Chapter 4 Evaluating a Company's Resources, Capabilities, and Competitiveness

Which of the following is not a tangible resource?

A company's reputation for integrity and quality products

________ is a much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents the best practice when both cost and effectiveness are taken into account.

Benchmarking

Which one of the following is not part of conducting a SWOT analysis?

Benchmarking the company's resource strengths and competitive capabilities against industry key success factors

Which one of the following is a tangible resource?

Financial capital

Which of the following is not a good example of a company's resources?

Having higher earnings per share and a higher stock price than key rivals

Which of the following is not accurate as concerns the task of identifying the strategic issues and problems that merit front-burner managerial attention?

Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company's internal and external environment.

Which of the following is not a good option for trying to remedy high internal costs vis-à-vis rival firms?

Implementing aggressive strategic resource mapping to permit across-the-board cost reduction

Which of the following most accurately reflect a company's resource strengths?

Its core competencies, competitive capabilities, and valuable intangible assets

Which of the following is not an example of an external threat to a company's future profitability?

Lack of a distinctive competence

Which of the following is not an example of an external threat to a company's future profitability?

Lack of a well-known brand name with which to attract new customers and help retain existing customers

Which of the following is not a market opportunity most relevant to a particular company?

Likely entry of potent new competitors

Which of the following is not an option for remedying a forward channel-related cost disadvantage?

Negotiate more favorable prices with suppliers.

Which of the following is not an option for improving supplier-related value chain activities?

Persuade forward channel allies to implement best practices.

Which of the following is not an example of a company's dynamic capability?

Petsmart's ability to remain a big-box, bricks and mortar retailer

________ is identifying and appraising a company's resource strengths and weaknesses and its external opportunities and threats.

SWOT analysis

Which of the following is not a component of evaluating a company's competitive strength and cost structure?

Scanning the environment to determine a company's best and most profitable customers

Which one of the following is not an intangible resource?

Technological assets

Which one of the following is not a reliable measure of how well a company's current strategy is working?

The company's development of human capital, organizational capital, and information capital

Which of the following best describes the market opportunities that tend to be most relevant to a particular company?

Those that match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage

The four tests of a resource's competitive power are often referred to as the

VRIN test, which asks if a resource is valuable, rare, inimitable, and nonsubstitutable.

________ is a powerful tool for sizing up the company's competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace.

VRIN tests

Which of the following is not one of the five questions that comprise the task of evaluating a company's competitive strength and cost structure?

What are the company's most and least profitable geographic segments?

Which one of the following is not something that can be learned from doing a competitive strength assessment?

Whether a company should correct its weaknesses by adopting best practices and/or revamping the makeup of its value chain

When looking at the entire industry, the main areas in a company's overall value chain where important differences between a firm's cost and value do not occur are in

a company's own internal activities, the supplier's industry value chain, and the forward channel portion of the industry chain.

The difference between a resource and a capability is that

a resource represents a competitive asset that is owned or controlled by the company, whereas a capability is a competently performed internal activity that is developed through the deployment of the company's resources.

Managers can pursue any of several strategic approaches to reduce the costs of internally performed value chain activities and improve a company's cost competitiveness by

acquiring suppliers, rivals, or forward channel distributors.

The most important payoff of doing a thorough SWOT analysis is

assisting strategy makers in drawing conclusions about the company's overall situation and crafting a strategy that is well-matched to the company's resources and capabilities, its market opportunities, and the external threats to its future well-being.

A resource-based strategy

attempts to exploit resources in a manner that offers value to customers in ways rivals are unable to match.

For a particular company resource to have meaningful competitive power and perhaps qualify as a basis for competitive advantage, it should

be competitively important, hard for competitors to copy or imitate, rare and something rivals lack, and not be easily trumped by the substitute resources/capabilities of rivals.

A company that lacks a stand-alone resource that is competitively powerful may attempt to develop a competitive advantage through

bundled resources that enable superior performance of cross-functional capabilities that can be leveraged to support its business model and strategy

Imitation by rivals is most challenging when

capabilities reflect a high level of social complexity and causal ambiguity.

Benchmarking involves

comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities.

When a company is good at performing a particular internal activity, it is said to have a

competence

A company's value chain

consists of two broad categories of activities: the primary activities that create customer value and the requisite support activities that facilitate and enhance the performance of the primary activities.

