MGMT 481 chapter 4
Under the value chain perspective, managers evaluate a firm's system of activities in order to?
Identify how competitive advantage flows from the inputs to outputs of the firm's distinct activities.
Competitive advantage occurs when there is a high utilization of which type of assets?
Intangible
Which of the following activities would be considered a primary activity in a firm's value chain?
Production
Which of the following is NOT a criterion for a strategically important resource?
Tangible
Firm resources such as intellectual property and brand equity are important to a firm because?
They are intangible, costly to imitate, and can lead to sustained competitive advantages.
Strategic activity systems that are socially complex are?
Difficult to imitate
Under the resource-based view of competitive advantage, firm resources such as intellectual knowledge and plant equipment are?
Assets that are key to superior firm performance.
An upscale jeweler ordered several thousand ounces of gold a few years ago when gold was priced at $650 an ounce. As of 2011, gold was averaging about $1,700 an ounce. This jeweler will be able to protect his competitive advantage, at least temporarily, due to which condition?
Better expectations of future resource value
Within the resource-based model, what is the meaning of the term "resource heterogeneity"?
Bundles of resources and capabilities differ across firms.
If a firm's resources and capabilities are costly to imitate because imitating firms do not understand the relationship between the resources and capabilities controlled by the firm, this firm's competitive advantage is protected from imitation by _________________.
Casual ambiguity
It is difficult to pinpoint the underlying cause of Apple's phenomenal success. Gaining a deep understanding of exactly why Apple has done so well is difficult because of which situation?
Casual ambiguity
When a firm possesses resources and capabilities that are valuable but not rare, it has a?
Competitive parity
Amazon is known for superior IT systems and customer service. UPS provides superior supply chain management services at low cost. Both Amazon and UPS have leveraged their _______________, which has led to competitive advantages for both firms.
Core competencies
The general lesson from the Chapter 4 opening case on Circuit City is the importance of ______________ to a firm when it is attempting to gain and sustain competitive advantages.
Core competencies
Unique strengths that are embedded deep within a firm that allow it to differentiate itself and create higher value for customers is a ____________.
Core competency
Strategy Highlight 4.2 discusses how IBM was able to rebound because CEO Lou Gerstner refocused the company on satisfying market needs through IT services as opposed to mainframe and mini-computers. This strategic highlight shows that IBM's current success is partially based on?
Creating a new strategic fit for IBM through the utilization of dynamic capabilities.
If the firm is not organized to capture the value from its resources, it will not profit from the investment in the resources. In the 1980s, Xerox's Palo Alto Research Center (PARC) developed many of the foundations for the ____________ industry. Yet these valuable and rare innovations were commercialized by other firms.
Desktop computing
When a firm enjoys a competitive advantage, it attracts a significant amount of attention and its products or services can be at risk due to?
Direct imitation or substitution
British conglomerate EMI developed and launched the invention of the CAT scanner. This paved the way for follow-up innovations like nuclear magnetic resonance imaging (MRI). Despite its initial success, EMI lost out quickly in the marketplace to GE Medical Systems, which was able to reverse-engineer EMI's scanner. This is an example of what resource attribute?
Direct substitution with an engineering work-around
To sustain competitive advantage, strategic activity systems need to?
Evolve over time
Creating resources that meet the VRIO criteria are strategically important to a firm because:
Firms that possess these types of resources may be able to experience a sustained competitive advantage.
One way that a firm can create a sustainable competitive advantage is by?
Managing value chain activities better than its rivals.
If Sony and Microsoft develop the same customer knowledge base and create gaming products that provide the same customer appeal as Nintendo, then?
Nintendo will have a resource that is valuable but no longer rare
Under the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage because its resources were?
Not costly to imitate
Which of the following is NOT a condition that can help a firm sustain its competitive advantage?
Past decisions constrain the current dynamic capabilities
Both Honda and Sony took many decades to build their core competencies, and these competencies are based primarily by decisions made in the past. This process is called?
Path dependence
The fact that the U.S. still uses a system of measurement from the 1820s instead of the metric system, and is at a disadvantage in certain cross-border transactions and negotiations, demonstrates that?
Path dependence can affect the ability to remain competitive
The resource-based view is in sharp contrast to which model of industry competition (from Chapter 3).
Perfect competition
When only a few firms can perform a capability in the same unique way, this capability is considered to be?
Rare
A firm's superior performance in the marketplace affords it the luxury of _____________.
Reinvesting retained earnings back into the firm's capabilities and resources
When a successful firm exhibits resource immobility, _____________________.
Resource differences between the firm and a rival are hard to replicate
The assumption under the resource-based model that firm resources and capabilities differ across firms and that this leads to performance differences is referred to as _______?
Resource heterogeneity
_________ implies that for a given business activity, some firms may be more skilled than others in accomplishing it.
Resource heterogeneity
This statement regarding the resource-based view is accurate?
Resource heterogeneity and resource immobility are two critical assumptions that strategists must keep in mind.
