Deck 5: Analyzing Resources and Capabilities

Question 1

There is a growing trend to:

A)Hire only those with the specific technical skills needed.
B)Hire people for their attitude, and train them for any skills lacking.
C)Fire people who are over-skilled and overpaid
D)Fire people who are under-skilled and overpaid.

Answer 1

B

Question 2

McDonalds can illustrate the concept of:

A)Adaptability
B)A large size firm
C)Routinization
D)Flexibility

Answer 2

C

Question 3

If employees are a firm's most valuable assets, how can organizations keep them?

Answer 3

Members of an organization are critical assets because they are the only "living intelligence gifted" entity within the organization.
Their skills, experience, motivation and involvement are precious assets of the firm, because they collectively and individually make a strong difference in organizational performance.
Human resources are the only assets that can leave the organization. Employees offer their services within the framework of a contract.
Firms use several levers to keep these resources within the organization. The basic idea is to satisfy these employees by creating strong incentives for them to stay. These incentives can be monetary, with many different types of bonuses and package components, or non monetary, such as job satisfaction through autonomy, promotion, or a very interesting job. The organizational culture appears to be a tool to create a pleasant work environment and positive work relations.
This topic has been extensively studied in HR management and in the organizational behavior field. Contingency is key: different employees require different techniques because their personality, their expectations, their potential, and their skills are completely different.

Question 4

Are "Human resources" really resources?

Question 5

Does the expertise and knowledge that top managers have acquired in previous professional experiences matter if their current firm lacks the required resources and competencies?

Question 6

What are the determinants of the potential for resources and capabilities to generate profits?

Question 7

How are industry attractiveness and competitive advantage, on the one hand, related to Ricardian and monopoly rents, on the other?

Question 8

Is it possible in large organizations that top managers do not have full knowledge of their firm's competencies?

Question 9

Honda, Canon, and 3M Corporation are illustrations of:

A)Firms that suffer from an obvious mismanagement of their resources and capabilities
B)Firms that nurture and leverage some technological core competencies
C)Firms that benefited from a stable environment that contributed to the management of their core competencies
D)Firms that manage their capabilities only by a few "rules-of-thumb"

Question 10

Organizational culture:

A)Consists of values and the social interactions linked to the distribution of responsibility within the organizational structure
B)Is about senior managers' beliefs and vision
C)Consists of values, norms, traditions, assumptions and behaviors
D)Beliefs and employees' psychological attributes

Question 11

What does managerial action at Walt Disney in the mid-1980s illustrate?

Question 12

Human resources are included as part of a firm's strategic resources because:

A)The firm owns its employees
B)The firm does not own its employees
C)Employees can be used by management as a productive (intangible) asset.
D)"Resource" is part of their name

Question 13

Why do different names exist related to the central notion of competence, such as capability, distinctive competence, core competence, dynamic capability, etc?

Question 14

Firms such as Philip Morris, Coca-cola, Harley Davidson, Johnson & Johnson, Google, UPS, and 3M are firms that:

A)Illustrate the fact that even large firms can face law suits because of illegal or unethical behaviors
B)Exhibit poor reputational assets
C)Do not seem to possess many specific competencies
D)Illustrate the value of intangible resources (such as reputation and brand name)

Question 15

What are the strengths and weaknesses of the practical guide to put resources and capability analysis to work?

Question 16

Nowadays, many firms are devoting a lot of effort to manage their human resources, especially through:

A)Training them to operate in cross-functional teams.
B)Short-term contracts.
C)Appraisals focused on assessing results and individual competences.
D)Ensuring managers are trained in peopld.management.

Question 17

In 2003, the stakeholders of Gucci and Pinault Printemps Redoute learned that:

A)Gucci would lose critical assets
B)Gucci and PPR were not compatible (after the acquisition of Gucci)
C)Perfume and fragrance markets were in distress
D)Gucci's careful planning and financial disciplines had led to excellent financial results for the firm

Question 18

Distinctive competences are:

A)The same concept as organizational capabilities
B)Those competences which are easy to identify.
C)The same as core competences
D)Those things which an organisation does particularly well relative to competitors, whereas core competences are fundamental to a firm's performance

Question 19

When are resources and competencies valuable for a firm?

