Deck 3: Resources and Capabilities

Question 1

An experienced manager's knowledge is path-dependent.

Answer 1

True

Question 2

The internal environment

A)is the structure inside an industry.
B)has become less important as an explanation of firms' profitability.
C)is how a firm's resources and capabilities are deployed to deliver its business strategy.
D)can safely be left to the HR Department to manage.

Answer 2

C

Question 3

Resources are ultimately more important than capabilities.

Answer 3

False

Question 4

Competitive advantage is generally the amount by which one firm's profitability exceeds another's in the same industry.

Question 5

The value of a brand is the confidence it instils in customers regarding the expected benefits associated with that brand.

Question 6

Combining several resources may create capabilities that deliver superior profitability.

Question 7

Industry attractiveness is now more important in explaining firms' profitability than competitive advantage.

Question 8

Path-dependent means that a company's capabilities today are the result of its history.

Question 9

Because good companies know their own relative strengths and weaknesses, they focus efforts on strengthening the right resources and capabilities.

Question 10

Dynamic capabilities are useful in fast changing environments.

Question 11

The safest way to value a firm's productive assets for strategic purposes is to use the historic cost book value of its assets.

Question 12

Human resources are always listed on a firm's balance sheet.

Question 13

Resources are a firm's productive assets; capabilities are what a firm can do.

Question 14

Superior capabilities can be acquired and owned by astute firms.

Question 15

It is vital for a business strategist to distinguish between a firm's resources and its capabilities.

Question 16

Core rigidities provide the spine that helps firms learn new skills faster.

Question 17

We need to honestly appraise our resources and capabilities in order to maximize our appeal to customers.

Question 18

Remedying strategic weaknesses in capabilities is likely to take several years.

Question 19

A capability that is needed to win versus competitors is a core competence.

Question 20

Assembling a great set of resources is the key to getting good results.

Question 21

A capability that is "needed to play" is

A)a threshold resource.
B)a unique resource.
C)a threshold competence.
D)a core competence.

Question 22

An organizational capability requires

A)many unique resources.
B)just one unique resource.
C)no unique resources.
D)individuals to coordinate with each other, and some capital or technology, to achieve a valuable transformation to goods or services.

Question 23

Because marketing is a threshold capability for Hyundai,

A)they learned all the vital lessons early on.
B)to counter their earlier poor image they have had to catch up to their rivals' capabilities.
C)they do not need to pay it significant attention.
D)they now excel at marketing.

Question 24

Apple and 3M's ability to develop genuinely new products are

A)part of their corporate structures.
B)due entirely to their unique corporate cultures.
C)lucky coincidences.
D)one of their core research and development capabilities.

Question 25

In fast changing environments

A)a firm should focus on its oldest markets.
B)a firm may define itself by its resources and capabilities.
C)both a and b.
D)neither a nor b.

Question 26

Prahalad and Hamel's 1990 paper

A)summarized the main constraints of the external environment.
B)summarized the strategic positioning school's point of view.
C)won that year's nobel prize for economics.
D)kick-started the modern resource-based view of the firm.

Question 27

Companies' "book values" are generally much less than their stock market valuations because

A)auditors tend to err on the conservative side.
B)accountants are generally required by accounting standards to ignore the value of brands and all other reputational assets.
C)to be on the safe side accountants tend to undervalue brand values.
D)accountants and marketing experts have different methods of valuing brands.

Question 28

The hierarchy of capabilities explains

A)how capabilities to do market research time-effectively and buy advertising cost-effectively, belong under marketing capabilities.
B)how capabilities are made up of processes that use resources to achieve a desired result.
C)how the CEO should have more capabilities than the CFO, the COO etc.
D)how core capabilities are more valuable than threshold capabilities.

Question 29

In MacDonald's most small firms, a process which is usually routinized is

A)developing a new product.
B)launching a new promotional campaign.
C)making a burger.
D)expanding internationally.

