4490 Chapter 4

______ are the firm's level of investments to maintain or build a resource.

Resource flows

______ refers to the idea that a firm is a bundle of resources and capabilities that is unique to the firm.

Resource heterogeneity

One of the most popular tools used by firms to evaluate their current situation and future prospects is the ______.

SWOT analysis

______ describes a situation in which different social and business systems interact with each other.

Social complexity

According to the VRIO framework, a rare resource is ______ if firms that do not possess the resource are unable to develop or buy the resource at a comparable cost.

costly to imitate

The ______ describes the internal activities a firm engages in when transforming inputs into outputs.

value chain

Cowgirl Boots, inexpensive leather boots for women, are selling at record-high numbers. The CEO of the company, however, cannot figure out why. Was it caused by the company's recent advertisement campaign or the newly reduced price of the boots or some other unknown factor? Based on this information, what concept describes the CEO's confusion regarding Cowgirl Boots' recent success?

causal ambiguity

Strategic leaders use internal and external analyses in tandem to create a customized fit between a company's ______.

internal resources and external environment

Primary activities include which of the following? (Check all that apply.) human resources research and development operations supply chain management

operations supply chain management

Capabilities

organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically

VIRO framework

A theoretical framework that explains and predicts firm-level competitive advantage.

______ activities add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain.

Primary

support activities

firm activities that add value indirectly, but are necessary to sustain primary activities

A resource is considered ______ if it helps a firm to deal with an external threat.

valuable

______ describes a situation where the cause and effect of a phenomenon are not readily apparent.

Causal ambiguity

True or false: A competitive advantage is most often maintained indefinitely.

False

True or false: The value chain concept is applicable primarily to high-tech firms in rapidly changing environments.

False

Which of the following were resources and capabilities that helped Five Guys gain a competitive advantage and develop into a successful restaurant chain? (Check all that apply.) Focusing on such details as store layout and design Preparing and freezing meat paddies at a centrally located site Carefully choosing the supplier of the potatoes for their fries Never using the highest-priced vendor for a product

Focusing on such details as store layout and design Carefully choosing the supplier of the potatoes for their fries

What are the characteristics of a strategic activity system as it applies to firms? (Check all that apply.) It is causally ambiguous. It weakens competitive advantage. It consists of interconnected activities. It is socially complex.

It is causally ambiguous. It consists of interconnected activities. It is socially complex.

______ describes a process in which the options one faces in the current situation are limited by decisions made in the past.

Path dependence

______ are the firm's current level of intangible resources.

Resource stocks

______ resources have physical attributes and are visible.

Tangible

Which of the following are situations in which a resource is considered valuable? (Check all that apply.) The resource helps the firm increase its economic value creation (V-C). The resource is both heterogeneous and immobile. The resource helps a firm exploit an external opportunity. The resource helps the firm produce tangible, not intangible competencies.

The resource helps the firm increase its economic value creation (V-C). The resource helps a firm exploit an external opportunity.

Which of the following statements are true about the capabilities of a firm? (Check all that apply.) They include organizational skills. They include managerial skills. They concern the deployment of resources. They include intellectual property.

They include organizational skills. They include managerial skills. They concern the deployment of resources.

True or false: According to the resource-based model, a firm is assumed to be a unique bundle of resources, capabilities, and competencies.

True

Which of the following identifies the resources that can lead to a competitive advantage?

VRIO framework

Capabilities include which of the following? (Check all that apply.) a company's organizational structure a company's culture a company's financial statements a company's routines

a company's organizational structure a company's culture a company's routines

dynamic capabilities

a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources in its quest for competitive advantage

Resource-based view

a model that sees certain types of resources as key to superior firm performance

A customized strategy that considers the unique resources of the company while considering the external environment creates ______.

a strategic fit between them

Time compression diseconomies occur when a firm ______.

attempts to reach an outcome in a reduced amount of time

Isolating mechanisms are considered to be ______.

barriers to imitation

According to the VRIO framework, to fully exploit the competitive potential of its resources, capabilities, and competencies, a firm must ______.

be organized to capture value

In order to be successful, a firm must have a resource that is valuable, rare, costly to imitate, and the firm must ______.

be organized to capture value

What do the best firms in an industry seek to identify and manage on an ongoing basis as sources to respond to their external environment? (Check all that apply.) internal weaknesses core competencies resources capabilities

core competencies resources capabilities

A(n) ______ is a unique strength, embedded deep within a firm, that is critical to gaining and sustaining competitive advantage.

