Deck 3: Internal Analysis: Resources and Competitive Advantage

Question 1

The building blocks of competitive advantage are efficiency, quality, innovation and customer responsiveness.  

Answer 1

True

Question 2

Employee productivity is a common measure of efficiency.

Answer 2

True

Question 3

The primary activities of the value chain include the design, creation, and delivery of the product, the product's marketing, and its support and after-sales service.

Answer 3

True

Question 4

At the heart of any company's business model is the combination of congruent strategies aimed at creating distinctive competencies that differentiate its products and result in a lower cost structure.

Question 5

Lucy is an entrepreneur who is interested in opening her own bakery. She is concerned with obtaining money for equipment for the bakery such as ovens, pots and pans, and display cabinets. Lucy is trying to obtain intangible resources for her business.

Question 6

The price a company charges for a good or service is typically more than the utility placed on that good or service by the customer.

Question 7

At Adam's bicycle repair shop, the primary value chain activity of production occurs each time a customer's bicycle is repaired.

Question 8

The importance of reliability in building competitive advantage has increased dramatically over the past several decades.

Question 9

A value chain is a sequence of activities for transforming inputs into outputs that are valued by customers.

Question 10

Together with an analysis of the company's external environment, internal analysis gives managers the information they need to choose the business model and strategies that will enable their company to attain a sustained competitive advantage.

Question 11

In the fashion industry, the time required to take a new product from design inception to placement in a retail store is known as customer response time.

Question 12

Internal analysis is concerned with identifying a company's opportunities and threats.

Question 13

A resource is inimitable if competitors are able to copy it easily.

Question 14

When a company has differentiated products, they have less pricing options.

Question 15

Nene works in a factory where she picks crab meat from crabs. She is paid per day based upon the number of pounds of crab meat that she picks. Nene's daily number of pounds of crab meat can be referred to as her productivity.

Question 16

The more a resource is firm-specific and difficult to imitate, the more likely a company holding that resource is said to have a distinctive competency.

Question 17

Resources can be considered valuable if they enable a company to create a strong demand for its products or if it reduces the costs of producing its products.

Question 18

The VRIO model is designed to help companies assess the quality of their resources and identify sources of competitive advantage.

Question 19

Quality-as-excellence and quality-as-reliability are concepts that apply to goods but not services.

Question 20

Distinctive competencies are firm-specific strengths that allow a company to differentiate its products and achieve substantially lower costs than its rivals.

Question 21

Which of the following is not true regarding a company's distinctive competencies?

A) They represent the unique strengths of the company.
B) They refer to company strengths that competitors cannot easily match or imitate.
C) They form the bedrock of a company's strategy.
D) They can be based in any of the value creation functions of the company.
E) They are shared by many firms in an industry.

Question 22

Resources:

A) are only the tangible assets available to a company.
B) can be both tangible and intangible.
C) are harder for a company to copy than capabilities are.
D) do not include patents, copyrights, and trademarks.
E) are considered valuable only if they increase a company's costs.

Question 23

Competitive advantage typically leads to:

A) a defective business model.
B) average profitability within an industry.
C) superior profitability.
D) the Icarus paradox.
E) barriers to changes in the organization.

Question 24

The more utility a company creates for its customers, the more flexibility it has in determining prices.

Question 25

Competitive advantage is based on:

A) distinctive competencies.
B) the Icarus paradox.
C) higher cost structure.
D) prior strategic commitments.
E) barriers to change in a company.

Question 26

The ability of established competitors to imitate the competitive advantage of a rival is limited by factors such as existing strategic commitments and low absorptive capacity.

Question 27

The intellectual property of an organization is a(n):

A) tangible resource.
B) strategic commitment.
C) tangible capability.
D) barrier to change.
E) intangible resource.

Question 28

When conducting an internal analysis, strategic managers should:

A) identify its internal resources and evaluate the quality of those resources.
B) ?only count something as a resource if the company is actively managing it.
C) always file for patents and trademarks on intellectual property.
D) exclude any resource as a source of competitive advantage if it isn't rare.
E) identify as many resources as possible, regardless of their value or rarity.

Question 29

Which of the following is true of the impact of high product quality on competitive advantage?

A) It decreases the  utility of the products.
B) It lowers unit costs of the products.
C) It adversely affects employee productivity.
D) It limits the company's ability to differentiate its products.
E) It increases the need for after sales services.

Question 30

Benchmarking is a practice in which a company's performance is compared against that of other companies in different industries.

Question 31

Donna can make a chair for about $100, she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. In this case, the consumer surplus is:

A) $50.
B) $75.
C) $125.
D) $150.
E) $225.

Question 32

Based on the VRIO framework, a resource can be considered a source of competitive advantage if it is:

A) shared by most companies in an industry.
B) ?rare, valuable, difficult to imitate and organized or managed by the company.
C) the foundation of a company's strategy.
D) kept as a trade secret rather than as a patent.
E) increases the cost of producing the product and therefore the price charged to customers.

