MGT 3830 Chapter 4
InVue, a consumer electronics company, is the leading manufacturer of high-definition (HD) LED televisions. HD technology has been its core competency and the company holds 60 percent shares in that market. However, InVue's competitors have now begun to produce more-advanced technologies like 4K Ultra HD and Internet-enabled Smart televisions. According to the dynamic capabilities perspective, what should InVue do? A) InVue should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment. B) InVue should stick to its existing core competency, that is HD LED technology, as it is the best in that segment. C) InVue should take steps to reduce the causal ambiguity and socially complexity of its core competency. D) InVue should work on enhancing the mobility of its core competency.
A) InVue should start working on Ultra HD and Smart television technologies to adapt its core competency to suit the external environment.
How does causal ambiguity act as an isolating mechanism for organizations? A) It makes it difficult for the competitors to understand why a company has been so successful. B) It creates a situation in which different social and business systems interact with one another. C) It makes it difficult for competitors to deploy their resources by creating ambiguity within their organizational structures. D) It makes it difficult for competitors to imitate core competencies quickly due to time compression diseconomies.
A) It makes it difficult for the competitors to understand why a company has been so successful.
62) Which of the following is an implication of high employee turnover in a company? A) It results in a reduction in the company's intangible-resource stocks. B) It makes the source of the company's competitive advantage causally ambiguous. C) It makes the source of the company's competitive advantage socially complex. D) It results in greater immobility and heterogeneity of the company's resources.
A) It results in a reduction in the company's intangible-resource stocks.
Which of the following best exemplifies social complexity as an isolating mechanism? A) Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management and product development systems with little success. B) Kristin's Cosmetics failed to acquire the resources for its eyeliner at a low cost and thereby lost its competitive advantage over Monica's Makeup. C) Kristin's Cosmetics had difficulty competing with Monica's Makeup because it could not access the many makeup factories in Kentucky as easily as its competitor. D) Kristin's Cosmetics did not fully understand the reasons for the success of Monica's Makeup and therefore had difficulty competing with the firm.
A) Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management and product development systems with little success.
The owners of Puff Ball bakery want to open a second retail outlet. Which of the following scenarios is most likely to yield a competitive advantage? A) Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction. B) Purchase an existing bakery from a business that closed due to declining sales and try to revive it. C) Build a shop in a sparsely populated rural area where the land is inexpensive and few other bakeries exist. D) Open a shop in a crowded downtown location where several other bakeries have been successful over the years.
A) Open a shop on an inexpensive piece of land near a new mixed-use residential and business district currently under construction.
You are the manager of Impromptu Printing, a leading print shop. Impromptu's resources include a highly experienced staff and state-of-the-art printing presses. However, your closest competition has started to cut into your market share by offering same-day turnaround on most orders. Although your staffing and equipment is not optimized for rapid production, you decide to start offering a same-day guarantee to your customers. According to the resource-based view, what is wrong with this decision? A) You have failed to take into account resource immobility. B) Customers tend to have negative opinions of firms that imitate other firms. C) Employees are often resistant to changes in strategy. D) Your business is not organized to capture value.
A) You have failed to take into account resource immobility.
Which of the following describes a situation in which firms acquire resources at a low cost, laying the foundation for a competitive advantage later? A) better expectations of future resource value B) path dependence affecting current decisions C) causal ambiguity D) social complexity
A) better expectations of future resource value
To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to A) contribute to the firm's strategic position as either low-cost leader or differentiator. B) reduce the immobility and the heterogeneity of the firm's resources. C) create a static fit between the company's internal resources and the external environment. D) reduce the causal ambiguity and the social complexity of the firm's source
A) contribute to the firm's strategic position as either low-cost leader or differentiator.
