MGT 491 Flores- Ch. 4 MC

Flectronics has used $700,000 from its total annual earnings of $1,650,000 to invest in upgrading its manufacturing facilities. Its accounts receivable from customers is estimated to be $130,000 and accounts payable $75,000. In monetary terms, what would Flectronics's resource flows be?

$700,000

Which of the following is a drawback of the SWOT analysis?

A problem with this framework is that a strength can also be a weakness, and that an opportunity can also simultaneously be a threat.

Which of the following best exemplifies social complexity as an isolating mechanism?

Amanda's Cosmetics attempted to imitate how Michele's Makeup combined its management and product development systems with little success.

Cartzy Inc., Cartific Inc., and Clustercart 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. Judging from the market conditions described in this scenario, which of the following statements is true?

Any advantage that one firm has will be short-lived.

Suppose that several senior managers recently left Target Corporation and went to work at rival Walmart. What part of the ""stocks and flows"" of resources does this represent for Target Corporation?

leakage

Buzztronic is a market leader in consumer electronics. If Ficolee and Ficola, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Buzztronic, then

Buzztronic will have a resource that is valuable but no longer rare.

Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will be successful today only if its

internal strengths change with its external environment in a dynamic fashion.

When performing internal analysis of firms, how would you answer the question, "why do companies exist?"

Companies exist because they create value for customers in ways that customers are unable to replicate on their own.

Firms that can employ and establish _________________, are more likely to protect their competitive advantage from being copied and/or eroding away.

isolating mechanisms

Several senior managers recently left Fred's Autos Inc. and went to work at Better Autos Inc., a rival company. What does this imply?

Fred's Autos Inc. faced resource leakage.

Your company, a small software development firm, has attracted many of the top young programmers in your area. As a result, the apps you produce have been praised for their innovative features and intuitive user experience. According to the bathtub metaphor in the dynamic capabilities perspective, what is the best way for you to protect against resource leakage?

Improve the benefits package to retain key employees and reduce turnover.

Have A Seat Furniture has seen its profit margins shrink over the past several years as increased competition has driven down furniture prices. You have been tasked with improving the company's margins. Which of the following approaches makes the most sense within the context of strategic activity systems?

Install modern manufacturing equipment to improve efficiency.

_____ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.

Isolating mechanisms

Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premium headphone market. Which of the following statements accurately explains one of the main reasons for the success of Beats?

It created a perception that owning its products was cool.

Shippity and ShipING Inc. are two competing firms in the same industry. Shippity's tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. ShipING 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?

It is likely that ShipING Inc. is better enabled than Shippity to gain and sustain a competitive advantage.

How does causal ambiguity act as an isolating mechanism for organizations?

It makes it difficult for the competitors to understand why a company has been so successful.

The owners of Always Baked bakery want to open a second retail outlet. Which of the following scenarios is most likely to yield a competitive advantage?

Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction.

In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility?

PaluniInc. has been able to outperform its competitors because the uniqueness of its employee experience is difficult for competitors to replicate.

After conducting a SWOT analysis, your firm has decided to focus on addressing issues located in the Weaknesses-Opportunities quadrant. Which of the following steps are you most likely to take?

Reorganize the inefficient research and development department to bring innovative products to market more quickly.

Which of the following statements accurately describes a firm's resource stock?

Resource stocks are a firm's current level of intangible resources.

Jennifer, 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 her 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 Jennifer employing?

SWOT analysis

Core competencies are derived from the combination of

key strategic resources and a firm's capabilities.

Which of the following applies to the Strength-Threats quadrant of the SWOT matrix?

The local fast-food chain Easy Hot Dogs used its wholesome image to maintain its competitive advantage against stiff competition.

You are the manager of Value Printing, a leading print shop. Value's resources include a highly experienced staff and state-of-the-art printing presses. However, your closest competition has started to cut into your market share by offering same-day turnaround on most orders. Although your staffing and equipment is not optimized for rapid production, you decide to start offering a same-day guarantee to your customers. According to the resource-based view, what is wrong with this decision?

You have failed to take into account resource immobility.

