Quiz 4
Which of the following explains how dynamic capabilities are different from the resource-based view?
Dynamic capabilities deal with applying resources over time. ex: Dynamic capabilities deal with applying resources over time; the resource-based view does not.
A firm's _______ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers.
activities ex: Activities are distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers. Each distinct activity enables firms to add incremental value by transforming inputs into goods and services.
For an asset or a capability to be included in a firm's resource stock, it should be
built through investments over time. ex: For an asset or a capability to be included in a firm's resource stock, it should be built through investments over time. According to the dynamic capabilities perspective, the managers' task is to decide which investments to make over time in order to best position the firm for competitive advantage in a changing environment.
In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm?
decreasing government interference in the target market ex: Decreasing government interference in the target market best exemplifies an external opportunity for a firm. Strengths and weaknesses are internal to an organization, whereas opportunities and threats are external to the organization.
In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by
eliminating an internal weakness to mitigate an external threat. ex: In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by eliminating an internal weakness to mitigate an external threat.
Patents, designs, copyrights, trademarks, and trade secrets are five forms of
intellectual property. ex: Patents, designs, copyrights, trademarks, and trade secrets are five forms of intellectual property.
According to the value chain analysis, which of the following is a support activity?
research and development ex: According to the value chain analysis, research and development is a support activity. Support activities add value indirectly. These activities—such as research and development (R&D), information systems, human resources, accounting and finance, and firm infrastructure including processes, policies, and procedures—support each of the primary activities.
Which of the following is an example of a firm's capabilities?
skills involved in training and managing a workforce ex: A firm's capabilities include skills involved in training and managing a workforce. Capabilities are the organizational and managerial skills necessary to orchestrate a diverse set of resources and to deploy them strategically.
The _____ describes the internal activities a firm engages in when transforming inputs into outputs.
value chain view ex: The value chain view describes the internal activities a firm engages in when transforming inputs into outputs.
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?
FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage. ex: The most likely implication of the asset values of the two companies is that FL Systems Inc. will find it harder than Oryxo Systems Inc. to attain competitive advantage. Competitive advantage is more likely to spring from intangible rather than tangible resources.
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 costly to imitate. ex: The resource attribute that most likely underpins Onivo's competitive advantage is that it is costly to imitate. A resource is costly to imitate if firms that do not possess the resource are unable to develop or buy the resource at a reasonable price.
Which of the following statements accurately brings out the distinction between a firm's resources and capabilities?
While resources reinforce core competencies, capabilities allow managers to orchestrate their core competencies. ex: In the interplay of resources and capabilities, resources reinforce core competencies, while capabilities allow managers to orchestrate their core competencies. Resources are any assets such as cash, buildings, machinery, or intellectual property that a company can draw on when crafting and executing a strategy. Capabilities are the organizational and managerial skills necessary to orchestrate a diverse set of resources and to deploy them strategically.
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. ex: 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. One of the four key criteria in the VRIO framework is being organized to capture value; the characteristic of having in place an effective organizational structure, processes, and systems to fully exploit the competitive potential of the firm's resources, capabilities, and competencies.
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. ex: 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 and/or neutralize an external threat. A resource is valuable if it helps a firm increase the perceived value of its product or service in the eyes of consumers, either by adding attractive features, or by lowering price because the resource helps the firm lower its costs.
A firm decides to retain $20,000 from its annual earnings and invest it in developing an advanced manufacturing system. In this scenario, the $20,000 would most likely be referred to as the firm's
resource flow. ex: In this scenario, the $20,000 would most likely be referred to as the firm's resource flow. Resource flows are the firm's level of investments to maintain or build a resource.
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 heterogeneity ex: This scenario best illustrates resource heterogeneity. This critical assumption in the resource-based model of competitive advantage is that bundles of resources, capabilities, and competencies differ across firms.
Which of the following will most likely be considered as an automobile company's core competency?
the company's ability to make its cars more fuel efficient than most of its competitors Ex: The company's ability to make its cars more fuel efficient than most of its competitors will most likely be considered as an automobile company's core competency. Core competencies are unique strengths, embedded deep within a firm, that allow 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.
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 brand equity ex: Intangible resources have no physical attributes and thus are invisible. Examples of intangible resources are a firm's culture, its knowledge, brand equity, reputation, and intellectual property.
In a perfectly competitive industry structure
any competitive advantage that one firm has will be short-lived. ex: The critical assumptions of the resource-based model are fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure. In perfect competition, all firms have access to the same resources and capabilities, ensuring that any advantage that one firm has will be short-lived.
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 and 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. ex: This failure of Savvy Inc. can be best attributed to time compression diseconomies. When attempting to compress lots of effort and resources such as research and development into a short time period, it will not be as effective as when a firm spreads out its effort and investments over a longer period of time. Trying to achieve the same outcome in a short time period, even with higher investments, tends to lead to inferior results.