Question 20

From a capability standpoint, 2001 was a disastrous year for Mariah Carey's because:

A)She dressed in an inappropriate manner for concerts
B)She stayed away from her strengths
C)She had a nervous breakdown
D)She used other artists intensively

Question 21

Sources of strategic resource immobility between firms include:

A)Geographical immobility, willingness of suppliers to deliver from external factor markets, and corporate culture
B)Corporate culture, organizational structure, and asset mass efficiencies
C)Asset mass efficiencies, time compression diseconomies, and imperfect information
D)Geographical immobility, imperfect information, and organizational capabilities.

Question 22

The ability of a firm achieving a good level of profit thanks to its resources and capabilities depends on:

A)Many factors in addition to the firm's competences
B)The ability of top managers to effectively and efficiently guide the firm through the strategic management process
C)Its ability to use them to establish and to sustain, competitive advantage and to appropriate the returns by deploying its competitive advantage
D)Its ability to perform better than its rivals, to extract more value than similar firms in the same strategic group, and to distribute the value to its stakeholders

Question 23

The key to success is:

A)Having a clear understanding of a firm's strengths and weaknesses and in particular to base strategy on the exploitation of key strengths.
B)Having a strong main core competence that a firm may rely upon to build its strategy
C)Being well-placed to exploit a monopoly position
D)Having key strengths based on low cost.

Question 24

"Time compression diseconomies" means:

A)Being unable to achieve sufficient volume in a short time-scale.
B)The extra costs incurred by a second or subsequent mover attempting to quickly catch up the critical mass of a first-mover's key resources.
C)The costs of employing extra staff and paying overtime which make a project uneconomic.
D)Not achieving an economic production level due to lost time e.g. because of a strike.

Question 25

What is the link between capabilities and routines?

A)Generally, a firm only becomes proficient with processes when they have become routine. They may possibly then be termed capabilities.
B)Every routine create a capability
C)Capabilities are things which a firm does which are out-of-the-ordinary, and so non-routine.
D)A capability must be capable of being routinely revised.

Question 26

Resource and capability appraisal is:

A)A fixed process which must be adhered to
B)For developing strategy implications
C)Mainly to do with managing key weaknesses
D)Largely a stand.alone process, which in itself should be made routine and thus become a capability in its own right.

Question 27

Establishing an inventory of a firm's resources from the Annual Corporate Report is:

A)Difficult, especially because the intangible resources are not generally shown as assets.
B)Easy - they're all listed there
C)No good since the Corporate Report relates to the past, not the present.
D)Irrelevant to the topic

Question 28

Despite the theories and tools for analysing strategic position, many major firms fail:

A)Because the senior managers are too wedded to a former "recipe for success" which always worked in the past.
B)Because they believe in their own unassailable position
C)Because they fail to recognise that technology and/or customer needs have moved on
D)Any of the above reasons - which is not an exhaustive set.

Question 29

The existence of a competitive advantage through resources and competencies is linked to:

A)The ratio between the value and the cost of these resources and competencies
B)The scarcity and relevance of these resources and more importantly that of their derived competences
C)The durability and transferability of these resources and competencies
D)The difficulty of acquiring these resources and competencies externally or building them in-house

Question 30

Ultimately, appraising resources and capabilities relies upon:

A)The theoretical understanding of the analyst.
B)Sophisticated statistical tools
C)Benchmarking tools
D)Insight and understanding of the specific industry and company.

Question 31

Core competences possess several attributes:

A)They provide a basis for entering new markets and make a disproportionate contribution to the customer value
B)They provide a basis for building new technological processes and offer a valuable product or service to a firm's customers
C)They deliver value to a firm and provide a basis for entering international markets
D)They allow top managers to understand the human resources of their firm and to define and implement a technological strategy

Question 32

The first step of capability management is:

A)To identify the key resources and capabilities
B)To assess a firm's strengths and weaknesses
C)To assess resources and capability of importance in regards to a firm's rivals and its corporate governance
D)A fiction because it is an iterative process with no specific first step.

Question 33

A firm's human resources are:

A)The people employed by the organization
B)The expertise, the skills, the commitment and motivation offered by the employees of the organization
C)The knowledge possessed by the employees of the organization
D)The psychological variables embedded in the organization's employees

Question 34

In the case where a firm possesses a "key weakness", the firm:

A)Is likely to be stuck with such a weakness in the short to medium term
B)Could look at forming an alliance or outsourcing to offset the weakness
C)Should examine ways to diminish the impact of the weakness
D)Should consider all of the above

Question 35

Organizational routines are:

A)Irregular and unpredictable patterns of activity made up of sequences of coordinated actions
B)Regular patterns of activity which are not really very important.
C)Regular events and processes performed by junior staff.
D)Patterns of activity made up of sequences of coordinated actions which have been repeated many times by individuals and teams to the extent of being very used to the pattern and sequence.

