Deck 5: Value Chain Analysis

Question 1

The Microsoft Xbox console uses 1,700 components produced by 250 suppliers worldwide.

Answer 1

True

Question 2

Some sophisticated strategy research has demonstrated that industry structure and conditions can explain only a small portion of the variance in the performance of firms within an industry.

Answer 2

True

Question 3

An examination of driving forces is one of the three basic methods for conducting an internal analysis to gain insight into a firm's strategic potential.

Answer 3

False

Question 4

A SWOT analysis can help uncover a company's strengths and weaknesses, knowledge it can then use as it creates or adjusts its strategy.

Question 5

It is typical that one senior manager at a company is assigned the responsibility for conducting a SWOT analysis.

Question 6

A SWOT analysis presents a dynamic view of a company, allowing managers to see how capabilities change over time.

Question 7

Benefits of using a SWOT analysis include the fact that it is easy to use and understand and that it is a strong starting point for in-depth discussion and analysis of a company's strategic position.

Question 8

A matrix that arrays a company's strengths and weaknesses against its opportunities and threats is called a probability-impact matrix.

Question 9

The potential drawbacks of using a SWOT analysis include the possibility for some ambiguity about whether a particular item is a strength or a weakness and the danger that the list of items produced can become too long.

Question 10

The value chain is a concept that emphasizes that a company is an organization of interrelated activities designed to create value for stakeholders and that the derivation of superior performance is better understood by focusing on what a company actually does.

Question 11

Human resource management, procurement, and research and development are some of the primary activities in the value chain.

Question 12

Inputs, operations, distribution, and marketing and sales are representative support activities in the value chain.

Question 13

A study of U.S. employment showed that most of the jobs in the economy in the year 2000 were tied to value chain support activities.

Question 14

An analysis of a firm's value chain provides more actionable information for managing strategy than a SWOT analysis and it illustrates how a firm's strengths and weaknesses are produced.

Question 15

With value chain analysis there might be a tendency to simply focus on the nature of the marketplace rather than on internal activities and behaviors.

Question 16

Activity-based costing is a method of managerial accounting used to assign all direct and indirect costs to a particular activity.

Question 17

Value creation occurs when some other party appreciates something that we do for him or her and is willing to execute a profitable transaction with us as a result.

Question 18

One way to create value is by offering the customer the same benefits as those provided by competitors but at a higher price.

Question 19

It is possible to create value upstream for suppliers as well as for the community in which the company operates in addition to creating value for customers.

Question 20

Value capture occurs when a company creates value by acting in ways that its competitors cannot or will not act.

Question 21

Activities that are idiosyncratic are unique to the industry in which those activities take place.

Question 22

Primary value chain activities are far less obvious to outsiders and competitors and are therefore much more difficult to imitate.

Question 23

The three primary steps in performing a value chain analysis are: 1) identify the value chain activities, 2) evaluate their value-creating properties and cost characteristics, and 3) identify improvements that allow the company to capture greater value.

Question 24

Two of the executional drivers of value chain activities include the experience curve and the firm's level of capital intensity.

Question 25

A value chain analysis may show that some of the firm's activities are more effectively handled by another company - that is, they should be outsourced.

Question 26

The complexity of the value chain for Microsoft's Xbox 360 is best illustrated by the fact that

A) Microsoft produces all of the components and assembles the consoles itself.
B) each console has 1,700 components produced by 250 suppliers worldwide.
C) Microsoft had to add a third manufacturing facility to keep up with demand.
D) Xbox 360s are shipped to Long Beach, California and then on to Memphis, Tennessee.

Question 27

It has become more difficult to create value in the travel agency industry because

A) more and more customers purchase airline tickets directly from web sites rather than from travel agents.
B) travel agents primarily arrange domestic travel and today people tend more toward international travel.
C) travelers are migrating toward cruises for vacations and are avoiding airline flights.
D) airline fares have become much easier to understand than they were a few years ago.

Question 28

The difference between a SWOT analysis and a value chain analysis is that a SWOT analysis tells us what a company ________ while a value chain analysis tells us what a company ________.

A) is; does
B) makes; outsources
C) sells; buys
D) says it believes; truly values

Question 29

The acronym SWOT stands for

A) Skills, Wiles, Outlays, and Themes
B) Strengths, Weaknesses, Opportunities, and Threats
C) Selling, Waste, Oversight, and Trim
D) Scrutinize, Winnow, Offshore, and Trust

Question 30

A SWOT analysis has which of the following benefits?