A company's competitive strength scores

determine whether a company has a cost-effective value chain.

Every organization has many resources, capabilities, and routines; however, those few things the company does really well and performs with a very high proficiency are termed

distinct capabilities.

The most important parts of conducting a SWOT analysis are

drawing conclusions about the company's overall business situation and translating these conclusions into strategic actions.

The two most important parts of SWOT analysis are

drawing conclusions from the SWOT listings about the company's overall situation and translating these conclusions into strategic actions to better match the company's strategy to its resource strengths and market opportunities, correct the important weaknesses, and defend against external threats.

When a company has become proficient in modifying, upgrading, or deepening the company's resources and capabilities in response to its changing environment and market opportunities, it is called a

dynamic capability.

Sizing up a company's overall resource strengths and weaknesses

essentially involves constructing a strategic balance sheet on which the company's resource strengths represent competitive assets and its resource weaknesses represent competitive liabilities.

The most difficult part of benchmarking is

figuring out how to gain access to information regarding rivals' practices and costs.

A company's resource weaknesses can relate to

inability to achieve a leading market share.

Activity-based costing

is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost.

A company resource weakness or competitive deficiency

is something a company lacks or does poorly (in comparison to rivals) or a condition that puts it at a disadvantage in the marketplace.

Identifying the primary and secondary activities that comprise a company's value chain

is the first step in understanding a company's cost structure (since each activity in the value chain gives rise to costs).

Organizational capabilities are virtually always

knowledge-based.

The value of doing competitive strength assessment is to

learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals.

The common types of valuable resources and competitive capabilities that management should consider when crafting a strategy do not include

market share, profit growth, and increases in stock price.

The external market opportunities that are most relevant to a company are the ones that

match up well with the firm's financial resources and competitive capabilities, offer the best growth and profitability, and present the most potential for competitive advantage.

A company that is at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals

may be able to develop substitute resources that accomplish the same objective as the competitively valuable resource possessed by rivals.

The options for remedying a cost disadvantage associated with activities performed by forward channel allies include

pressuring forward channel allies to reduce their costs and markups.

A first-rate SWOT analysis

provides a good basis for crafting a strategy.

Doing a competitive strength assessment entails

ranking the company against major rivals on each of the important factors that determine market success and ascertaining whether the company has a net competitive advantage or disadvantage versus major rivals.

A capability of the firm is not considered to be

related to the level of resources available.

Determining whether a company's prices and costs are competitive

requires looking at the costs of a company's internally performed activities and the costs of its suppliers and forward channel allies (distributors/dealers).

The primary activities included in the value chain include

supply chain management, operations, distribution, sales and marketing, and customer service activities

A company's strategic options for internally performed value chain activities do not include

switching to activity-based costing.

Accurately assessing the competitiveness of a company's cost structure and value proposition requires

that managers understand an industry's entire value chain system.

Identifying the strategic issues a company faces and compiling a "worry list" of problems and roadblocks is an important component of company situation analysis because

the "worry list" sets the management agenda for taking actions to improve the company's performance and business outlook.

One important indicator of how well a company's present strategy is working is whether

the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.

Costs and price differences among competing companies can have origins in activities performed by

the company's internally performed activities (its own value chain), but also on costs in the value chain of its suppliers and distribution channel allies.

A company's resources and capabilities represent

the firm's competitive assets that determine its competitiveness and ability to succeed in the marketplace.

A company's value chain identifies

the primary activities that create value for customers and related support activities.

The options for remedying a supplier-related cost disadvantage include

trying to negotiate more favorable prices with suppliers and switching to lower priced substitute inputs.

A resource-based strategy

uses a company's valuable and rare resources and competitive capabilities to deliver value to customers that rivals have difficulty matching.

Two analytical tools useful in determining whether a company's prices and costs are competitive are

value chain analysis and benchmarking

The competitive power of a company resource or competitive capability hinges on

whether it is rare and, therefore, something rivals lack.

One of the most telling signs of whether a company's market position is strong or precarious is

whether its prices and costs are competitive with those of key rivals.

The competitive power of a company resource depends on

whether the resource is really competitively valuable, if it is rare and something competitors lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute resource strengths and competitive capabilities of rivals.