) Pulse Mobiles Inc. is a cell phone manufacturing company. Its latest range of smartphones are visually similar to the Y-series range of smartphones from Talkie Gen Inc., in terms of its shape and look-and-feel. Which of the following strategies has Pulse Mobiles Inc. used to replicate the valuable and rare resource of Talkie Gen Inc.? A) direct imitation B) strategic equivalence C) substitution D) innovation
A) direct imitation
A firm will fail to create a sustained competitive advantage when the A) fit between its internal strengths and the external environment is static. B) source of its competitive advantage is causally ambiguous. C) source of its competitive advantage is socially complex. D) resource bundles exhibit heterogeneity and immobility.
A) fit between its internal strengths and the external environment is static.
In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength? A) increase in a firm's customer loyalty B) growth in the size of the market in which a firm operates C) rise in the income of the demographic segment to which a firm caters D) loss of a competitor's reputation
A) increase in a firm's customer loyalty
Salubre Pharmaceuticals invested $3.4 billion dollars to develop a new drug for individuals with diabetes. After Salubre receives FDA approval of the drug, its marginal cost to produce the drug for market will be A) low. B) high. C) moderate. D) unpredictable.
A) low.
Trendline Architects' core competency is building multi-family housing in urban areas. This competency is based primarily on the decisions made by the company's top management over several years to focus on building in densely populated cities. This process is called A) path dependence. B) dependence complexity. C) causal dependence. D) path immobility.
A) path dependence.
To reduce the amount of time it takes to apply packaging to its finished products, North Star Foods is implementing new equipment at its production plants. By doing this, North Star is addressing a ________ in the value chain analysis. A) primary activity B) secondary activity C) support activity D) premier activity
A) primary activity
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, 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? A) resource immobility B) resource heterogeneity C) resource imitation D) resource substitution
A) resource immobility
Dynamic capabilities are especially relevant for surviving and competing in markets that A) shift quickly. B) shift slowly. C) remain constant. D) remain unpredictable.
A) shift quickly.
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 said to be A) socially complex. B) inexhaustible. C) non-substitutable. D) nonambiguous.
A) socially complex.
Crystal Tech Inc.'s competency in designing and manufacturing efficient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-in-time manufacturing system, has enabled Crystal Tech Inc. to increase its profitability by lowering its production costs. Thus, Crystal's competency in designing and manufacturing microprocessors will be considered a(n) ________ resource in the VRIO framework. A) valuable B) substitute C) imitable D) organized
A) valuable
Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn Autos Inc., a rival company. What does this imply? A) The resource stock of Bass Automobiles Inc. increased. B) Bass Automobiles Inc. faced resource leakage. C) The resource flow into Unicorn Autos Inc. was reduced. D) Bass Automobiles Inc.'s tangible assets decreased.
B) Bass Automobiles Inc. faced resource leakage.
Igor's Furniture has seen its profit margins shrink over the past several years as increased competition has driven down furniture prices. You have been tasked with improving the company's margins. Which of the following approaches makes the most sense within the context of strategic activity systems? A) Go against the trend and raise prices. B) Install modern manufacturing equipment to improve efficiency. C) Increase spending on online marketing efforts. D) Focus on imitating the most successful products of competitors.
B) Install modern manufacturing equipment to improve efficiency.
Invoro is a market leader in consumer electronics. If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Invoro, then A) Finolo and Ethver will have a VRIO resource. B) Invoro will have a resource that is valuable but no longer rare. C) Invoro will have a sustainable competitive advantage in the industry. D) Invoro will have a resource that is rare but no longer valuable.
B) Invoro will have a resource that is valuable but no longer rare.
Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premium headphone market. Which of the following statements accurately explains one of the main reasons for the success of Beats? A) It produced the highest-quality headphones. B) It created a perception that owning its products was cool. C) It emphasized marketing over core competency. D) It focused on sponsoring future athletic superstars.
