identify such as financial and physical assets
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Technology development is a much broader concept than research and development.
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The SWOT framework is not sufficient as the primary basis for evaluating the internal strengths and weaknesses of a company.
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The activities that may provide support only to one company may be critical to the primary value-adding activity of another firm.
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The corporate culture at Southwest airlines is an example of causal ambiguity.
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The value-chain concept assumes that both primary and support activities are capable of producing value for customers.
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Though two teams could have different ages, functional backgrounds, experience, and so on, they could be strategically equivalent and thus substitutes for one another.
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Toyota paid a heavy price for its excessive emphasis on cost control. By focusing on one strength exclusively, it suffered severe losses. This is an example of the limitations of a SWOT analysis.
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Two valuable firm resources (or two bundles of resources) are strategically equivalent when each one can be exploited separately to implement the same strategies
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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.
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When evaluating the financial performance of a firm, it is important to compare the results with industry norms.
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Crowdsourcing has many benefits, including the example in which McDonalds set up a Twitter campaign to promote positive word of mouth which became a platform for people looking to bash the chain.
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Effective strategic planning processes are intangible resources.
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Employee exit cost is a factor that can increase employee bargaining power and help him or her appropriate profits of the firm.
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Excellent customer performance results from processes, decisions, and actions that occur only in the marketing efforts of the firm.
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Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a complete guide to study companies.
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Financial resources such as cash and cash equivalents are intangible resources.
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Firms that are successful in creating competitive advantages that are sustainable for a period of time do not have to be concerned about profits being retained by employees or managers.
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For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria: rareness and difficulty in substitution.
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For the balanced scorecard to work, managers must articulate goals for five categories of customer concerns: time, quality, performance and service, cost, and design.
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Harley-Davidson sells accessories, clothing, toys and motorcycles. They have a brand image in common which is a tangible resource.
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Historical comparisons are most appropriate during periods of recession or economic boom.
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In value-chain analysis, value is measured by the market value of the total stock outstanding of the company.
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Inbound logistics include all activities associated with transforming inputs into the final product form such as machining, packaging, assembly, equipment, testing, printing, and facility operations.
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Intangible resources of a firm refer to its capacity to deploy tangible resources over time and leverage those resources effectively.
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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).
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One advantage of SWOT analysis is that it helps managers to identify strengths that are almost always sources of sustainable competitive advantages.
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Patents, copyrights, and trademarks are intangible resources.
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Path dependency has no impact on the inimitability of resources.
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People want to partner with you because they have heard you are a credible company built through a culture of trust. In a sense, being a great company to work for also makes you a great company to work with. This is an example of causal ambiguity
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Some firms find great value by not incorporating their customers into the value creation process.
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Some leading edge companies are applying the prosumer concept. Here, firms team up with their suppliers and alliance partners to satisfy their customer needs.
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Support activities provide support for primary activities, but not each other.
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Technip has developed intelligent pipes that can monitor and regulate the temperature throughout an oil pipeline. This is an example of a procurement support activity in the value chain.
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The SWOT analysis can show managers how to achieve a competitive advantage.
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The SWOT framework is sufficient as the primary basis for evaluating the external opportunities and threat of the company.
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The ability of a firm to do well from an innovation and learning perspective is most dependent on its tangible assets.
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The balanced scorecard enables managers to evaluate their business from only two perspectives: customer and financial
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The current ratio is used to measure long-term solvency.
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The price-earnings ratio is used to measure profitability.
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The profit margin ratio is used to measure long-term solvency.
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The resource-based view of the firm focuses solely on the internal analysis of the operations of the firm.
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The return on assets ratio is used to measure short-term solvency of the firm.
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The static nature of the SWOT assessment is a positive advantage for it as an evaluation framework.
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The strengths and capabilities of a firm are enough to enable it to achieve a competitive advantage in the marketplace.
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The total debt ratio is used to measure profitability.
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To survive and prosper, managers must not make frequent changes to existing products and services, because it will confuse the customer.
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Top managers have learned not to rely on SWOT to stimulate self-reflection and group discussions about how to improve their firm and position for success.
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Trade secrets are intangible resources.
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Value-chain analysis can only be applied to manufacturing operations.
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When using industry norms as a standard of comparison, managers must be sure that the firms used in the comparisons are representative of all sizes and strategies within the industry.
F
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.
T
Amazon Prime is an example of a difficult to imitate capability that gives it competitive advantage over its rivals.
T
An important implication of the balanced scorecard is that managers need not look at their job as primarily balancing stakeholder demands
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At times, the difference between manufacturing and service is in providing a customized solution rather than mass production, as is common in manufacturing.
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Capabilities that exhibit causal ambiguity are difficult to imitate
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Company reputation with customers, suppliers and other stakeholders is an intangible resource.
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Company strengths and weaknesses are tied to its stated goals and objectives.
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Dell lost its competitive advantage by 2009 in part because it placed its efforts on operational excellence to the exclusion of reinvention.
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Encyclopedia Britannica lost competitive positioning due to a misunderstanding of the change in competitors, when the CD-based encyclopedia became popular for home computers.
T
Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value-chain analysis.
T
Examples of organizational capabilities are outstanding customer service, excellent product development capabilities, superb innovation processes, and flexibility in manufacturing processes
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FedEx employees take computer-based job competency tests every 6 to 12 months in order to identify areas of individual weakness and provide input to a computer database of employee skills. This is an example of a tangible resource.
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Focusing too narrowly on current customers, technologies and competitors can lead a company to overlook periphery industry boundaries and a new set of competitive relationships.
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For the balanced scorecard implementation to be effective, a set of rules for employees that address continuous process improvement and the personal improvement of individual employees needs to be established so that employees buy-in to the change. True False
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Frito-Lay uses crowdsourcing to make its Super Bowl ads. This is an example of a primary activity in the value chain.
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If a firm builds its strategy on a capability that cannot, by itself, create or sustain competitive advantage, it is wasting its time and resources.
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In conducting a SWOT analysis, a risk for strategists is that they rely on traditional definitions of their industry and competitive environment and therefore focus too narrowly on current competitors.
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In considering the business from the customer perspective using the balanced scorecard, company performance is essential.
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In considering the business from the innovation and learning perspective using the balanced scorecard, the ability of the firm to do well is more dependent on its intangible and tangible assets.
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In considering the business from the internal business perspective using the balanced scorecard, customer-based measures must be translated into indicators of what the firm must do internally to meet customer expectations.
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In considering the business from the internal business perspective using the balanced scorecard, periodic financial statements are used to indicate the consequences of improved quality, response time, productivity, and innovative products. These consequences include improved sales.
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In value-chain analysis, finance and accounting are considered part of the general administration of a firm.
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Campbell Soup uses electronic networks in order 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.
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Comcast gets a bad review on Yelp. This is an example of harm to a tangible resource.
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A meaningful ratio analysis need only include how ratios change over time.
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A strength of the balanced scorecard is that it is very easy to implement and that there is little need for executive sponsorship.
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A travel agent does not add value by creating an itinerary that includes transportation, accommodations, and activities that are customized to your budget and travel dates.
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At Sephora.com, a customer service representative taking a phone call from a repeat customer has instant access to what shade of lipstick she likes best. This is an example of a procurement support activity in the value chain.
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Campbell Soup uses an electronic network to facilitate its continuous-replenishment program with its most progressive retailers. This is known as an operations primary activity in the value chain.
F
A law firm renders services that are specific to client needs and circumstances. This is an example of the transformation process of a service organization.
T