Quiz 2 - Sustainable Competitive Advantage

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? a) Creative destruction b) Entrepreneurship c) Innovation d) Market for ideas e) Disruptive technologies

a) Creative destruction

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? a) Factor conditions b) Demand conditions c) Supply conditions d) Related supplier or support industries e) Strategy, structure, and rivalry

a) Factor conditions

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? a) Regression to the mean b) Competitive advantage c) Persistent performer d) Sustainable firm e) Predictable performance

a) Regression to the mean

What term refers to the costs incurred by buyers when they change to a different supplier? a) Switching costs b) Buyer costs c) Reputation costs d) Learning costs e) Customer costs

a) Switching costs

What term best describes clusters of activities that a firm does especially well in comparison with other firms? a) Competitive advantage b) Resources c) Capabilities d) Threats to sustainability e) Strategic firm assets

c) Capabilities

What type of isolating mechanisms increase the economic power of a competitive advantage over time once a firm has acquired that advantage? a) Scarce b) Imperfectly mobile c) Early-mover advantages d) Impediments to imitation e) Cospecialized

c) Early-mover advantages

What term best describes firm-specific assets such as patents and trademarks, brand-name reputation, installed base, and organizational culture? a) Competitive advantage b) Capabilities c) Resources d) Threats to sustainability e) Strategic firm assets

c) Resources

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? a) Leveraging resources b) Strategic intent c) Strategic stretch d) Hypercompetition e) Global dominance

d) Hypercompetition

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? a) Scarce b) Imperfectly mobile c) Early-mover advantages d) Impediments to imitation e) Cospecialized

d) Impediments to imitation

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? a) Persistence of profitability for the firm b) Capability-based theory of the firm c) Regression to the mean d) Resource-based theory of the firm e) Five-forces framework

d) Resource-based theory of the firm

What term best describes assets that are more valuable when used together than when separated? a) Isolating b) Value-creating c) Imperfectly mobile d) Scarce e) Cospecialized

e) Cospecialized

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? a) Riskiness of R&D b) Correlated research strategies c) Evolutionary economics d) Dynamic efficiency e) Dynamic capabilities

e) Dynamic capabilities

What product characteristic refers to the situation where consumers place higher value on a product if other consumers also use it? a) Value creation effect b) Product linkage c) Product externality d) Complementary effect e) Network effect

e) Network effect

Which of the following is not an isolating mechanism that falls under the heading of early-mover advantage? a) Learning curve b) Reputation and buyer uncertainty c) Buyer switching costs d) Network effects e) Superior access to inputs or customers

e) Superior access to inputs or customers

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? a) The replacement effect b) Strategic intent c) Strategic stretch d) Hypercompetition e) The sunk cost effect

e) The sunk cost effect