B) It created a perception that owning its products was cool
GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information? A) BC Inc. will be less competitive than GN Corp. because of its smaller investment in tangible assets. B) It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage. C) Judging from the assets listed, BC Inc. has probably been in the industry a much shorter time than GN Corp. D) There is no resource heterogeneity between the two firms, BC Inc. and GN Corp., as they operate in the same industry.
B) It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage.
________ describes a process in which the options one faces in a current situation are limited by decisions made in the past. A) Social complexity B) Path dependence C) Cannibalization D) Causal ambiguity
B) Path dependence
Which of the following statements accurately brings out the difference between tangible and intangible resources? A) Tangible resources contribute to a company's competitive advantage, whereas intangible resources have little effect on competitive advantage. B) Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased. C) Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily. D) Tangible assets are difficult for competitors to imitate, whereas intangible assets can be easily replicated.
B) Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased.
Which of the following provides an example of how a firm's valuable resource can be imitated? A) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of a generic medieval cathedral. B) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of the Leaning Tower of Pisa. C) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of the U.S.S. Enterprise aircraft carrier. D) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of a castle from a fantasy movie.
B) To compete with Build Your Own's model of the Eiffel Tower, Best Replica came out with a model of the Leaning Tower of Pisa.
A resource-based view of a firm provides a model that systematically aids in identifying A) core rigidities. B) core competencies. C) competitive disadvantage. D) competitive parity.
B) core competencies.
Seth's Computer Repair has maintained a competitive advantage based on its thorough and professional service, reasonable pricing, and money-back guarantee. Management at the company is so committed to doing repairs well that they often have rejected employee suggestions to expedite their processes. Recently, the company has begun to lose customers to a new local service offering same day in-home repairs and 24/7 online customer support. According to the dynamic capabilities perspective, Seth's Computer Repair has lost its competitive advantage due to A) value chain disruption. B) core rigidity. C) resource flows. D) resource stocks.
B) core rigidity.
According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were A) invaluable and common. B) easy to imitate. C) extremely rare. D) non-substitutable.
B) easy to imitate.
O'Ryan Plastics maintains a manufacturing plant overseas. The local government has just been overthrown by a military group that opposes foreign influence in the country. According to the SWOT analysis, the political situation in this location is considered to be an A) external opportunity. B) external threat. C) internal strength. D) internal weakness.
B) external threat.
In the context of the resource-based model of competitive advantage, if a successful firm exhibits resource immobility it means that the A) rival firms have better accessibility to quality resources, which they will be able to acquire and deploy to their benefit. B) firm will have a sustained competitive advantage because of its unique resources that are difficult for others to replicate that are difficult for others to replicate. C) competitors can easily replicate or copy the firm's resource bundles and capabilities. D) resources of the firm cannot be effectively deployed within its own organization
B) firm will have a sustained competitive advantage because of its unique resources that are difficult for others to replicate that are difficult for others to replicate.
Facing stiff competition in the e-reader market, Sumac Industries wants to protect its competitive advantage by increasing the perceived value of its reader. Sumac's best strategy to accomplish this would be to A) increase the cost of production to add innovative new features. B) highlight the number of celebrities who use Sumac e-readers. C) lower the retail price of its e-reader to attract new customers. D) try to imitate some of the features found in competing products.
B) highlight the number of celebrities who use Sumac e-readers.
The competitive advantage that one firm has will be short-lived in an industry in which A) resource immobility is high. B) perfect competition exists. C) resource heterogeneity is high. D) capabilities of a firm are not easily replicable.
B) perfect competition exists.