Question 30

We can define the following general resources for a firm:

A)human, intangible and tangible.
B)tangible, intaglio and humane.
C)humane, fungible and tangible.
D)physical, financial, and other current.

Question 31

Brand values are a

A)type of tangible resource.
B)type of intangible resource.
C)type of synergistic resource.
D)type of sustainable resource.

Question 32

Human resource capabilities

A)include the skills to train and develop people.
B)are generally a firm's greatest resource.
C)are the distinctive capability of most automobile makers.
D)b and c.

Question 33

Organizational culture is

A)the way a firm is organized.
B)a firm's deeply held values.
C)a firm's deeply held traditions and social norms.
D)b and c.

Question 34

When firms develop organizational routines they are

A)seeking to liven up boring production manuals.
B)learning by doing.
C)in the mature stage of an industry's life cycle.
D)in the declining stage of an industry's life cycle.

Question 35

Porter's firm value chain can be used to

A)estimate the value added at each stage of a good's production and distribution.
B)show the after-tax profit generated by each part of the firm.
C)show the pre-tax profit generated by each part of the firm.
D)map out a firm's main activities into threshold and distinctive capabilities.

Question 36

An organizational process is

A)what suspects endure in courtrooms.
B)a long line of people performing one activity.
C)a sequence of coordinated actions that performs a task.
D)the chain of command above an employee.

Question 37

Threshold capabilities enable a firm to do what every firm in its industry must do. Distinctive competences

A)describe those things that an organization does particularly well relative to its competitors.
B)are its unique selling point.
C)are those product features that stop non-customers from buying the product.
D)are captured in logos, trademarks etc.

Question 38

To value a firm's tangible resources

A)we should take the historic cost book value.
B)we must update historic cost assets to current cost (modern replacement cost)assets.
C)we need to know how they could be used optimally.
D)this is a specialist task for professional accountants.

Question 39

The difference between a capability and a competence is

A)a competence is core to a firm's operations.
B)a capability is necessary to survive, but a competence is essential to thrive.
C)a competence is necessary to survive, but a capability is essential to thrive.
D)no difference in this textbook where they are taken as interchangeable.

Question 40

Spending money raising market perceptions of Hyundai's brand was

A)a worthwhile investment in intangible resources.
B)a worthwhile investment in human resources.
C)eventually recognized in the balance sheet.
D)a waste of money.

Question 41

Truly successful firms

A)are told their strengths and weaknesses by external experts.
B)are honest enough to recognize their own true strengths and weaknesses themselves.
C)obtain confirmation of their strengths and weaknesses from outside experts.
D)b and c.

Question 42

Unsuccessful firms

A)don't know their own strengths and weaknesses.
B)don't know where to invest their efforts and resources in remedying weaknesses.
C)are arrogant about current capabilities, relying on past glories.
D)can fall into a, b or c.

Question 43

Early experiences for some major oil companies

A)dictate their current positions.
B)mean some of their modern core competences show path dependency.
C)are irrelevant to current corporate cultures.
D)are indelibly printed on older staff's minds.

Question 44

Firms try to develop resources and capabilities to

A)maximize attractiveness to our customers.
B)create sustainable competitive advantage.
C)maximize current profit rates.
D)attract the best employees.

Question 45

We need to appraise our resources and capabilities against

A)our past record; we must continually improve.
B)the best firms around the world, no matter in what country, market or industry.
C)our competitors' resources and capabilities.
D)The best that our competitors might attain in the future.

Question 46

The final appraisal of the strengths and weaknesses of a firm's resources & capabilities

A)is a quantitative appraisal by an objective outside body.
B)requires insight and understanding of a firm's industry, and its position within the industry.
C)requires artistic flair and creative questioning.
D)requires detailed knowledge of business strategy theory, and all its intellectual roots.

