Chapter 3

The __________ are those with the potential to be formed into core competencies as the foundation for creating value for customers. - "most" knowledge resources - "most" capabilities - "right" resources - "dark side" resources

"right" resources

Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other airlines cannot, such as jokes on flights or the cooperation between gate personnel and pilots. These examples illustrate which of the following criteria for sustainable competitive advantage? - Valuable - Rare - Costly to imitate - Non substitutable

- Costly to imitate

Compared to tangible resources, intangible resources are: - of less strategic value to the firm. - less likely to be the focus of strategic analysis. - a superior source of capabilities. - more likely to be reflected on the firm's balance sheet.

- a superior source of capabilities.

To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT: - be technologically innovative. - be hard for competing firms to duplicate. - be without good substitutes. - be valuable to customers.

- be technologically innovative.

__________ is the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context. - Strategic thinking - A global mind-set - Profit-pooling - Competency-discovering

A global mind-set

Which of the following is NOT a component of internal analysis leading to competitive advantage? - Tangible and intangible resources - Analysis of supplier power - Capabilities - Core competencies

Analysis of supplier power

__________ can be viewed as the capacity to take action. - Strategic assets - Human capital - Core competencies - Functional capabilities

Core competencies

Which of the following are assets that are rooted deeply in the firm's history, accumulate over time, and are relatively difficult for competitors to analyze and imitate? - Tangible resources - Intangible resources - Monetary capital - Core competencies

Intangible resources

Which of the following is NOT a factor affecting sustainability of a competitive advantage? - Availability of substitutes for a firm's core competence - Rate at which obsolescence of the core competence occurs because of environmental changes - Imitability of a core competence - Length of time the core competence has existed

Length of time the core competence has existed

Which of the following is true about outsourcing? - Outsourcing allows firms to be more flexible and requires minimal coordination. - Outsourcing allows firms to concentrate on those areas in which they can create value. - Outsourcing strengthens the creative and innovative functions within the firm. - Outsourcing is effective only when it includes all support activities.

Outsourcing allows firms to concentrate on those areas in which they can create value.

__________are the source of a firm's __________, which are the source of the firm's __________. - Resources; capabilities; core competencies - Capabilities; resources; core competencies - Capabilities; resources; above-average returns - Core competencies; resources; competitive advantage

Resources; capabilities; core competencies

An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. Which of the following should the investor consider when making a decision? - The investor will find that the success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future. - The investor will find that the restaurant's financial statements undervalue the true value of its resources. - The investor should be aware that intangible assets are difficult to leverage into additional businesses. - The investor should search for a firm that has competitive advantages based on tangible resources.

The investor will find that the restaurant's financial statements undervalue the true value of its resources.

Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme's owner should: - concentrate on maintaining Acme's current core competencies. - focus on developing Acme's future competitive advantages. - place more emphasis on tangible resources, which are less vulnerable to obsolescence than intangible resources. - recognize that core competencies derived from human resources are more subject to becoming core rigidities than are core competencies based on other types of resource

WRONG concentrate on maintaining Acme's current core competencies. WRONG recognize that core competencies derived from human resources are more subject to becoming core rigidities than are core competencies based on other types of resource

A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised: - foresight. - judgment. - effective strategic thinking. - decisiveness.

WRONG decisiveness.

Knowledge transfer and access to resources within the value chain are enhanced by: - guidelines for sharing knowledge and resources. - social capital. - penalties for not sharing knowledge and resources. - training employees on how to cooperate.

WRONG guidelines for sharing knowledge and resources.

The critical executive skill of the current business age is the ability to: - manage technological innovation. - manage intellectual capital. - initiate change and overcome inertia. - coordinate tangible and intangible resources.

WRONG manage technological innovation. WRONG coordinate tangible and intangible resources.

A decision that results in failure: - is a career-ending event because it is so unusual. - often results from lack of accountability. - fosters organizational inertia. - allows for learning.

allows for learning.

Capabilities: - tend to be developed through firm-wide interactions and reside in the firm as a whole. - tend to be concentrated in the support activities of the value chain. - tend to be concentrated in the primary activities of the value chain. - are often developed in specific functional areas.

are often developed in specific functional areas.

Tangible resources include: - assets that are people-dependent, such as know-how. - assets that can be observed and quantified. - organizational culture. - a firm's reputation.

assets that can be observed and quantified.

Capabilities typically come from: - individual resources. - one unique resource. - several outstanding resources used independently. - combining resources.

combining resources.

