Economics of Strategy: Chapter 11 Sustaining Competitive Advantage
What term best describes clusters of activities that a firm does especially well in comparison with other firms?
Capabilities
Which of the following terms best describes the situation when sources of competitive advantage in an industry are being created and eroded at an increasingly rapid rate?
Hypercompetition
Which of the following products and services do NOT depend on standards?
Books
Which of the following is the weakest an example of a "shock"?
Contracting to use another firm's proprietary process
What term best describes assets that are more valuable when used together than when separated?
Cospecialized
Which of the following is NOT an example of a way a seller can increase switching costs?
Creating a product line compatible with parts that are made by other manufacturers
What term best describes when quiet periods in markets are punctuated by fundamental "shocks" or "discontinuities" that destroy old sources of advantage and replace them with new ones?
Creative destruction
Size, growth, and character of home demand for a firm's product are examples of what?
Demand conditions
Which of the following terms best describes the ability of a firm to maintain and adapt the capabilities that are the basis of its competitive advantage?
Dynamic capabilities
What type of isolating mechanisms increase the economic power of a competitive advantage over time once a firm has acquired that advantage?
Early-mover advantages
Which of the following is least likely a characteristic of profit persistence in an industry?
Economic profits should quickly converge to zero
Which of the following terms describes a nation's position with regard to the elements (e.g. human resources, infrastructure) of production that are necessary to compete in a particular industry?
Factor conditions
What type of isolating mechanisms impedes existing firms and potential entrants from duplicating the resources and capabilities that form the basis of the firm's advantage?
Impediments to imitation
What term best describes a resource that cannot "sell itself" to the highest bidder?
Imperfectly mobile
Which of the following is NOT a Legal Restriction?
Intellectual property
Which of the following terms best describes a place in which a firm can sell its ideas for full value?
Market for ideas
What product characteristic refers to the situation where consumers place higher value on a product if other consumers also use it?
Network effect
What term best characterizes the battle between firms to innovate first?
Patent race
What term best describes the characteristic of a process if past circumstances could exclude certain evolutions in the future?
Path dependence
What term describes the situation where a firm does exceedingly well due to good luck or exceedingly poorly due to bad luck, but returns to normal performance following?
Regression to the mean
What term describes a framework used in strategy based on resource heterogeneity which posits that for a competitive advantage to be sustainable, it must be underpinned by resource capabilities that are scarce and imperfectly mobile?
Resource-based theory of the firm
What term best describes firm-specific assets such as patents and trademarks, brand-name reputation, installed base, and organizational culture?
Resources
Which of the following is NOT an impediment to imitation?
Scale diseconomies
What term best refers to fundamental changes that lead to major shifts of competitive positions in a market?
Shock
What term describes the optimal allocation of society's resources at a given point in time?
Static efficiency
Which of the following terms best describes an idea, developed by Gary Hamel and C. K. Prahalad, which combines commitment to the firm's ambitions with the flexibility to change with circumstances?
Strategic Stretch
Which of the following is not an isolating mechanism that falls under the heading of early-mover advantage?
Superior access to inputs or customers
What term refers to the costs incurred by buyers when they change to a different supplier?
Switching costs
Which of the following terms best describes a phenomenon whereby, despite equal innovative capabilities, an entrant is willing to spend more to develop an innovation?
The replacement effect
Which of the following terms best describes a phenomenon whereby a profit-maximizing firm sticks with its current technology or product concept even though the profit-maximizing decision for a firm starting from scratch would be to choose a different technology or product concept?
The sunk cost effect