One of the assumptions under the resource-based model made about Southwest Airlines is that SWA has been able to sustain a competitive advantage because its resources and capabilities are difficult to imitate and do not easily leave the firm. What is this assumption called?
Resource immobility
Intangible firm resources such as brand equity and corporate culture can be analyzed by what method?
Resource stocks and resource flows
Assets that a firm can draw on that are both tangible and intangible are ___ .
Resources
Core competencies are built through the interplay of several firm attributes. These attributes include a firm's?
Resources, capabilities, and activities
When a firm combines __________ and ___________, it builds core competencies.
Resources; capabilities
A risk to a firm that believes its resources are costly to imitate is that?
Rivals may employ substitution and work around the original design.
Which framework most easily allows for the combination of both internal and external factors in the analysis of a firm's competitive advantage?
SWOT analysis
Chapter 4 details actions that Vanguard took after 1997 to add customer segmentation as a new core activity because it was unable to provide quality service to targeted customer segments at the lowest possible cost. By changing its ________________, Vanguard was able to adapt to changing market conditions and sustain its competitive advantage in the investment industry.
Strategic activity system
Amazon compensated for their lack of valuable and rare resources by implementing a new distribution system to reduce operating costs. This is referred to as?
Strategic equivalence
Which of the following SWOT factors are generated from internal resources, capabilities, and competencies?
Strengths and weaknesses
When a firm has resources and capabilities that are valuable and rare only, it has?
Temporary competitive advantage.
If a manager is listing out resources that can be used to drive competitive advantage, which one of the following would NOT be on the list?
The economy
According to Michael Porter, when it comes to a firm's value chain activities and the essence of strategy, a firm should ask itself?
Which activities should be done? And more importantly, what should not be done?
Which of the following is a question that managers must ask concerning internal firm factors when conducting a SWOT analysis?
All of these
____________ refer(s) to a firm's ability to reconfigure resources and create external market changes.
Dynamic capabilities
Which framework can managers use to determine whether firm resources and capabilities are internal strengths or weaknesses?
The VRIO framework
Strategy Highlight 4.1 points out that Nintendo became the market leader of game consoles and was able to gain market leadership over Sony and Microsoft based on its knowledge of the casual gamer. This deep understanding, derived over many years, has enabled Nintendo to develop games that respond to customer preferences. Nintendo's knowledge of its customer is currently a(n)?
VRIO resource
What pitfall does the use of strategic activity systems highlight when a competitor is considering imitating a rival firm?
A compounding effect, reducing the probability of successfully copying each interconnected system activity
What is NOT true concerning the importance of dynamic capabilities to a firm?
A firm is unable to create rare resources unless it is dynamic
Intangible assets add great value to a firm because?
A firm's culture, knowledge, and intellectual property take time to develop and are generally difficult to imitate.
An example of a non-tangible resource?
A firm's reputation
Which of the following frameworks is most effective at demonstrating the difficulty of imitating a firm with 25 interconnected activities?
A strategic activity system
When a firm is conceptualized as a network of socially complex, interconnected activities, it is referred to as being?
A strategic activity system.
When evaluating the sustainability of a competitive advantage, which of the following is NOT true?
If managed effectively, existing core competencies can sustain a competitive advantage indefinitely.
Google's fixed assets, including its headquarters ("The Googleplex") and server farms, are valued at $5 billion, while the Google brand is valued at over $100 billion. Apple's physical attributes are valued at $2 billion, while its brand is valued at over $63 billion. What can be derived from this?
Intangible assets, while invisible, contribute more to competitive advantage than do tangible assets.
A SWOT analysis allows managers to evaluate a firm's current situation and future prospects by simultaneously considering _________ and __________ factors.
Internal; external
Primary activities in the firm level value chain are?
Involved in a product's physical creation, its distribution, and its service after the sale
Toyota lost its competitive advantage when lean manufacturing became an industry standard as other firms learned about and utilized this manufacturing process. These firms learned about lean manufacturing due to?
Knowledge diffusion
Suppose several senior managers recently left Google and went to work at rival Microsoft. What part of the "stocks and flows" of resources does this represent for Google?
Leakage
According to Strategy Highlight 4.3, Microsoft's eventual industry dominance is largely credited to?
The lucky break that Bill Gates got when starting Microsoft, which was leveraged into a highly effective strategy.
Core competencies are important to a firm because?
They need to be benchmarked from a firm with the competitive advantage
As noted in the Chapter 4 opening case, Circuit City lost its market leadership in part because it laid off some of its most experienced and loyal salespeople. It can be said that Circuit City lost a resource that was?
Valuable and rare
Currently, lean manufacturing is a __________ but ____________ resource, which leads to competitive parity.
Valuable, common
Resources and capabilities that generate a temporary competitive advantage are?
Valuable, rare, and costly to imitate
One of the strategic goals of management is to develop a resource base that is primarily?
Valuable, rare, costly to imitate, and organized to capture value
The purpose of a firm's ____________ is to add additional value through primary and support activities that competitors cannot easily replicate.
Value chain