In the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity?

an increase in its customers' disposable income

Hot Caffeine, a leading coffee roaster, anticipated that the prices of coffee beans from Costa Rica, where its main suppliers were located, would double in less than three years. This would significantly affect Hot Caffeine' profit margins. Thus, Hot Caffeine decided to develop a new partnership with a supplier in Indonesia. As predicted, the price of Costa Rican coffee beans increased twofold. Because the price of Indonesian coffee beans was much lower, Hot Caffeine was able to maintain its profit margins in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate?

better expectations of future resource value

Threadbare Industries is a new high-end textile company that 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 Threadbare Industries to acquire using its capital?

brand name

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as

capabilities.

Assume 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

causal ambiguity.

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

causal ambiguity.

Frozen Gold is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of Frozen Gold best exemplifies a

core competency.

One of the reasons that Circuit City filed for bankruptcy was due to its inability to reinvest, hone, and upgrade its once impressive resource base. Ultimately, Circuit City's core competences became

core rigidities.

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength?

increase in a firm's customer loyalty

SJobs's Computer Repair has maintained a competitive advantage based on its thorough and professional service, reasonable pricing, and money-back guarantee. Management at the company is so committed to doing repairs well that they often have rejected employee suggestions to expedite their processes. Recently, the company has begun to lose customers to a new local service offering same day in-home repairs and 24/7 online customer support. According to the dynamic capabilities perspective, SJobs's Computer Repair has lost its competitive advantage due to

core rigidity.

Tim's ToothCream has been the leader of dental care products for about 40 years. However, this company relied too long on its competency of reducing cavities without refining or upgrading other aspects of its product. As a result, other personal hygiene companies that began to offer toothpastes with natural whitening agents gained a competitive advantage over Tim's ToothCream. This case is an example of

core rigidity.

TalkaLot Inc. is a cell phone manufacturing company. Its latest range of smartphones are visually similar 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 TalkaLot Inc. used to replicate the valuable and rare resource of Talkie Gen Inc.?

direct imitation

Leading guitar string producer Highly Strung Inc. has enjoyed a competitive advantage based on its proprietary coating that gives its strings a clearer sound and longer lifespan than uncoated strings. One of Highly Strung's competitors, however, has recently developed a similar coating using less expensive ingredients, which allows it to charge a lower price than Highly Strung for similar-quality strings. Highly Strung's competitive advantage is in danger due to

direct imitation and substitution.

The ___________________ suggest(s) that because the external environment changes, strategic leaders must choose their current and future investments carefully over time in order to best maintain their firm's competitive advantage.

dynamic capabilities perspective

According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were

easy to imitate.

According to the resource-based view, a firm's competitive advantage often stems from its

intangible resources.

As manager of a relatively new company, you are tasked with analyzing company resources to identify core competencies capable of supporting a competitive advantage. Which of the following resources is most likely to generate a competitive advantage?

enthusiastic company culture

ezTV, a consumer electronics company, is the leading manufacturer of high-definition (HD) LED televisions. HD technology has been its core competency and the company holds 60 percent shares in that market. However, ezTV's competitors have now begun to produce more-advanced technologies like 4K Ultra HD and Internet-enabled Smart televisions. According to the dynamic capabilities perspective, what should ezTV do?

ezTV should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment.

In the context of the resource-based model of competitive advantage, if a successful firm exhibits resource immobility it means that the

firm will have a sustained competitive advantage because of its unique resources that are difficult for others to replicate that are difficult for others to replicate.

A firm will fail to create a sustained competitive advantage when the

fit between its internal strengths and the external environment is static.

LightningDrive 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 LightningDrive sustain its competitive advantage?

high costs involved in imitation

Facing stiff competition in the e-reader market, Smart Reads wants to protect its competitive advantage by increasing the perceived value of its reader. Smart Reads' best strategy to accomplish this would be to

highlight the number of celebrities who use Smart Reads e-readers.

According to the value chain analysis, which of the following is a primary activity?

marketing and sales

When company managers formulate strategy decisions resulting from their internal analysis, they are primarily making decisions about how to

obtain and allocate critical and scarce resources.