Question 36

If a firm possesses "superfluous strengths", it may:

A)Prune these capabilities.
B)Develop innovative strategies to turn these superfluous strengths into competitive advantage, perhaps in a new market.
C)Answers a and b
D)None of the above

Question 37

What are the different families of resources that can be identified?

A)Intangible and physical resources
B)Tangible, intangible, human resources, technological, and cultural resources
C)Tangible, hybrid, organizational and technological resources
D)Tangible, intangible, and human resources

Question 38

Although capability levels vary from one firm to another:

A)Every firm has specific capabilities not possessed by any other firm.
B)Every firm has a specific organizational structure
C)Every profitable firm has some activity where it excels or has the potential to excel
D)Ultimately, it's the size of the firm which matters most.

Question 39

Capabilities can be understood and represented in a hierarchical diagram:

A)Yes
B)Sometimes
C)Never
D)Never and does not make any sense

Question 40

What does "Asset mass efficiencies" mean for a firm?

A)A firm should try to corner the market in a scarce resource.
B)A strong initial position for a specific resource facilitates the subsequent accumulation of more of that resource
C)It means the achievement of economies of scale through selling to a mass-market.
D)For the same resource, a larger amount is always more productive and efficient than a smaller one

Question 41

The perceived importance of resources and capabilities to firms' strategies became prominent because:

A)Top managers have understood the importance of competitive advantages from major academic papers published at the time.
B)The general environment has become more unstable and the structure of industries has evolved towards simultaneously more cooperation and more competition
C)The planning school of strategy has been heavily criticized and planning departments in large firms have almost disappeared
D)It became increasingly apparent that competitive advantage was more important to profit generation than mere characteristics of the industry as a whole.

Question 42

A firm's resources and capabilities are:

A)Such that one resource means one capability
B)Associated but not linked
C)Such that one capability may rest upon several resources
D)Not directly related to each other at all

Question 43

Establishing an inventory of a firm's capabilities turns out to be:

A)Surprisingly hard, requiring understanding and insight
B)Difficult
C)Quite easy with the appropriate tools
D)Almost impossible even with the appropriate tools

Question 44

It is important to make the distinction between resources and capabilities that are merely "needed to play" (qualifying criteria) versus those "needed to win" (winning criteria)

Question 45

When the external environment is unstable and in a state of flux:

A)The firm itself, composed of resources and capabilities, may be a more stable basis for defining its identity and mission
B)A market-focused strategy may provide enough stability and consistency of direction for the firm to establish its strategy
C)The analysis of customers' needs takes too long.
D)Efforts must be devoted to stabilize this external environment or to understand it enough to predict its future states

Question 46

Which type of source of competitive advantage has become most prominent regarding strategy?

A)Competitive advantage through the development and deployment of tangible resources and capabilities
B)Competitive advantage through the development and deployment of intangible resources and capabilities
C)Competitive advantage through the development of a stronger market position and customer loyalty
D)Competitive advantage through the development and deployment of resources and capabilities

Question 47

Benchmarking typically involves a subjective comparison of firm's resources and capabilities with those of competitors.

Question 48

In 1990, academics Prahalad and Hamel were among the first to point out that:

A)The basis for strategy, is a firm's corporate culture
B)The source of prediction for the future of the firm and the evolution of its external environment, as well as the source of new products lies in its capabilities.
C)The source of new products, the roots of competitiveness, and a source of cohesion for a firm's identity are its human resources
D)Capabilities could be the roots of competitiveness and profits, more than industry structure.

Question 49

The resource-based view focuses on:

A)The interface between corporate strategy and business strategy
B)The interface between strategy and the resources of a firm
C)The interface between strategy and the internal environment of a firm
D)The interface between resources and capabilities within a firm

Question 50

One implication of the resource-based perspective is that:

A)Firms tend to adopt similar or close strategies
B)Firms focus on being different from competitors in ways which matter to their competitiveness and to customers
C)Firms focus on building a stronger portfolio of capabilities than the average portfolio of their rivals
D)Firms focus on understanding their resources and capabilities in regards to their weaknesses

Question 51

Ultimately, industry attractiveness derives from the ownership of resources.