Question 33

A company's profitability depends on the value customers place on the company's products and a company's ability to reduce its production costs.

Question 34

Intellectual property protections, including patents, trademarks and copyrights, typically provide a barrier to imitation.

Question 35

The most successful firms are those that constantly learn and adjust their distinctive competencies.

Question 36

IBM's investment in mainframe computers, that proved disadvantageous when the market shifted to smaller personal computers, is an example of a prior strategic commitment.

Question 37

Absorptive capacity refers to the ability of an enterprise to identify, value, assimilate, and use new knowledge.

Question 38

If a company's profitability is higher than the industry average, it has a competitive advantage.

Question 39

Imitating a company's capabilities tends to be more difficult than imitating its basic and advanced factors of production.

Question 40

When a resource is said to be organized, this means that the company:

A) identified the resource as a resource.
B) ?built a department to execute its operations using the resource.
C) takes the resource for granted and assumes its value.
D) has made it difficult to copy or imitate.
E) has developed a method for making sure it gets the most out of its unique strengths.

Question 41

Using the value chain model, which of the following primary activities is performed first, as inputs are transformed into outputs?

A) Research and development
B) Marketing and sales
C) Logistics
D) Production
E) Service and support

Question 42

Efficiency is:

A) defined as the time it takes to produce a product.
B) the quantity of inputs required to produce an output.
C) independent of customers' perception of a product's value.
D) measured by looking at a product's price.
E) lower when the output is high-quality.

Question 43

Research and development activities are concerned with:

A) design of products.
B) distribution of goods.
C) customer services.
D) analyzing financial performance.
E) marketing of products.

Question 44

Intel's invention of the microprocessor in the early 1970s, Cisco's development of the router for routing data over the Internet in the mid-1980s, and Apple's development of the iPod, iPhone, and iPad in the 2000s can be referred to as _____ innovations.

A) process
B) product
C) customer
D) sector
E) absorptive

Question 45

Which of the following support activities in the value chain refers to the transmission of physical materials from procurement through production and into distribution?

A) Human resources
B) Information systems
C) Research and Development
D) Logistics
E) Operations

Question 46

Anna bakes cookies for about $10 per batch, she charges customers $15 to a batch, and customers perceive that the cookies are worth $25 per batch. Anna's profit margin is:

A) $5.
B) $7.5.
C) $10.
D) $15.
E) $25.

Question 47

According to the text, one of the basic building blocks of competitive advantage is:

A) quantity.
B) logistics.
C) variety.
D) distribution.
E) innovation.

Question 48

Kodak possesses the leading imaging technology. This technology has allowed the company to differentiate its products from those offered by rivals. Imaging technology is Kodak's:

A) distinctive competence.
B) profit.
C) support activity.
D) value chain.
E) retired product.

Question 49

Mike works as a corporate trainer, teaching new employees how to perform manufacturing tasks. In which value chain activity does Mike work?

A) Research and development
B) Human resources
C) Materials management
D) Production
E) Company infrastructure

Question 50

Cost accountants are responsible for gathering and monitoring data used for controlling the organization's costs. In which value chain activity do cost accountants work?

A) Research and development
B) Human resources
C) Materials management
D) Marketing and sales
E) Company infrastructure

Question 51

Ford Motors developed the Explorer sports utility vehicle in 1990, and it is still in the top ten best-selling sports utility vehicles in the United States, based on an extensive study of customer preferences. Which value chain activity of Ford conducted those studies?

A) Research and development
B) Human resources
C) Materials management
D) Marketing and sales
E) Company infrastructure

Question 52

Which of the following is an important attribute for a product from a quality-as-reliability perspective?

A) Styling
B) Aesthetic appeal
C) Wait time at the point of sale
D) Features
E) Performance

Question 53

Using the value chain model, which of the following primary activities is performed last, as inputs are transformed into outputs?

A) Research and development
B) Marketing and sales
C) Service and support
D) Production
E) Human resources

Question 54

Which primary activity in the value chain is concerned with the design of products and production processes?

A) Research and development
B) Marketing and sales
C) Materials management
D) Production
E) Company infrastructure

Question 55

Which of the following best describes product innovation?

A) Transforming a quantity of inputs into a given output
B) Identifying and satisfying a customer's needs
C) Creating products that have superior attributes than existing products.
D) Developing a new process that focuses on quantity rather than quality.
E) Measuring the quantity of outputs produced per employee

Question 56

The simplest measure of efficiency is:

A) the amount of money the company has to work with in the short term.
B) the ratio of revenues divided by invested capital.
C) the net profit expressed as a percentage of sales.
D) the total costs of producing products.
E) the quantity of inputs that it takes to produce a given output.

Question 57

Innovation refers to the act of:

A) seeking patent protection for new products.
B) creating new products and processes.
C) measuring time taken for a service to be provided.
D) measuring the output produced by an employee.
E) identifying and satisfying the needs of a customer.

