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