The owner of a store that sells fine-quality fabrics for home seamstresses bemoans the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of: - the hazard of competitors being able to imitate a firm's core competency. - the need for firms to stick to their core competencies through temporary downturns in market demand. - the lack of intangible resources undermining the core competencies of the firm. - core competencies that have become core rigidities.

core competencies that have become core rigidities.

Charmed by Claire is a successful retail boutique that sells women's accessories. Claire, the owner/manager, knows that women have many options when buying jewelry. When customers enter her store, they are greeted by name and given prompt, friendly attention. Customers return to the store because the service is excellent. Claire says the most important decision she makes is hiring the best staff because customer service is vital to her business. Customer service is a(n): - human resource. - organizational resource. - rare resource. - core competency.

core competency WRONG human resource.

A firm's core competencies, integrated with an understanding of the results of studying the conditions in the external environment, should: - guarantee profits. - lead to a first-mover advantage. - drive the selection of strategies. - increase the firm's market share.

drive the selection of strategies.

When firms lay off employees, they are: - treating employees as an intangible resource. - recognizing the reduced value of labor in the value chain. - eroding the organization's knowledge resources. - temporarily sacrificing a tangible asset that is easily replaced.

eroding the organization's knowledge resources.

Valuable capabilities allow the firm to: - exploit opportunities in its external environment. - neutralize threats in its internal environment. - exploit opportunities or neutralize threats in its external environment. - neutralize opportunities in its internal environment.

exploit opportunities or neutralize threats in its external environment.

If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm will: - achieve competitive parity. - have a competitive disadvantage. - have a temporary competitive advantage. - gain a sustainable competitive advantage.

have a temporary competitive advantage.

A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management's policies on secrecy as "verging on paranoid." These policies indicate that the top management of the firm believes the organization's core competencies are: - causally - ambiguous. - unobservable. - imitable. - common.

imitable.

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT: - lack of scientific transference. - social complexity. - unique historical conditions. - causal ambiguity.

lack of scientific transference.

Judgment is the capacity for making a successful decision when: - there are multiple decision criteria. - no obviously correct model or rule is available. - cognitive biases create barriers to rationality. - there are contradictions between the firm's vision and its implemented strategy.

no obviously correct model or rule is available.

Organizational culture is: - amorphous and changeable. - not easily imitable. - so difficult to analyze that most firms should choose to ignore it. - typically fragile in the face of changes in the external environment.

not easily imitable.

Government agencies are known for having so many layers and rules that decisions are made slowly and inefficiently. In this case, the __________ resource is a detriment to taxpayers using and paying for the bureaucracy. -financial - organizational - physical - technological

organizational

Amazon is building a new distribution facility in Robbinsville, New Jersey. It is immediately off the exit of a major road. This is an example of a(n) __________ resource. - financial - organizational - physical - technological

physical

Outsourcing is the: - spinning off of a value-creating activity to create a new firm. - selling of a value-creating activity to other firms. - purchase of a value-creating activity from an external supplier. - use of computers to obtain value-creating data from the Internet.

purchase of a value-creating activity from an external supplier

One capability that can be learned from failure is when to: - repeat with a modification. - add more resources. - dig in. - quit.

quit WRONG repeat with a modification.

All core competencies have the potential to become core: - rigidities. - stagnations. - inefficiencies. - weaknesses.

rigidities.

A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely on organically raised chicken and beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be: -permanent. - sustainable. - temporary. - defensible.

temporary.

It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and: - the rapid development of the Internet's capabilities. - extensive use of outsourcing within the borders of the United States. - the declining number of inventions and patents developed by U.S. citizens. - the simultaneous erosion of the U.S. work ethic and the U.S. education system.

the rapid development of the Internet's capabilities.

Value chain analysis is a tool used to: - analyze a firm's external environment for value-creating opportunities. - analyze a firm's value chain activities and support functions in isolation from its competitors' value chain. - understand the parts of the firm's operation that create value and those that do not. - identify the firm's core competencies in each of the primary activities of the firm.

understand the parts of the firm's operation that create value and those that do not.

In the airline industry, frequent flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are __________ but no longer __________. - rare; valuable - valuable; rare - socially complex; rare - valuable; causally ambiguous

valuable; rare

The proper matching of what a firm CAN DO with what it MIGHT DO: - balances the internal characteristics of the firm with the characteristics of the external environment. - overcomes the rigidity and inertia resulting from a history of success. - yields insights the firm requires to select its strategy. - develops core competencies based on human knowledge.

yields insights the firm requires to select its strategy.