Chapter 4 Quiz

Onivo Auto Inc. has been the leader in low-cost and fuel-efficient engine technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage? - The resource is easy to replicate. - The resource is costly to imitate. - The resource neutralizes external opportunities. - The resource decreases the perceived value of its products.

The resource is costly to imitate.

Which of the following statements accurately brings out the distinction between a firm's resources and capabilities? - While a firm's resources are always tangible, its capabilities are by their very nature intangible. - While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies. - Unlike resources, capabilities do not find their expression in the firm's structure, routines, and culture. - Unlike capabilities, the resources of the firm cannot be imitated by its competitors.

While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies.

If a firm is not effectively organized to exploit the competitive potential of a valuable, rare, and costly to imitate (VRI) resource, the best case scenario is - a temporary competitive advantage. - a state of perfect competition. - strategic equivalence. - direct imitation.

a temporary competitive advantage.

A firm's _______ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers. - resource flows - capital gains - capabilities - activities

activities

In the context of the VRIO framework, a resource is said to be valuable if it - allows a firm to take advantage of an external opportunity. - helps a firm increase its costs but lower its prices. - results in a perfectly competitive industry structure. - leads to competitive parity within an industry.

allows a firm to take advantage of an external opportunity.

In a perfectly competitive industry structure - resource immobility is high. - resource heterogeneity is high. - any competitive advantage that one firm has will be short-lived. - competitors cannot quickly acquire resources used by the current market leader.

any competitive advantage that one firm has will be short-lived.

In the dynamic capabilities perspective, for an asset or a capability to be included in a firm's resource stock, it should be - readily available for purchase using cash. - commonly shared by other firms in the same industry. - built through investments over time. - capable of reducing the barriers to entry in an industry.

built through investments over time.

In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm? - increasing productivity of the employees - decreasing employee attrition within the firm - decreasing government interference in the target market - increasing inflation rates in the target market

decreasing government interference in the target market

Patents, designs, copyrights, trademarks, and trade secrets are five forms of - intellectual property. - social complexity. - causal ambiguity. - path dependence.

intellectual property.

According to the value chain analysis, which of the following is a support activity? - production and operations - supply chain management - marketing and sales - research and development

research and development

Which of the following is an example of a firm's capabilities? - routine activities performed in the firm, like physical delivery of products - specific tasks involved in the invoicing of customers - assets such as plant and machinery owned by the firm - skills involved in training and managing a workforce

skills involved in training and managing a workforce

Which of the following will most likely be considered as an automobile company's core competency? - the company's ability to follow federal laws just like its competitors - the company's ability to start distributing its cars in areas where a competitor is the market leader - the company's ability to make its cars more fuel efficient than most of its competitors - the company's ability to manufacture cars at a cost that is average in the industry

the company's ability to make its cars more fuel efficient than most of its competitors

The auditor of a public company is assessing the value of all the intangible assets owned by the company. Which of the following would most likely be included in this assessment? - the company's headquarters - the company's brand equity - the company's cash reserves - the company's plant and equipment

the company's brand equity

While most of Savvy Inc.'s competitors were moving toward developing and emerging markets, Savvy Inc. decided to keep its operations limited to its home country so that it could gain some advantage. A few years later, however, Savvy Inc. lost its footing in the home market due to a sharp fall in demand. It then decided to invest in large-scale operations in the same developing nations as its competitors, within a short period of six months. However, its costs kept increasing, so it could not compete against the already established brands. In this scenario, the failure of Savvy Inc. can be best attributed to - time compression diseconomies. - better expectations of future resource value. - economies of scale. - resource mobility.

time compression diseconomies.

Using the _______, managers can see how competitive advantage flows from a firm's distinct set of activities. - resource-based view - VRIO framework - value chain analysis - SWOT analysis

value chain analysis

The _______ describes the internal activities a firm engages in when transforming inputs into outputs. - resource-based view - PESTEL analysis - value chain view - SWOT analysis

value chain view

Which of the following explains how dynamic capabilities are different from the resource-based view? - Dynamic capabilities deal with resource heterogeneity. - Dynamic capabilities deal with intangible resources. - Dynamic capabilities deal with tangible resources. - Dynamic capabilities deal with applying resources over time.

Dynamic capabilities deal with applying resources over time.

FL Systems Inc. and Oryxo Systems Inc. are two competing firms. FL Systems Inc. has $300,000 in tangible assets and $200,000 in intangible assets. Oryxo Systems Inc. has $150,000 in tangible assets and $347,000 in intangible assets. In the context of the resource-based view, which of the following is the most likely implication of the asset values of the two companies? - Oryxo Systems Inc. has less valuable resources than FL Systems Inc. - Oryxo Systems Inc. has less invisible assets than FL Systems Inc. - FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage. - FL Systems Inc. will find it easier than Oryxo Systems Inc. to sustain competitive advantage.

FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage.

In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by - maximizing an external strength to exploit an internal opportunity. - eliminating an internal weakness to mitigate an external threat. - leveraging an external opportunity to overcome an internal threat. - using an internal strength to exploit an external opportunity.

eliminating an internal weakness to mitigate an external threat.

A firm decides to retain $20,000 from its annual earnings and invest it in developing an advanced manufacturing system. According to the dynamic capabilities perspective, the $20,000 would most likely be referred to as the firm's - capital gain. - frozen asset. - resource flow. - marginal utility.

resource flow.

Even though Easy Speak Inc. and KM Com Inc. operate in the same industry—telecommunications—each firm has a different and loyal customer base. While Easy Speak Inc. attracts young students and professionals through its efficient network coverage and pricing, KM Com Inc. attracts elderly customers solely due to its excellent customer service. Thus, both firms draw their strengths from distinct resource bundles. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate? - resource imitation - resource mobility - resource substitution - resource heterogeneity

resource heterogeneity