A)This statement is true
B)This statement is wrong
C)This statement can be true under certain circumstances
D)This statement does not make sense

Question 52

The most important resources and capabilities are those which both give the firm a strength versus competitors, and which relate strongly to key success factors

Question 53

Filling resource gaps and developing capabilities for the future:

A)Are part of capability analysis and management
B)Are unimportant to the process of capability analysis
C)Are the responsibility of operations managers only
D)Do not require any specific attention by senior management

Question 54

Identifying the key resources and capabilities is the first step in analyzing their strategic importance.

Question 55

In exploring how to create more value from tangible assets, two questions must be addressed:

A)Can a firm save money on these assets by changing the depreciation policy, and how can it delay replacing them?
B)How can a firm reduce cost/unit of output on underutilized assets, and/or how can it redeploy them more profitably?
C)How can a firm beat its rivals regarding these assets, and how can it build a better reputation in regards to its external environment?
D)How can a firm acquire more efficient assets from external markets, or how can it build these assets in-house?

Question 56

What's the difference between a resource and a capability?

A)A resource is a productive asset of the firm whereas a capability refers to what the firm can do
B)A resource is an immobile asset whereas a capability is a dynamic concept.
C)A resource is a weak source of competitive advantage whereas a capability is a strong one
D)It is very difficult to elucidate.

Question 57

What is the difference between Monopoly rents and Ricardian rents?

A)Ricardian rents refer to technological advantages whereas Monopoly rents are profits arising from the firm being a monopoly.
B)Ricardian rents refer to profits arising from market power, whereas Monopoly rents are profits arising from superior resources
C)Monopoly rents refer to profits arising from market power, whereas Ricardian rents are profits arising from superior resources
D)The difference is only semantic

Question 58

The previous chapters of the book have focused on:

A)What commercial firms are in general trying to achieve - chiefly profit.
B)The analysis of the internal environment
C)The identification of profitable opportunities in the external environment
D)Both a and c above

Question 59

Examples of reputational assets are:

A)Corporate culture, organizational culture, and trademarks
B)Reputation of a firm's top managers within the industry, and corporate culture
C)Brand names, trademarks, and customers' confidence in the firm
D)Brand names, and a firm's employee turnover rate

Question 60

If the speed of change of the environment increases, a firm's resources and capabilities will:

A)Tend to provide a more secure foundation for the firm's strategy
B)Provide a more secure foundation for its short-term activities
C)Provide a stronger basis for the firm's technological strategy
D)Potentially hold it back in evolving with the market.

Question 61

The value of a firm's human plus intangible resources can be seen as the difference between its market capitalisation and the fair value of its tangible assets. The human plus intangible assets are then typically worth much more than the tangible assets.

Question 62

Organizational capability, distinctive competence, and core competence are similar terms, relating to a firm's capacity to achieve competitive advantage.

Question 63

If a resource or capability is durable, it will confer a sustainable competitive advantage upon the firm.

Question 64

Capabilities are what a firm can do - in particular, what it can do better than competitors

Question 65

The analysis of a firm's principal functions and Porter's value chain are two approaches that can be used to identify a firm's capabilities.

Question 66

Given a rapid rate of change in the external environment, the organization, its resources, and competencies present a more stable base from which to consider strategy.

Question 67

The three main types of resources exist: tangible, intangible, and human

Question 68

For a resource or capability to be a source of competitive advantage, two conditions must be present: scarcity and relevance

Question 69

Until about 20 years ago, industry attractiveness was viewed as the main reason why some businesses were more profitable than others..

Question 70

Organizational capabilities are the outcome of the organizational processes through which the efforts of different individuals are integrated.

Question 71

Strategy's concern is to match a firm's resources and capabilities to the opportunities emerging from its environment

Question 72

With some ingenuity, it may be possible to develop innovative strategies that turn apparently inconsequential strengths into valuable capabilities

Question 73

Competitive advantage rather than industry attractiveness is nowadays understood to be the more important source of profit, in general

Question 74

In the 1990s, ideas about the role and importance of a firm's resources and capabilities coalesced into a perspective named the "Resource-based view"

Question 75

In general, higher level capabilities that require cross-functional integration are the more strategically important and valuable

Question 76

Resources are the productive assets owned by a firm

Question 77

A key feature of efficient and reliable processes is that a firm has been able to perform them routinely. However, routinizing a process is not sufficient to make it a distinctive competence.

Question 78

Assessment centers and competency modeling are examples of the adoption by firms of objective, quantitative approaches to appraising human resources.

Question 79

The strategic options of advanced technology companies are restricted, because their technology ties them to a specific market focus.

Question 80

Kodak is a prime example of a company restricted to chemicals and film, because it had no possibility of gaining expertise in digital technology, despite trying hard to do so.