The "Natural Nourishment" granola bars manufactured by Global Good Foods have been the top-selling granola bars in the market. Though the market for granola bars is flooded with competitors, Global Good has been able to maintain its market position for a long time. This is mainly attributed to the pleasant texture of its granola, which comes from a proprietary processing technique used by the company. This competency of Global Good Foods will be considered as a(n) ________ resource in the VRIO framework. A) imitable B) rare C) intangible D) organizational
B) rare
Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which One Electro Inc. lags behind. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated? A) resource value B) resource heterogeneity C) resource immobility D) resource imitation
B) resource heterogeneity
Tony's Pizza has been trying to directly copy the strategies of Moonlight Pies. Even though it is evident that the success of Moonlight Pies' success comes from the freshness and variety of ingredients it uses, Tony's Pizza has not been able to introduce the same types of produce into its recipes. This is because Moonlight's network of relationships with local growers, as well as its efficient supply chain, are very difficult to emulate. Which of the following barriers to imitation does this scenario best illustrate? A) path dependence B) social complexity C) resource mobility D) resource homogeneity
B) social complexity
Online retailer NetShop had been drastically losing market share to its competitors. The management hired a reputed consulting firm to advise the company. The experts from the consulting firm pointed out that the company primarily lost out on its competitive advantage due to its poor customer service, including slow response times to customer inquiries and unclear return policies. These ineffective policies and procedures led to many disgruntled customers and a steady migration to more customer-friendly retailers. NetShop can best solve its problem by working on its A) immobile assets. B) support activities. C) resource flows. D) resource stocks.
B) support activities.
Which of the following is a drawback of the SWOT analysis? A) The SWOT analysis takes into account only the internal environment of a firm, ignoring the equally important external environment. B) This framework is only applicable to the manufacturing industries; it is ineffective when applied to the service firms. C) A problem with this framework is that a strength can also be a weakness, and that an opportunity can also simultaneously be a threat. D) A drawback of this framework is that it allows managers to evaluate only a firm's current situation and not its future prospects.
C) A problem with this framework is that a strength can also be a weakness, and that an opportunity can also simultaneously be a threat.
How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure? A) In the resource-based model, resources are freely available and mobile, whereas in the perfectly competitive industry structure, resources are highly immobile. B) In perfect competition, it is extremely difficult to replicate the resource bundles of a firm, whereas in the resource-based model, it is extremely easy to imitate them. C) In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry. D) In the resource-based model, only physical assets of a firm are considered as resources, whereas in perfect competition, a firm's capabilities and competencies are also considered as resources.
C) In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry.
________ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy. A) Embargoes B) Cartel arrangements C) Isolating mechanisms D) Market niches
C) Isolating mechanisms
Which of the following statements accurately describes a firm's resource stock? A) Resource stocks are a firm's level of resources that are common to competitors. B) Resource stocks are a firm's future estimate of both tangible and intangible resources. C) Resource stocks are a firm's current level of intangible resources. D) Resource stocks are a firm's level of investments to maintain or build a resource.
C) Resource stocks are a firm's current level of intangible resources.
The "diagonal assembly system" was a production system pioneered by the automobile company Gogo. Recently, Gogo was able to sue a competitor and won the suit, thereby receiving $100 million in damages. Which of the following would most likely enable Gogo to win such a lawsuit? A) The competitor ran advertising that criticized Gogo's assembly system. B) The competitor failed to apply for a patent of its own assembly system. C) The competitor infringed on Gogo's patent of the "diagonal assembly system." D) The competitor developed an assembly system that worked on a newer theory than Gogo's system.
C) The competitor infringed on Gogo's patent of the "diagonal assembly system."
Which of the following applies to the Strength-Threats quadrant of the SWOT matrix? A) The local fast-food chain Easy Hot Dogs expanded its limited menu to maintain its advantage against stiff competition. B) The local fast-food chain Easy Hot Dogs added a salad bar to maintain its competitive advantage against stiff competition. C) The local fast-food chain Easy Hot Dogs used its wholesome image to maintain its competitive advantage against stiff competition. D) The local fast-food chain Easy Hot Dogs revised its image of being a cheap-food place to being a wholesome family place to maintain its competitive advantage against stiff competition
C) The local fast-food chain Easy Hot Dogs used its wholesome image to maintain its competitive advantage against stiff competition.