core competency

primary activities

firm activities that add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain

The purpose of a SWOT analysis is to ______.

form a strategy that is tailored to the firm's unique strengths and weaknesses and the opportunities and threats in its environment

If the problem with a business strategy results in causal ambiguity, managers will ______.

have a difficult time developing a theory to deal with the problem

What should a firm do in order to be organized to capture value? (Check all that apply.) have good coordinating systems have a good organizational structure have a rare and valuable resource have CEOs with forward-thinking vision

have good coordinating systems have a good organizational structure

resource

in the resource-based view of the firm, a resource includes any assets as well as any capabilities and competencies that a firm can draw upon when formulating and implementing strategy

In contrast to primary activities, support activities add value ______, but are necessary to sustain primary activities.

indirectly

A firm's culture, brand equity, and intellectual property are examples of ______.

intangible resources

Which of the following are examples of resources for a firm? (Check all that apply.) intellectual property cash legal liabilities buildings

intellectual property cash buildings

Which isolating mechanism is set up to legally prevent companies from copying products that give a firm a competitive advantage?

intellectual property protection

What are examples of intangible resource stock a company may have? (Check all that apply.) reputation for quality dynamic capabilities engineering expertise a manufacturing facility

reputation for quality dynamic capabilities engineering expertise

Core competencies of a business are generated by the interaction of ______.

resources and capabilities

The interaction of the many individual systems in the operation of a company often leads to causal ambiguity because of ______.

social complexity

Accounting and finance are ______ activities in a firm's value chain.

support

In order to avoid making costly mistakes due to the potential shortcomings of the SWOT analysis, a manager should ______.

take results from the SWOT analysis with "a grain of salt"

The resource-based view classifies all resources as ______.

tangible or intangible

What does the concept of resource heterogeneity imply?

that each firm has different resources

In performing a SWOT analysis to generate insights from external and internal analysis, internal strengths and weaknesses can be determined by applying ______ and external strengths can be evaluated in part by applying ______.

the VRIO framework; PESTEL

Value Chain

the internal activities a firm engages in when transforming inputs into outputs; each activity adds incremental value

How are intangible resource stocks acquired?

through investments over time in intangible resources

A firm's attempts to shorten the length of time a process takes, may lead to disappointing outcomes because of ______.

time compression diseconomies

A core competency can help a company achieve which of the following? (Check all that apply.) to reduce the wages of its employees to differentiate its products and services to create higher value for the consumer to offer products of comparable value at lower cost than rivals can

to differentiate its products and services to create higher value for the consumer to offer products of comparable value at lower cost than rivals can

Which of the following are intangible resources that can be protected as intellectual property? trademarks trade secrets copyrights generic formulas

trademarks trade secrets copyrights

core competencies

unique strengths, embedded deep within a firm, that are critical to gaining and sustaining competitive advantage

The VRIO framework is used to evaluate a firm's resources. VRIO is an acronym for which of the following? (Check all that apply.) Rare Original Valuable Imitate

Rare Valuable Imitate

The organizational and managerial skills necessary to orchestrate a diverse set of resources and deploy them strategically are called _____.

capabilities

For a firm to sustain any competitive advantage over time, the fit between its internal strengths and external environment needs to be ______.

dynamic

Which of the following can help a firm extend its competitive advantage? (Check all that apply.) intellectual property protection better expectations of future resource value depletion of tangible and intangible resources resource stocks and flows path dependence

intellectual property protection better expectations of future resource value path dependence

Intellectual property protection and social complexity are examples of ______ mechanisms, which help a firm sustain a competitive advantage.

isolating or isolation

The culture of Zappos is hard to imitate because it consists of numerous, diverse interactions among its employees, processes, procedures, and norms, that create which of the following?

social complexity

Which of the following is true according to the assumption of resource heterogeneity?

Resource bundles vary from company to company.

"Time compression diseconomies" refers to the concept that ______.

attempting to get a good outcome in less time tends to be ineffective

intangible resources

resources that do not have physical attributes and thus are invisible

Tangible Resources

resources that have physical attributes and thus are visible

The concept of social complexity suggests that ______.

social and business systems that work for one firm may be hard to imitate because of complex interactions between these systems

When strategizing about possible competitive advantages, a major advantage of the SWOT analysis is that it allows managers to simultaneously consider ______.

internal and external factors

A resource is ______ if the number of firms that possess it is less than the number of firms required to reach a state of perfect competition.

rare