4490 Chapter 4
______ are the firm's level of investments to maintain or build a resource.
Resource flows
______ refers to the idea that a firm is a bundle of resources and capabilities that is unique to the firm.
Resource heterogeneity
One of the most popular tools used by firms to evaluate their current situation and future prospects is the ______.
SWOT analysis
______ describes a situation in which different social and business systems interact with each other.
Social complexity
According to the VRIO framework, a rare resource is ______ if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost.
costly to imitate
The ______ describes the internal activities a firm engages in when transforming inputs into outputs.
value chain
Cowgirl Boots, inexpensive leather boots for women, are selling at record-high numbers. The CEO of the company, however, cannot figure out why. Was it caused by the company's recent advertisement campaign or the newly reduced price of the boots or some other unknown factor? Based on this information, what concept describes the CEO's confusion regarding Cowgirl Boots' recent success?
causal ambiguity
Strategic leaders use internal and external analyses in tandem to create a customized fit between a company's ______.
internal resources and external environment
Primary activities include which of the following? (Check all that apply.) human resources research and development operations supply chain management
operations supply chain management
Capabilities
organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically
VIRO framework
A theoretical framework that explains and predicts firm-level competitive advantage.
______ activities add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain.
Primary
support activities
firm activities that add value indirectly, but are necessary to sustain primary activities
A resource is considered ______ if it helps a firm to deal with an external threat.
valuable
______ describes a situation where the cause and effect of a phenomenon are not readily apparent.
Causal ambiguity
True or false: A competitive advantage is most often maintained indefinitely.
False
True or false: The value chain concept is applicable primarily to high-tech firms in rapidly changing environments.
False
Which of the following were resources and capabilities that helped Five Guys gain a competitive advantage and develop into a successful restaurant chain? (Check all that apply.) Focusing on such details as store layout and design Preparing and freezing meat paddies at a centrally located site Carefully choosing the supplier of the potatoes for their fries Never using the highest-priced vendor for a product
Focusing on such details as store layout and design Carefully choosing the supplier of the potatoes for their fries
What are the characteristics of a strategic activity system as it applies to firms? (Check all that apply.) It is causally ambiguous. It weakens competitive advantage. It consists of interconnected activities. It is socially complex.
It is causally ambiguous. It consists of interconnected activities. It is socially complex.
______ describes a process in which the options one faces in the current situation are limited by decisions made in the past.
Path dependence
______ are the firm's current level of intangible resources.
Resource stocks
______ resources have physical attributes and are visible.
Tangible
Which of the following are situations in which a resource is considered valuable? (Check all that apply.) The resource helps the firm increase its economic value creation (V-C). The resource is both heterogeneous and immobile. The resource helps a firm exploit an external opportunity. The resource helps the firm produce tangible, not intangible competencies.
The resource helps the firm increase its economic value creation (V-C). The resource helps a firm exploit an external opportunity.
Which of the following statements are true about the capabilities of a firm? (Check all that apply.) They include organizational skills. They include managerial skills. They concern the deployment of resources. They include intellectual property.
They include organizational skills. They include managerial skills. They concern the deployment of resources.
True or false: According to the resource-based model, a firm is assumed to be a unique bundle of resources, capabilities, and competencies.
True
Which of the following identifies the resources that can lead to a competitive advantage?
VRIO framework
Capabilities include which of the following? (Check all that apply.) a company's organizational structure a company's culture a company's financial statements a company's routines
a company's organizational structure a company's culture a company's routines
dynamic capabilities
a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage
Resource-based view
a model that sees certain types of resources as key to superior firm performance
A customized strategy that considers the unique resources of the company while considering the external environment creates ______.
a strategic fit between them
Time compression diseconomies occur when a firm ______.
attempts to reach an outcome in a reduced amount of time
Isolating mechanisms are considered to be ______.
barriers to imitation
According to the VRIO framework, to fully exploit the competitive potential of its resources, capabilities, and competencies, a firm must ______.
be organized to capture value
In order to be successful, a firm must have a resource that is valuable, rare, costly to imitate, and the firm must ______.
be organized to capture value
What do the best firms in an industry seek to identify and manage on an ongoing basis as sources to respond to their external environment? (Check all that apply.) internal weaknesses core competencies resources capabilities
core competencies resources capabilities
A(n) ______ is a unique strength, embedded deep within a firm, that is critical to gaining and sustaining competitive advantage.