In the context of SWOT analysis, which of the following best exemplifies a firm's external opportunity? A) an increase in its financial resources B) an increase in its brand equity C) an increase in its customers' disposable income D) an increase in its employee productivity
C) an increase in its customers' disposable income
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 A) path dependence. B) dependence complexity. C) causal ambiguity. D) social complexity.
C) causal ambiguity.
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 A) time compression diseconomies. B) resource homogeneity. C) causal ambiguity. D) path dependence.
C) causal ambiguity.
Merton's Toothpaste has been the leader of dental care products for about 40 years. However, this company relied too long on its competency of reducing cavities without refining or upgrading other aspects of its product. As a result, other personal hygiene companies that began to offer toothpastes with natural whitening agents gained a competitive advantage over Merton's. This case is an example of A) resource flow. B) dynamic capabilities. C) core rigidity. D) value chain.
C) core rigidity.
Leading guitar string producer Wound Up Inc. has enjoyed a competitive advantage based on its proprietary coating that gives its strings a clearer sound and longer lifespan than uncoated strings. One of Wound Up's competitors, however, has recently developed a similar coating using less expensive ingredients, which allows it to charge a lower price than Wound Up for similar-quality strings. Wound Up's competitive advantage is in danger due to A) a lack of perceived value. B) a lack of organization. C) direct imitation and substitution. D) resource immobility.
C) direct imitation and substitution.
Due to resource immobility, a critical assumption in the resource-based model of a firm, the A) competitive advantage of a firm exists for a short period of time. B) resource bundles of a firm can be easily imitated by competitors. C) resource differences between firms last for a long time. D) competencies and capabilities of all firms in an industry are similar.
C) resource differences between firms last for a long time.
Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's A) core competency. B) intangible resources. C) tangible resources. D) capabilities.
C) tangible resources.
Smooth Fusion Inc. is a software company that has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage? A) the cloud computing service that it uses B) the capital the company raised from its shareholders C) the expertise acquired by the employees in the company D) the headquarters building owned by the company
C) the expertise acquired by the employees in the company
When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because Blue Tech Inc.'s models were inferior to the third- and fourth-generation models its competitors were selling. In this scenario, Blue Tech Inc.'s failure can be best attributed to A) causal ambiguity. B) diseconomies of scope and scale. C) time compression diseconomies. D) social complexity.
C) time compression diseconomies.
Cartech Inc. is a manufacturer of automobile parts, which it sells to retail auto supply stores. Its core competencies include superior design and engineering capabilities, as well as a highly integrated and efficient supply chain. To sustain its competitive advantage, Cartech should first A) seek to replicate its nearest competitor's competency in innovative marketing. B) attempt to cut costs by replacing assembly line workers with robots. C) upgrade its engineering department and improve its supply chain. D) diversify its product offerings by developing parts for construction equipment.
C) upgrade its engineering department and improve its supply chain.
Ironhorse Tools has used $700,000 from its total annual earnings of $1,650,000 to invest in upgrading its manufacturing facilities. Its accounts receivable from customers is estimated to be $130,000 and accounts payable $75,000. In monetary terms, what would Ironhorse's resource flows be? A) $1,650,000 B) $130,000 C) $75,000 D) $700,000
D) $700,000
Home Value Inc., Max Cart Inc., and Nice Necessities Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Judging from the market conditions described in this scenario, which of the following statements is true? A) Resource immobility of the firms will be low. B) The industry structure will be far from perfect competition. C) Barriers to entry within the industry will be high. D) Any advantage that one firm has will be short-lived.
D) Any advantage that one firm has will be short-lived.
Your company, a small software development firm, has attracted many of the top young programmers in your area. As a result, the apps you produce have been praised for their innovative features and intuitive user experience. According to the bathtub metaphor in the dynamic capabilities perspective, what is the best way for you to protect against resource leakage? A) Invest in an online marketing campaign for existing products to retain customers. B) Open a satellite office overseas to support the company culture of taking chances. C) Attempt to undercut the competition by imitating their top-selling product. D) Improve the benefits package to retain key employees and reduce turnover.
