Chapter 4

In the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity? An increase in its financial resources An increase in its brand equity An increase in its customers' disposable income An increase in its employee productivity

An increase in its customers' disposable income

Which of the following is an example of a firm's resources? Routine activities like order taking and invoicing customers, performed in a firm Assistance available from the government in the form of rules and regulations Assets such as land and building owned by a firm Liabilities such as bills payables and short-term debts

Assets such as land and building owned by a firm

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? Inventory Tools and equipment Land and building Brand name

Brand name

In the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness? Fall in the purchasing power of the firm's customers Increased competition in the industry where the firm operates Irregularity in the raw materials supply throughout the industry Decline in the firm's market share

Decline in the firm's market share

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. Groupon's competency was built more on an intangible resource than on a tangible one. Groupon operated in an industry where the barriers to entry were high. Groupon invested in resources that were invaluable and common.

Groupon's competency was not hard to imitate.

If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products that provide the same customer appeal as Invoro, a market leader in consumer electronics, then: Finolo and Ethver will have a VRIO resource. Invoro will have a resource that is valuable but no longer rare. Invoro will have a sustainable competitive advantage in the industry. Invoro will have a resource that is rare but no longer valuable.

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

Which of the following resources is a firm's resource stock? Cash at bank Reputation for quality Land and building Plant and machinery

Reputation for quality

Which of the following statements accurately brings out the difference between tangible and intangible resources? Tangible resources contribute to a company's competitive advantage, whereas intangible resources fail to do the same. Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased. Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily. Tangible assets are difficult to imitate, whereas intangible assets can be easily replicated.

Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased.

True Sync 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 True Sync Inc. will best enable it to gain and sustain a competitive advantage? The resources of the company that are mobile The capital raised by the company from its shareholders The expertise acquired by the employees in the company The headquarters owned by the company

The expertise acquired by the employees in the company

Brown Foods Inc., a leading chocolate producer, anticipated that the prices of cocoa beans would double in less than three years. This would disrupt the availability of cocoa in the industry. Thus, Brown Foods Inc. decided to purchase cocoa plantations in Ghana. As predicted, the prices of cocoa increased twofold. Because of the company-owned cocoa plantations, Brown Foods Inc. was able to sustain its competitive advantage in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate? Social complexity Causal ambiguity Time compression diseconomies Better expectations of future resource value

Time compression diseconomies

In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility? AP Corp. has earned a good reputation among its shareholders by investing more in tangible assets over intangible assets. Two Triangle Inc. has lost its market share because its resources are not mobile, that is rigid, inflexible, and static. Blue Elixir Corp. has been able to gain a competitive advantage because of its ability to efficiently move its resources from one manufacturing unit to another. True 3 Inc. has been able to outperform its competitors because the uniqueness of its resources is difficult to replicate.

True 3 Inc. has been able to outperform its competitors because the uniqueness of its resources is difficult to replicate.

The perfectly competitive industry structure differs from the resource-based model in its view that: all firms have access to the same resources. accessibility to bundles of resources differ across firms. resources tend to be "sticky." competencies differ across firms working in the same industry.

all firms have access to the same resources.

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as _____. tangible resources reserves capital gains capabilities

capabilities

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 _____. time compression diseconomies resource homogeneity causal ambiguity path dependence

causal ambiguity

Amazon.com's ability to provide the largest selection of items online, combined with superior IT systems and customer service, can be referred to as its _____. equity reserve economic equity core competency capital gain

core competency

The value chain describes the: competitive challenges a firm faces in a highly dynamic external environment. internal activities a firm engages in when transforming inputs into outputs. current consequences a firm experiences due to its decisions in the past. strategic advantages a firm experiences when its resources lack causal ambiguity.

internal activities a firm engages in when transforming inputs into outputs.

Connect Plus Cellular is a leading mobile network operator. Since most of the resources used by Connect Plus Cellular is easily available, the company's brand name is the only resource that distinguishes it from the other operators. No other competitor in the industry has a strong brand name like that of Connect Plus Cellular. This unique asset that has helped the company gain a competitive advantage will be considered as a(n) _____ resource in the VRIO framework. tangible mobile imperishable rare

rare

To make the SWOT analysis an effective management tool, a strategist must first: distinguish a firm's resources, competencies, and capabilities from each other. separate a firm's primary activities from support activities. analyze the pros and cons of strategic options. scan a firm's internal and external environments.

scan a firm's internal and external environments.