A) It is easy to understand and use.
B) It suggests an overall direction for the firm.
C) It provides a good starting point for a more in-depth discussion of the firm's strategy.
D) A SWOT analysis has all of the benefits listed above.

Question 31

A matrix that arrays a company's strengths and weaknesses against its opportunities and threats is called a(n) ________ matrix.

A) SWOT
B) internal-external
C) TOWS
D) assessment

Question 32

Which of the following is a potential SWOT analysis drawback?

A) It results in a concise list of items across the four categories.
B) It provides a static view of the firm.
C) It unambiguously distinguishes between strengths and weaknesses.
D) All of the above are potential SWOT analysis drawbacks.

Question 33

The ________ provides "a systematic way of examining all the activities a firm performs and how they interact..."

A) value chain
B) resource-based view
C) structure-conduct-performance model
D) audit trail

Question 34

Most companies participate in ________ of the industry value chain.

A) all
B) almost none
C) only part
D) the raw materials end

Question 35

Which of the following is not one of the primary activities in the value chain?

A) training
B) inputs
C) operations
D) marketing & sales

Question 36

Which of the following is one of the support activities in the value chain?

A) human resource management
B) research & development
C) procurement
D) All of the above are support activities in a value chain.

Question 37

A study of employment in the U.S. found that jobs in the economy

A) mostly were in value chain primary activities.
B) mostly were in value chain support activities.
C) were evenly split between value chain support and primary activities.
D) could not be readily ascertained to be in either value chain support or primary activities.

Question 38

The benefits of value chain analysis over SWOT analysis include which of the following?

A) A value chain analysis illustrates the derivation of strengths and weaknesses.
B) A value chain analysis presents a dynamic rather than static view of the firm.
C) A value chain analysis provides more actionable information for managing strategy.
D) All of the above are benefits of a value chain analysis over a SWOT analysis.

Question 39

A managerial accounting method used to assign all direct and indirect costs to a particular activity is

A) FASB-directed accounting.
B) international standards accounting.
C) activity-based costing.
D) indirect public costing.

Question 40

________ occurs when some other party appreciates something that we do for them and is willing to execute a profitable transaction with us as a result.

A) Value creation
B) A negotiated settlement
C) An absence of transaction costs
D) A bartered trade

Question 41

Which of the following is not a basic way in which value can be created?

A) By providing customers with the same benefits they can get elsewhere and charging the widely accepted industry price, or a little more to earn some profit.
B) By providing greater benefits for the same price the customer has been accustomed to paying.
C) By providing the same benefits but at a lower price that the customer has been accustomed to paying.
D) By broadening access to benefits to a wider audience, without sacrificing the benefits delivered to existing customers.

Question 42

Value is best captured when a company's set of activities is ________ and those activities are not easily imitated by a competitor.

A) contestable
B) hidden
C) idiosyncratic
D) embedded in routines

Question 43

Value chain activities that are far less obvious to outsiders and competitors, and therefore far more difficult to imitate are ________ activities.

A) primary
B) support
C) transactional
D) data-driven

Question 44

Relying on internal activities and processes, tapping customers and suppliers for ideas, and engaging in other boundary-spanning activities meant to identify emerging trends are all means by which a company can deliberately create a focus on

A) the behaviors of rivals.
B) the likelihood of an industry price war.
C) opportunity recognition.
D) its changing culture.

Question 45

Performance and cost dimensions of activities that are derived from business operations involving people, systems, routines, culture, and coordination that usually have a fairly important learning component are known as

A) executional drivers.
B) cost drivers.
C) contingent drivers.
D) success drivers.

Question 46

Performance and cost dimensions of activities that are derived from the strategic choices made about the underlying economic logic and structure of the business are known as

A) organizational drivers.
B) structural drivers.
C) performance drivers.
D) cultural drivers.

Question 47

Contrast the purposes of an external analysis and an internal analysis.

Question 48

In your own words describe some of the benefits and drawbacks of using a SWOT analysis.

Question 49

What are some of the fundamental primary and support activities by which a company can create value?

Question 50

What are the basic ways in which a company creates and captures value through its various activities? How does this added value lead to a competitive advantage?