Question 58

Customer response time is:

A) the time taken for value to be placed on a company's products by customers.
B) the time taken for development of a new process for producing products and delivering them to customers.
C) the time taken for given inputs to be converted into an output.
D) the time taken for development of products that have superior attributes to existing products.
E) the time taken for a good to be delivered or a service to be performed.

Question 59

_____ consists of the electronic systems for managing inventory, tracking sales, pricing products, selling products, and dealing with customer service inquiries.

A) Information systems
B) Logistics
C) Barriers to imitation
D) Benchmark
E) Materials management

Question 60

The concept of efficiency as a building block of competitive advantage applies to:

A) all products produced by a firm.
B) products consumers believe to be high-quality; not low-quality.
C) only those products of a firm popular among a large customer base.
D) custom-made products only.
E) only those products that have been redesigned.

Question 61

A company's competitive advantage will not endure for long when that competitive advantage can be:

A) quickly or easily duplicated by other companies.
B) protected by patents.
C) protected by significant barriers to imitation.
D) shared with other companies in the industry.
E) shielded by copyrights.

Question 62

Which of the following is not a way that companies can avoid failure?

A) Benchmarking
B) Continuous learning
C) Developing distinctive competencies
D) Exploiting luck
E) Following rigid business processes

Question 63

Benchmarking can be defined as the practice of:

A) monitoring activities related to the design, creation, and delivery of a product, its marketing, and its support and after-sales service.
B) developing products that are new to the world or have superior attributes to existing products in the market.
C) measuring the time that it takes for a good to be delivered or a service to be performed.
D) measuring a company against the products, practices, and services of some of its most efficient global competitors.
E) analyzing the financial position of a company and creating the income statements and the balance sheets.

Question 64

Industry dynamism refers to:

A) the gradual erosion of a company's customer base over time.
B) shifts in product profitability.
C) a rapidly changing industry environment.
D) increasing per-unit costs.
E) a company's difficulty in changing its strategies and structure.

Question 65

Explain how tangible and intangible resources and capabilities can lead to distinctive competencies. Give specific examples.

Question 66

Which of the following reports includes the cost of goods sold?

A) The balance sheet
B) The financial position statement
C) The cash budget
D) The income statement
E) The overhead expense statement

Question 67

One of the most widely used measures of financial performance in an internal analysis is:

A) return on invested capital.
B) net profit margin.
C) share value.
D) net sales.
E) productivity.

Question 68

The ratio of net profit to invested capital is known as:

A) return on invested capital.
B) return on sales.
C) capital turnover.
D) cost of goods sold.
E) sales, general, and administrative expenses.

Question 69

Factors that make it difficult for a competitor to copy a company's distinctive competencies are known as:

A) barriers to imitation.
B) marketing know-how.
C) technological know-how.
D) support activities.
E) capabilities.

Question 70

A company's competitive advantage is more durable when:

A) barriers to imitation are low and there are few capable competitors.
B) barriers to imitation are high and there are many capable competitors.
C) barriers to imitation are high and the industry is stable.
D) the industry is stable and there are many capable competitors.
E) the industry is stable and barriers to imitation are low.

Question 71

The term value chain refers to the idea that a company is:

A) one of a series of units that comprise an industry segment.
B) the producer of a series of customer-valued products that are linked together.
C) a series of activities that transform inputs into products that customers value.
D) one of a series of economic functions.
E) a collection of various products and their attributes.

Question 72

Analyze the relationships among distinctive competitive advantage, distinctive competencies, resources, and capabilities.

Question 73

Give one example of a firm that has achieved a distinctive competency in efficiency and describe that competency. Repeat for a firm with a distinctive competency in quality, innovation, and responsiveness to customers.

Question 74

When Rollie's car wash began to lose business to rivals, Rollie read publications for car wash owners to learn the best practices in the industry. Then she implemented the best practices. Rollie is using ____ to improve her car wash.

A) specialized assets
B) benchmarking
C) strategic commitments
D) inertia
E) the Icarus paradox

Question 75

Evaluate and comment on this statement: "No competitive advantage lasts forever."

Question 76

Dale's methods of fitting horseshoes save time and money for his employer at the local ranch. However, when Dale suggests that everyone use his method, his boss, Cedric, says, "No. That's not the way we've always done it around here." Cedric's resistance to change illustrates:

A) organizational inertia.
B) prior strategic commitments.
C) barriers to mobility.
D) lack of distinctive competencies.
E) the Icarus paradox.

Question 77

Ray, a toymaker, knits a stuffed unicorn for Belle. Which function of the value chain is illustrated in this scenario?

A) Marketing
B) Distribution
C) Research
D) Production
E) Sales

Question 78

Identify and describe the four building blocks of competitive advantage. Provide an example of each using a real company situation.

Question 79

Ted is an accountant at ABC Company. He calculates the difference between total revenues and total costs before tax. Ted calculates the:

A) net profit.
B) capital turnover.
C) cost of goods sold.
D) return on sales.
E) invested capital.