D) Improve the benefits package to retain key employees and reduce turnover.
After conducting a SWOT analysis, your firm has decided to focus on addressing issues located in the Weaknesses-Opportunities quadrant. Which of the following steps are you most likely to take? A) Devote more resources to an extremely popular advertising campaign to promote an exciting new product. B) Shut down struggling retail outlets in an economically depressed region. C) Deploy top sales personnel to prevent buyers from migrating towards lower-priced competition. D) Reorganize the inefficient research and development department to bring innovative products to market more quickly.
D) Reorganize the inefficient research and development department to bring innovative products to market more quickly.
) In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility? A) AP Corp. has earned a good reputation among its shareholders by investing more heavily in equipment than in building up brand equity. B) Two Triangle Inc. has lost its market share because its resources are rigid, inflexible, and static. C) 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. D) True 3 Inc. has been able to outperform its competitors because the uniqueness of its employee experience is difficult for competitors to replicate.
D) True 3 Inc. has been able to outperform its competitors because the uniqueness of its employee experience is difficult for competitors to replicate.
Superlative Productions spent 10 million dollars to buy the rights to a best-selling novel. The company then prepared for production by hiring a screenwriter to adapt the novel, casting the main roles, renting cameras and other equipment, and scouting locations in southern Arizona. Which of the following pairs of resources are both intangible? A) money spent to buy rights to the novel; screenwriter's experience adapting novels B) money spent to buy rights to the novel; locations in southern Arizona C) best-selling novel; locations in southern Arizona D) best-selling novel; screenwriter's experience adapting novels
D) best-selling novel; screenwriter's experience adapting novels
Keen Beans, a leading coffee roaster, anticipated that the prices of coffee beans from Costa Rica, where its main suppliers were located, would double in less than three years. This would significantly affect Keen Beans' profit margins. Thus, Keen Beans decided to develop a new partnership with a supplier in Indonesia. As predicted, the price of Costa Rican coffee beans increased twofold. Because the price of Indonesian coffee beans was much lower, Keen Beans was able to maintain its profit margins in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate? A) intellectual property protection B) causal ambiguity C) time compression diseconomies D) better expectations of future resource value
D) better expectations of future resource value
Threadbare Industries is a new high-end textile company that 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 Threadbare Industries to acquire using its capital? A) a new CEO B) software C) a lease for a new building D) brand name
D) brand name
Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as A) tangible resources. B) reserves. C) capital gains. D) capabilities.
D) capabilities.
Cloud Cones is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of Cloud Cones best exemplifies a A) markup. B) resource flow. C) capital gain. D) core competency.
D) core competency.
In the context of SWOT analysis, which of the following best exemplifies a firm's internal weakness? A) fall in the purchasing power of the firm's customers B) increased competition in the industry where the firm operates C) irregularity in the raw materials supply throughout the industry D) decline in the firm's market share
D) decline in the firm's market share
As manager of a relatively new company, you are tasked with analyzing company resources to identify core competencies capable of supporting a competitive advantage. Which of the following resources is most likely to generate a competitive advantage? A) new production facilities B) large cash holdings C) stockpile of supplies D) enthusiastic company culture
D) enthusiastic company culture
True Moto Corp. (TMC) is a leading automobile company. The company has been able to sustain its competitive advantage primarily due to its high-quality and efficient electric motors. Most of its competitors have failed to develop similar electric motors at a reasonable price. Which of the following resource attributes listed in the VRIO framework has helped TMC sustain its competitive advantage? A) resource mobility B) inexhaustible nature C) intangibility of the company's resource D) high costs involved in imitation
D) high costs involved in imitation
Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will be successful today only if its A) competitive advantage is derived from static resource or market advantages. B) resource advantage is not causally ambiguous or socially complex. C) resource advantage is maintained for a short period of time. D) internal strengths change with its external environment in a dynamic fashion.
