Capstone Exam 2.4
GreenHarvest Inc. has used $350,000 from its total annual earnings of $1,250,000 to invest in 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 GreenHarvest inc.'s resource flows be?
$350,000
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.
Home Value Inc., Max Cart Inc., and Nice Necessities 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
Any advantage that one firm has will be short lived
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?
Brand Name
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
Core competency
When a firm issues more common stocks, other things equal, how will the following change? The firm's current ratio
Current ratio will not change
When a firm issues more common stocks, other things equal, how will the following change? The firm's earnings per share (EPS)?
Decrease
When a firm issues more common stocks, other things equal, how will the following change? The firm's return on equity (ROE)?
Decrease
Pulse Mobiles Inc. is a cell 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 share 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.?
Direct imitation
EasyOpen Inc. gained a patent for an electronic corkscrew. Soon the company made a huge profit on this device. Recently, however, other firms have produced electronic corkscrews. As a result, EasyOpen lost its competitive advantage. Which of the following would MOST likely be the reason for this development?
EasyOpen's patent expired after 20 years
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?
Groupon's competency was not hard to imitate
Which of the following best explains IBM has been able to maintain its competitive advantage?
IBS successfully transformed itself multiple times in the data information industry over a period of more than 100 years
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?
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
When a firm issues more common stocks, other things equal, how will the following change? The firm's capital structure: equity ratio and debt ratio?
Increases
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 main reasons for the success of Beat?
It Created a perception that owning its products was cool.
Which of the following statements accurately describes a firm's resource flow?
It is the firm's level of investments to maintain or build a resource
According to the value chain analysis, which of the following is a primary activity?
Marketing and sales
The "Gold Crips" potato wafers manufactured by True Foods Inc. have been the highest selling wafers in the market. Though the market 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 come from the unique natural flavoring used by the company. This competency of True Foods Inc. will be considered as a(n) ____________ resource in he VRIO framework.
Rare
Value Autos Inc. has been trying to directly copy the straties of Honk Autos Inc. Even though it is evident that Honk Autos Inc.'s success comes from its just-in-time inventory system, Values Autos Inc. has not been able to effectively apply the system in the same way. This is beause 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?
Social complexity
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 tot the resource-based view of competitive advantage, which of the following is an implication of this situation?
The resources of Trust Machines Inc. are difficult to replicate or imitate
VRIO
V - valuable R - rare I - Inimitable O - organized
Which of the following statements fails to bring out the essence of the dynamic capabilities perspective?
a firm's competitive advantage is derived from static resource or market advantages
The perfectly competitive industry structure differs from the resource-based model in its view that
all firms have access to the same resources
In the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity?
an increase in its customers' disposable
Which of the following is an example of a firm's resources?
assets such as land and buildings owned by a firm
Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable resources, capabilities, or competencies. This is primarily because of 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
casual ambiguity
To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to
contribute to the firm's strategic position as either low-cost leader or differentiator
Amazon.com's ability to provide the largest selection of items online, combined with superior IT systems and customer service, can be reffered to as its
core competency
In the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness?
decline in the firm's market share
According to the _______, competitive advantage is the outflow of a firm's ability to modify and leverage its resources base in a way that enables it to gain and sustain competitive advantage in a constantly changing environment
dynamic capabilities perspective
With regards to the VRIO framework, Croc Shoes was unable to sustain its competitive advantage primarily because its product were
easy to imitate
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
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 resources attributes listed in the VRIO framework has helped TMC sustain its competitive advantage?
high costs involved in imitation
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
Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will only be successful today if its
internal strengths change with its external environment in a dynamic fashion
How does casual ambiguity act as an isolating mechanism for organizations?
it makes it difficult for the competitors to understand why a company has been so successful
Which of the following is an implication of high employee turnover in a company?
its results in a reduction in the company's intangible-resource stocks
Intangible assets add great value to a firm primarily because the firm's
knowledge and culture takes time to develop and are generally difficult to imitate.
In knowledge-intensive industries, the marginal cost after initial invention are
low
Mova Electronics, a leading pager manufacture, 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 earning 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?
path dependence
VRD 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
path dependence
To increase its competitive advantage, HRV Automobiles seeks to improve the efficiency of its production plants. By doing this, HRVis address a _____ in the value chain analysis
primary activity
The resource-based view of a firm assumes that the
resource bundles of firms competing in the same industry are unique to some extent and thus differ from one another
Kaleidoscope Inc. is a leading international apparel company. Competitors across the globe have failed to imitate Kaleidoscope 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
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 a case an example of?
resource immobility
Dynamic capabilities are especially relevant for surviving and competing in markets that
shift quickly
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 trying to exactly imitate its strategy. Thuis, the source of Zappos competitive advantage is said to be
socially complex
Due to path dependence
strategic decisions have long-term consequences
During market testing, Sensation Cosmetics (SC) 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 SC would require a different business model to be successful. This SC started selling its products through direct marketing. In this scenario, Sensation Cosmetics accomplish substitution primarily through
strategic equivalence
Gene 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 is most likely to be considered a rare resource that is best contributing to its competitive advantage?
the company's chemical patents
Smooth Fusion 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 Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage?
the expertise acquired by the employees in the company
Riya has recently stated a restaurant in a commercial area where there are many other established restaurants and popular fast-food chains. Riya 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. Riya has also invested a huge amount on the interiors of the restaurant and equipping the kitchen with the latest appliances used by her competitors. In this scenario, which of the following is the most valuable resource for Riya's business?
the land owned by Riya, which reduces cost of operations
Which of the following is an accurate statement about value chain analysis?
the value chain concept can be applies to all firms, including service firms
Which of the following is NOT a condition that can help a firm sustain its competitive advantage?
when past decisions act as constraints for the current dynamic capabilities