chapter 4

competence is a key activity that a company executes better than its rivals.

distinctive

What should a company consider doing when it has competitive strengths in areas where its rivals are weak?

offensive moves defensive move

As a type of company resource, relationships include which of the following?

partnerships joint ventures dealer networks

A company is better able to fend off competition when it provides

higher customer value

Debt-to-equity, long-term debt-to-capital, and total debt-to-assets are all examples of ______ ratios.

leverage

For managers to guide a company's strategy successfully, they must first identify its

market opportunities.

Patents and copyrights are types of resources that are part of a company's

technological resources.

Changes in what factors contribute to the erosion of a company's competitive advantage over time?

technology customer preferences distribution channels

Threats to a company's profitability and competitive well-being can arise from which of the following external factors?

the emergence of lower cost or improved technologies burdensome new regulations unfavorable demographic shifts

The ability of a company to perform competently in carrying out a particular internal activity, such as product innovation or development, is called a

capability.

A company's sales revenues minus the cost of goods sold, divided by the sales revenues, is called the company's ______ margin.

gross profit

power, it is necessary to identify the firm's capabilities and resources and then determine their quality.

competitive

Detailed examination of a company's value chain, including its customer value proposition and business model, allows for evaluation of which of the following?

cost structure and pricing profit margin capabilities that enhance differentiation

When Company A's rivals have much higher competitive strength, Company A is said to have a net comp

disadvantage

Although it is an important way for a company to evaluate its business practices relative to other firms, the greatest barrier to benchmarking is ______ the necessary information.

gaining access to

A company is better able to fend off competition when it provides ______ than its rivals.

higher customer value

Which of the following are key components of a company's competitive strategy?

information technology human resources marketing

In addition to human resources, which of the following are intangible assets of a company?

its brands its image its reputation

To improve a company's cost competitiveness, managers can

outsource activities. implement best practices throughout the company. use new technologies to redesign products.

Which of the following are criteria of VRIN tests for evaluating the competitive advantage of a resource or capability?

rarity inimitability

A two-step process for evaluating a company's competitive assets and its ability to compete successfully in the marketplace is known as

resource capability

The operating income of a company divided by its interest expenses is called the ______ ratio.

times-interest-earned

A company can examine its value chain to analyze

the company's cost structure. its customer value proposition. its business model.

A company's competitive assets are made up of which of the following?

capabilities resources

Which company pioneered the use of benchmarking not only of its rivals but also of any company regarded as "world class"?

Xerox

How can a company use the information it has gleaned from benchmarking and value chain analysis?

Eliminate its own cost or value disadvantages. Improve profitability. Enhance competitiveness.

How can a company reduce cost disadvantages associated with supplier-related value chain activities?

Identify ways the company and supplier can both reduce costs. Negotiate lower prices from suppliers. Switch to less expensive materials.

How can a company use its supplier relationships to bolster its customer value proposition?

Integrate suppliers into the design process. Choose suppliers that have higher standards. Offer suppliers quality-based incentives.

Which statements about a company's capabilities are true?

One method of identifying capabilities starts with a survey of the functions performed within the company. One method of identifying capabilities starts with a list of the company's resources.

Aggressive price-cutting to win customers away from a rival can be risky for which the following reasons?

Other competitors might interpret such a move as an attack. Rivals with stronger relative cost positions might be able to better survive a price war.

How can a company enhance differentiation at the forward end of the value chain system?

Participate in cooperative advertising. Set standards and train channel partners to implement them. Offer incentives to downstream partners to enhance customer value.

The simplest tool for evaluating a company's overall market situation is known as ______ analysis.

SWOT

Which of the following accurately reflect the relationship between a company's activities and its resources and capabilities?

Value-creating activities contribute to the formation and development of capabilities. Continuous investment of resources in value chain activities leads to the creation of a competence. Prioritizing a competitive capability transforms it into a core competence.

What issues might be included on a managerial "worry list"?

how to respond to foreign competitors whether to acquire a rival company how to deal when rivals reduce prices

Of the four tests of a resource's competitive power, the most difficult is

assessing the availability of substitutes.

A distinctive competence has the potential to confer a competitive advantage, especially when it allows a company to

create new product demand. create new markets.

Capabilities that utilize various resources and result from collaboration across multiple departments, such as R&D, marketing, sales, and manufacturing, are known as ______ capabilities.

cross-functional

The value chains of a company's distribution-channel partners are significant because they directly affect which of the following?

customer satisfaction sales volumes retail prices

Which of the following are profitability ratios that help determine a company's financial performance?

net profit margin net return on total assets total return on assets

The value of performing a detailed competitive strength assessment is that it allows a company to

pinpoint competitors' relative weaknesses. plan offensive and defensive strategies. address vulnerabilities.

The two main categories of activities in a company's value chain are

primary

A true capability of a company that is performed consistently well and at an acceptable level of cost is called a(n)

competence

Resources that are both valuable and rare are

competitively superior. true strategic assets.

A competitive asset owned or controlled by a company is referred to as

resource.

A competitive asset owned or controlled by a company is referred to as a(n)

resource.

Closely integrated competitive assets that are tied to one or more cross-functional capabilities are called

resources

How can a company improve cost competitiveness on the distribution side of its value chain?