Question 47

To stop rivals acquiring a core resource or capability,

A)firms cannot stop its rivals from doing things they want to.
B)firms need to make that resource or capability immobile.
C)firms must use patents and the full array of legal protections.
D)everyone involved in this activity must be paid higher than the rivals could pay.

Question 48

Superior capabilities are often traced to staff skills and efforts

A)so pay is key: pay the highest rates and the best talents will walk into your firm.
B)you need to pay a good market rate to attract and retain top talent.
C)having the right corporate culture and being set the right challenges motivates good staff.
D)b and c.

Question 49

Core rigidities can

A)and must be eliminated by a new CEO.
B)develop over long periods.
C)inhibit firms' ability to develop new capabilities.
D)b and c.

Question 50

Internal appraisal of a company's capabilities against the best competitors

A)cannot be done; only external appraisal is valid.
B)can be done using discussion of past successes and failures.
C)can be done using external benchmarking.
D)b and c.

Question 51

Dynamic capabilities

A)are the capacity to learn new capabilities.
B)can be acquired through 'reverse takeovers'.
C)develop rapidly in some industries, then die.
D)b and c.

Question 52

The value to managers of understanding key success factors is

A)self-evident.
B)legitimate because it is accepted by the academic world.
C)in question because some important academics disagree with it.
D)generally accepted by the corporate, consulting and academic worlds, but as with most business concepts and models, there are always some detractors.

Question 53

Tight complex organizational routines

A)are based on unique corporate structures.
B)can be copied if rivals hire the right employees.
C)are complex capabilities that are hard for rivals to replicate.
D)a and c.

Question 54

In the automobile industry resources such as brand strength

A)are common enough; pick one, then use it.
B)can be bought - look at jaguar (three owners in the last ten years).
C)cannot be easily acquired.
D)a and b.

Question 55

BMW's core competence is its ability to integrate

A)world-class engineering, design excellence, and effective marketing.
B)world-class engineering, design excellence, and knowledge of global markets.
C)world-class engineering, design excellence, and products for every luxury market.
D)world-class products, design excellence, and products for every luxury market.

Question 56

Hyundai overcame the most difficult competitive advantages held by the incumbent automakers by

A)recruiting experts from other auto companies.
B)benchmarking the key capabilities needed to succeed, then making clear commitments to achieve them.
C)making long-term financial and business commitments to the auto industry.
D)all of the above.

Question 57

Resources and capabilities can generate higher profits

A)if competition is fierce.
B)if the competitive advantage they generate is sustained for some years.
C)only if governments allow firms to share resources.
D)only where cartels are effectively allowed.

Question 58

Taking an external focus to identify a firm's key resources and capabilities, we begin with industry

A)benchmarks.
B)trends.
C)key success factors.
D)alliances.

Question 59

Path dependence is

A)where you are today, with all your knowledge, being a result of how you got here.
B)the opposite: you could have got to today's position a hundred different ways.
C)total reliance on one's own history.
D)a way of planning the careers of future CEOs.

Question 60

Resources and capabilities need to be appraised against two key criteria:

A)cost and value.
B)strengths and weaknesses.
C)opportunities and threats.
D)their importance and strengths and weaknesses compared with the competition.

Question 61

Alliances are a way to develop new capabilities that

A)are less permanent than an acquisition/merger.
B)are cheaper than an acquisition or merger.
C)will guarantee competitive advantage.
D)a and b.

Question 62

Some firms introduce products into specific countries in a sequence The more a company outsources its value chain activities to a network of alliance partners, the more it needs to develop

A)new products.
B)innovation.
C)human resource skills.
D)systems integration capability.

Question 63

The point of 'resource leveraging' is to

A)use all a firm's resources more efficiently.
B)reduce the money tied up in working capital.
C)limit the range of new capabilities a firm is trying to develop at one time.
D)b and c.

Question 64

Two factors contribute to the efficiency and effectiveness with which teams of individuals perform repetitive patterns of activity:

A)demand and supply.
B)organizational learning.
C)culture.
D)b and c.