Chips & Motherboards Inc., a leading hard drive manufacturer, recently filed for bankruptcy. While most of Chips & Motherboards Inc.'s competitors were shifting away from physical data storage devices toward online cloud storage services, Chips & Motherboards Inc. invested most of its retained earnings in the effort to improve its hard drives. Once the hard-drive market drastically declined, Chips & Motherboards Inc. was unable to capitalize on the new technology. Which of the following does this scenario best illustrate?

path dependence

The competitive advantage that one firm has will be short-lived in an industry in which

perfect competition exists.

Value chain analysis consists of systematically analyzing a firm's key activities that for analysis purposes are categorized into two groups:

primary activities and support activities.

To reduce the amount of time it takes to apply packaging to its finished products, North Star Foods is implementing new equipment at its production plants. By doing this, North Star is addressing a _____ in the value chain analysis.

primary activity

Which of the following below is NOT categorized as a primary activity on Porter's Value Chain?

procurement

Due to resource immobility, a critical assumption in the resource-based model of a firm, the

resource differences between firms last for a long time.

Although eHook Inc. and eFury Inc. operate in the same consumer electronic industry, eHook Inc. has better sales and brand equity. This is attributed to eHook Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which eFuryInc. lags behind. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated?

resource heterogeneity

Southwest Airlines (SWA) and Alaska Airlines both compete as point-to-point airlines, but they draw upon different resource bundles. This example best illustrates which of the following assumptions regarding the resource-based view?

resource heterogeneity

Southwest Airlines (SWA) has enjoyed a sustained competitive advantage, allowing it to outperform its competitors over several decades. Continental and Delta attempted to copy SWA with their offerings of Continental Lite and Song, respectively. Neither Continental nor Delta, however, was able to successfully imitate the resource bundles and firm capabilities that make SWA unique. Which of the following is this case an example of?

resource immobility

Toyago Inc. is a leading educational toy company. Competitors across the globe have failed to imitate Toyago's production models, supply chain systems, knowledge systems, and culture. These attributes have remained unique to Toyago Inc. for a long time. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate?

resource immobility

Dynamic capabilities are especially relevant for surviving and competing in markets that

shift quickly.

Mama Mia's' Pizza & Calzone has been trying to directly copy the strategies of Fuhgeddaboudit Pies. Even though it is evident that the success of Fuhgeddaboudit Pies' success comes from the freshness and variety of ingredients it uses, Mama Mia's Pizza & Calzone' has not been able to introduce the same types of produce into its recipes. This is because Fuhgeddaboudit's network of relationships with local growers, as well as its efficient supply chain, are very difficult to emulate. Which of the following barriers to imitation does this scenario best illustrate?

social complexity

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

socially complex.

During market testing, Rembrandt Cosmetics realized that the cosmetics industry was dominated by multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. Rembrandt Cosmetics management realized that a new entrant would require a different business model to be successful. Thus, Rembrandt Cosmetics started selling its products through direct marketing. In this scenario, Rembrandt Cosmetics accomplished substitution primarily through

strategic equivalence.

Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's

tangible resources.

Which of the following will most likely be considered as an airlines core competency?

the airline's ability to make its fleet more fuel efficient than their competitors

Amelia has recently started a restaurant in a commercial area that already has many other established restaurants and popular fast-food chains. Amelia owns the building in which her restaurant is located, rather than leasing premises as her competitors do. This factor allows her to offer her products at a more competitive price. Amelia has also invested a huge amount in designing the restaurant's interior and in equipping the kitchen with the appliances that are most widely used in her industry. In this scenario, which of the following is the most valuable resource for Amelia's business?

the building owned by Amelia, which reduces cost of operations

STRIKEBYTE Inc. is a software company that has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of STRIKEBYTE Inc. will best enable it to gain and sustain a competitive advantage?

the expertise acquired by the employees in the company

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?

the punch presses that produce parts

Business managers are often concerned that just one of their company's activities will make or break their company's competitive advantage.However, you know that

their company's success depends on an array of many key activities, not just one activity.

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 Blue Tech Inc.'s models were inferior to the third- and fourth-generation models its competitors were selling. In this scenario, Blue Tech Inc.'s failure can be best attributed to

time compression diseconomies.

WeComput 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 WeComput Inc. to increase its profitability by lowering its production costs. Thus, WeComput's competency in designing and manufacturing microprocessors will be considered a(n) _____ resource in the VRIO framework.

valuable