Collaborate with distributors to find win-win cost reduction strategies. Encourage forward channel allies to reduce their costs and markups. Change to a more cost-effective distribution strategy.

When a company continually recalibrates and upgrades its equipment and other resources, the firm has a competitive advantage called ______ capability.

dynamic

Which of the following are potential market opportunities that managers try to identify when tailoring strategy to a company's situation?

expansion into new geographic markets serving additional customer groups or market segments acquiring rival companies with attractive capabilities

A company's tangible resources, typically defined as resources that can be easily quantified, include which of the following?

financial resources organizational resources technological resources

What qualities help create differentiation based on quality, which improves a company's competitive advantage?

image innovation design status

Which company resources and capabilities reflect a high level of social complexity?

interpersonal relationships between managers trust-based relations with customers internal company culture

What two elements must management address to maintain the value of the company's resources and capabilities?

Continually modify existing assets. Watch for the chance to develop new capabilities.

Which of the following are benefits of employing a third party to provide benchmarking data?

It helps avoid ethical issues. It maintains anonymity.

Which three of the following types of market opportunities are the most relevant for a company to pursue?

Market opportunities that offer the best chances for profitability. Market opportunities that match up with the company's competitive assets. Market opportunities that offer the best chances for growth.

Most of a firm's organizational capabilities can be characterized as being either of which two of the following?

being based on knowledge existing in a firm's processes and systems

The process of comparing the performance of numerous value chain activities across multiple types of companies to assess the costs and effectiveness of these activities is called

benchmarking

What analytic tools are helpful in evaluating the competitiveness of a company's costs and customer value proposition?

benchmarking value chain analysis

What techniques can a company use to identify its cost or value disadvantages when compared to key competitors?

benchmarking value chain analysis

A competitive strength assessment would most likely use information obtained through

benchmarking. SWOT analysis. resource and capability analysis.

The clothing retailer Patagonia remains competitive with a customer value proposition that focuses on which of the following?

corporate environmental responsibility high quality

When a company offers unusually low prices for high-quality products, its business model is based on having a competitive

customer value proposition.

What business practice is the most important factor that allows a company to seize the moment when a golden marketing opportunity presents itself?

diligent market reconnaissance

A company's ongoing ability to adapt and renew its competitive assets, capabilities, and resources is referred to as a ______ capability.

dynamic

Among a company's internal weaknesses are which of the following?

inferior capabilities deficiencies in intangible assets unproven skills

Information gleaned from a SWOT analysis can be used to create strategic actions that include which of the following?

matching the company's strategy to its internal strengths defending against external threats correcting significant weaknesses

To appraise a company's strengths, managers determine how well the firm performs key aspects of the business, such as

sales and marketing. supply chain management. customer service.

Something a firm does well or a quality it has that increases its competitiveness in the marketplace is a

strength.

A company's strategy should always be based on

the company's internal strengths.

What technique is most useful for helping a company analyze how its competitors deliver products or services that their customers want, at an attractive price?

value chain analysis

There are times, such as the financial crisis of 2008-2009, when adverse market conditions can create ______ that plunges a company into crisis and put its future in jeopardy.

a sudden-death threat

When a company is able to maintain its competitive edge despite competitors' efforts to overcome it, the company is said to have achieved

a sustainable competitive advantage.

To solidify a company's future financial and competitive success, managers can examine the results of broad industry analysis and internal company evaluations. This will help them understand

what problems require their foremost attention. the company's strategic and competitive challenges. which of the company's competitive shortcomings need addressing.

Which statements about gathering company benchmarking information are true?

Comparing the costs of two companies can be misleading if the companies use different cost accounting principles. Some benchmarking information can be obtained from published reports by trade groups and industry research firms. Visiting the facilities of noncompeting companies is one way of gathering benchmarking information.

Which of the following are characteristics of a company's core competence?

It is competitively valuable. It contributes to the company's profitability. It is central to a company's strategy.

To be considered legitimate, a best practice must be unusually effective in which of the following ways?

in improving performance in enhancing safety in lowering costs

What would likely be part of the value chain for a service-based business, such as a packaging-design firm?

delivering artwork to clients brainstorming new ideas hiring creative talent

What can be learned through value chain analysis?

how each activity of a rival delivers value to customers the competitive differences among rivals the differences in how competitors perform specific activities

Which activities make up the primary value chain in the pulp and paper industry?

logging timber farming papermaking

Which of the following are factors that help indicate the success of a company's business strategy?

the rate of customer retention sales and earnings growth the company's stock price

An activity that a company performs poorly in comparison to its competitors is an example of a competitive deficiency, or

weakness

The letters in the acronym SWOT stand for strengths

weaknesses opportunities threats

The value chain of a company's suppliers is significant for which of the following reasons?

A supplier's value chain costs correlate with a company's own competitiveness. Suppliers' activities and costs directly affect a company's own value chain activities. The quality of goods supplied affects the purchasing company's differentiation capabilities.

How can managers improve a firm's customer value proposition and enhance differentiation?

Reallocate resources. Introduce new technologies. Adopt best practices.

Companies that have successfully managed their value chains to produce cost-based market advantages include

Ryanair. Carrefour. Nucor Steel.

Resources and capabilities are difficult for competitors to replicate when they

are unique. take time to build up. require large-scale operations.