management 454 chapter 4

Which of the following best exemplifies social complexity as an isolating mechanism?

Amanda's Cosmetics attempted to imitate how Michele's Makeup combined its management and product development systems, with little success.

When performing internal analysis of firms, how would you answer the question, "Why do companies exist?"

Companies exist because they create value for customers in ways that customers are unable to replicate on their own.

________ allow(s) a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost.

Core competencies

How does causal ambiguity act as an isolating mechanism for organizations?

It makes it difficult for the competitors to understand why a company has been so successful.

Assume a firm's resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm's competitive advantage is protected against imitation by

causal ambiguity.

Competitors have found it extremely difficult to imitate Gene Electronics' 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' 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 has been protected from losing its competitive advantage as a result of

causal ambiguity.

When a firm does not continually upgrade or improve core competencies, its competitors are likely to

develop equivalent or superior skills.

Capabilities are the________ and managerial skills necessary to orchestrate a diverse set of resources to deploy them strategically.

organizational

An observer may conclude that the organizational culture of Zappos, an online retailer for shoes and clothing, might be the basis for its competitive advantage. However, reverse social engineering to crack Zappos' code of success might be much more difficult for a company trying to exactly imitate its strategy. Thus, the source of Zappos'competitive advantage is

path dependence.

Southwest Airlines (SWA) has enjoyed a sustained competitive advantage, allowing it to outperform its competitors over several decades. Continental and Delta attempted to copy SWA with their offerings of Continental Lite and Song airlines, respectively. Neither Continental nor Delta, however, was able to successfully imitate the resource bundles and firm capabilities that make SWA unique. Which of the following is this case an example of?

resource immobility