core competency
primary activities
firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain
The purpose of a SWOT analysis is to ______.
form a strategy that is tailored to the firm's unique strengths and weaknesses and the opportunities and threats in its environment
If the problem with a business strategy results in causal ambiguity, managers will ______.
have a difficult time developing a theory to deal with the problem
What should a firm do in order to be organized to capture value? (Check all that apply.) have good coordinating systems have a good organizational structure have a rare and valuable resource have CEOs with forward-thinking vision
have good coordinating systems have a good organizational structure
resource
in the resource-based view of the firm, a resource includes any assets as well as any capabilities and competencies that a firm can draw upon when formulating and implementing strategy
In contrast to primary activities, support activities add value ______, but are necessary to sustain primary activities.
indirectly
A firm's culture, brand equity, and intellectual property are examples of ______.
intangible resources
Which of the following are examples of resources for a firm? (Check all that apply.) intellectual property cash legal liabilities buildings
intellectual property cash buildings
Which isolating mechanism is set up to legally prevent companies from copying products that give a firm a competitive advantage?
intellectual property protection
What are examples of intangible resource stock a company may have? (Check all that apply.) reputation for quality dynamic capabilities engineering expertise a manufacturing facility
reputation for quality dynamic capabilities engineering expertise
Core competencies of a business are generated by the interaction of ______.
resources and capabilities
The interaction of the many individual systems in the operation of a company often leads to causal ambiguity because of ______.
social complexity
Accounting and finance are ______ activities in a firm's value chain.
support
In order to avoid making costly mistakes due to the potential shortcomings of the SWOT analysis, a manager should ______.
take results from the SWOT analysis with "a grain of salt"
The resource-based view classifies all resources as ______.
tangible or intangible
What does the concept of resource heterogeneity imply?
that each firm has different resources
In performing a SWOT analysis to generate insights from external and internal analysis, internal strengths and weaknesses can be determined by applying ______ and external strengths can be evaluated in part by applying ______.
the VRIO framework; PESTEL
Value Chain
the internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value
How are intangible resource stocks acquired?
through investments over time in intangible resources
A firm's attempts to shorten the length of time a process takes, may lead to disappointing outcomes because of ______.
time compression diseconomies
A core competency can help a company achieve which of the following? (Check all that apply.) to reduce the wages of its employees to differentiate its products and services to create higher value for the consumer to offer products of comparable value at lower cost than rivals can
to differentiate its products and services to create higher value for the consumer to offer products of comparable value at lower cost than rivals can
Which of the following are intangible resources that can be protected as intellectual property? trademarks trade secrets copyrights generic formulas
trademarks trade secrets copyrights
core competencies
unique strengths, embedded deep within a firm, that are critical to gaining and sustaining competitive advantage
The VRIO framework is used to evaluate a firm's resources. VRIO is an acronym for which of the following? (Check all that apply.) Rare Original Valuable Imitate
Rare Valuable Imitate
The organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically are called _____.
capabilities
For a firm to sustain any competitive advantage over time, the fit between its internal strengths and external environment needs to be ______.
dynamic
Which of the following can help a firm extend its competitive advantage? (Check all that apply.) intellectual property protection better expectations of future resource value depletion of tangible and intangible resources resource stocks and flows path dependence
intellectual property protection better expectations of future resource value path dependence
Intellectual property protection and social complexity are examples of ______ mechanisms, which help a firm sustain a competitive advantage.
isolating or isolation
The culture of Zappos is hard to imitate because it consists of numerous, diverse interactions among its employees, processes, procedures, and norms, that create which of the following?
social complexity
Which of the following is true according to the assumption of resource heterogeneity?
Resource bundles vary from company to company.
"Time compression diseconomies" refers to the concept that ______.
attempting to get a good outcome in less time tends to be ineffective
intangible resources
resources that do not have physical attributes and thus are invisible
Tangible Resources
resources that have physical attributes and thus are visible
The concept of social complexity suggests that ______.
social and business systems that work for one firm may be hard to imitate because of complex interactions between these systems
When strategizing about possible competitive advantages, a major advantage of the SWOT analysis is that it allows managers to simultaneously consider ______.
internal and external factors
A resource is ______ if the number of firms that possess it is less than the number of firms required to reach a state of perfect competition.
rare