D) internal strengths change with its external environment in a dynamic fashion.
According to the value chain analysis, which of the following is a primary activity? A) research and development B) human resources management C) accounting and finance D) marketing and sales
D) marketing and sales
Iceberg Storage, a leading hard drive manufacturer, recently filed for bankruptcy. While most of Iceberg's competitors were shifting away from physical data storage devices toward online cloud storage services, Iceberg invested most of its retained earnings in the effort to improve its hard drives. Once the hard-drive market drastically declined, Iceberg Storage was unable to capitalize on the new technology. Which of the following does this scenario best illustrate? A) causal ambiguity B) knowledge diffusion C) social complexity D) path dependence
D) path dependence
Brain Boost Inc. is a leading educational toy company. Competitors across the globe have failed to imitate Brain Boost's production models, supply chain systems, knowledge systems, and culture. These attributes have remained unique to Brain Boost Inc. for a long time. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate? A) resource homogeneity B) resource cost C) resource substitution D) resource immobility
D) resource immobility
During market testing, Sensation Cosmetics (SC) realized that the cosmetics industry was dominated by multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. SC management realized that a new entrant would require a different business model to be successful. Thus, SC started selling its products through direct marketing. In this scenario, Sensation Cosmetics accomplished substitution primarily through A) path dependence. B) technology transfer. C) knowledge diffusion. D) strategic equivalence.
D) strategic equivalence.
Riya has recently started a restaurant in a commercial area that already has many other established restaurants and popular fast-food chains. Riya owns the building in which her restaurant is located, rather than leasing premises as her competitors do. This factor allows her to offer her products at a more competitive price. Riya has also invested a huge amount in designing the restaurant's interior and in equipping the kitchen with the appliances that are most widely used in her industry. In this scenario, which of the following is the most valuable resource for Riya's business? A) the investments made by Riya on the restaurant's interior B) the type of kitchen equipment widely used in her industry C) the restaurant's late entry into the market D) the building owned by Riya, which reduces cost of operations
D) the building owned by Riya, which reduces cost of operations
Gladiator Apparel is the market leader in the sportswear industry. Though most of its resources are common to those of its competitors, a few rare resources have helped the company gain and sustain a competitive advantage. Which of the following assets of Gladiator Apparel is most likely to be considered a rare resource that is contributing to its competitive advantage? A) the company's land and buildings B) the company's plant and machinery C) the company's raw material supplies D) the company's design patents
D) the company's design patents
The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment? A) a reputation for fast customer service B) a culture of proactive communication C) patents for electronic components D) the punch presses that produce parts
D) the punch presses that produce parts
A SWOT analysis would provide a definitive answer as to whether a firm's growing footprint in overseas markets is a strength or weakness.
FALSE
Accounting, human resources, and research and development (R&D) are examples of primary activities that add value directly to the value chain.
FALSE
Amazon's tendency to reinvest a large share of its profits into new services and capabilities exemplifies a low level of resource flows.
FALSE
High demand for online video streaming options is one of Netflix's core competencies.
FALSE
Intellectual property (IP) protections such as trademarks or patents are proven methods of establishing permanent barriers to imitation.
FALSE
One of Rolex's tangible resources is its well-known brand name and reputation for quality timepieces.
FALSE
A music distributor that decides to launch a proprietary music streaming service to respond to changes in music consumption trends exhibits dynamic capabilities.
TRUE
According to the resource-based view, a firm that differentiates itself from its competitors through its personalized approach to customer service is likely to sustain its competitive advantage for a long time.
TRUE
Dynamic strategic activity systems help a firm to maintain a competitive advantage for extended periods of time.
TRUE
The core competencies of a firm are determined by the interplay of its tangible resources and intangible capabilities.
TRUE
