Question 1

What term best describes a resource that cannot "sell itself" to the highest bidder?
A) Isolated
B) Value-creating
C) Scarce
D) Imperfectly mobile
E) Profit maximizing

Accepted Answer

An imperfectly mobile resource is a resource that cannot "sell itself" to the highest bidder, meaning it is not easily moved from one use to another or from one firm to another. This can be due to a variety of reasons such as legal restrictions, physical limitations, or other barriers. Scarce resources can sell themselves to the highest bidder if they are easily movable, and value-creating resources may be able to command a high price due to their positive impact on business operations. Isolated resources and profit-maximizing resources do not necessarily relate to this concept.

Question 2

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

Accepted Answer

The term that best describes assets that are more valuable when used together than when separated is "Cospecialized."

Question 3

Which of the following terms best describes an idea,developed by Gary Hamel and C.K.Prahalad,which combines commitment to the firm's ambitions with the flexibility to change with circumstances?
A) Leveraging resources
B) Strategic intent
C) Strategic stretch
D) Hypercompetition
E) Global dominance

Accepted Answer

C

Question 4

What term describes the optimal allocation of society's resources at a given point in time?
A) Creative destruction
B) Static efficiency
C) Dynamic efficiency
D) Efficient allocation
E) Resource efficiency

Accepted Answer

The answer of What term describes the optimal allocation of...

Question 5

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

Accepted Answer

The term "creative destruction" was coined by economist Joseph Schumpeter and refers to the process in which old market structures and sources of advantage are destroyed and replaced by new ones, often brought on by fundamental shocks or discontinuities in the market. It involves the introduction of new technology, new products, and new business models that displace or replace existing ones, ultimately leading to economic growth and modernization.

Question 6

What term best refers to fundamental changes that lead to major shifts of competitive positions in a market?
A) Jump
B) Shock
C) Alteration
D) Bolt
E) Shift

Accepted Answer

The answer of What term best refers to fundamental changes...

Question 7

Which of the following is the weakest an example of a "shock"?
A) Contracting to use another firm's proprietary process
B) Product Innovations
C) Discoveries of new sources of consumer value or market segments
D) Shifts in demand
E) Changes in public policy that enables firms to significantly shift their strategic position in a business

Accepted Answer

Contracting to use another firm's proprietary process may not necessarily be a significant shock to the industry or the market, as it could be a routine business decision. The other options present more significant changes and opportunities for firms to shift their strategic position.

Question 8

Which of the following terms best describes a phenomenon whereby,despite equal innovative capabilities,an entrant is willing to spend more to develop an innovation?
A) The replacement effect
B) Strategic intent
C) Strategic stretch
D) Hypercompetition
E) The sunk cost effect

Accepted Answer

The replacement effect describes a situation where an entrant (new competitor) is willing to spend more on innovation than an incumbent (established company) because the entrant has more to gain. The entrant's innovation could potentially replace the incumbent's existing products or services, thus the entrant values the innovation more highly.

Question 9

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

Accepted Answer

Hypercompetition is a term coined by Richard D'Aveni to describe the situation when sources of competitive advantage in an industry are being created and eroded at an increasingly rapid rate. This results in a highly dynamic and fiercely competitive environment where companies must constantly innovate and adapt in order to survive.

Question 10

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

Accepted Answer

The term that 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 is the resource-based theory of the firm, which is described in option D. The other options are not related to this framework.

Question 11

Which of the following is not an impediment to imitation?
A) Legal restrictions
B) Superior access to inputs or customers
C) Scale diseconomies
D) Market size economies
E) Intangible barriers: casual ambiguity, dependence on historical circumstances, and social complexity

Accepted Answer

The answer of Which of the following is not an...

Question 12

What term best characterizes the battle between firms to innovate first?
A) Market for new ideas
B) New product competition
C) R&D race
D) Innovation competition
E) Patent race

Accepted Answer

The answer of What term best characterizes the battle between...

Question 13

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

Accepted Answer

This situation is known as regression to the mean, where a company's performance returns to its long-term average after experiencing an abnormally good or bad period due to luck or external factors.

Question 14

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

Accepted Answer

Capabilities refer to the specific clusters of activities and processes that a firm excels at in comparison to competitors. These capabilities could stem from unique resources or competitive advantages, but are ultimately defined by the firm's ability to utilize these factors in a way that sets them apart in the market.

Question 15

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

Accepted Answer

Impediments to imitation refer to the barriers that make it difficult for existing firms and potential entrants to replicate the resources and capabilities of a successful firm. These barriers can include patents, copyrights, trademarks, trade secrets, and other legal protections, as well as unique organizational structures, culture, and processes that cannot be easily copied. Scarce resources, imperfectly mobile resources, early-mover advantages, and cospecialized resources can all contribute to a firm's competitive advantage, but they do not necessarily create significant barriers to imitation.

Question 16

Which of the following is least likely a characteristic of profit persistence in an industry?
A) Entry barriers exist
B) Economic profits should quickly converge to zero
C) Barriers to imitation exist
D) Firms earning above-average profits today should continue to do so in the future
E) Low profit firms today should remain low-profit firms in the future

Accepted Answer

Profit persistence refers to the ability of firms to sustain above-average profits in the long run. Economic theory suggests that if there are no barriers to entry or imitation, then profits in an industry should quickly converge towards zero as new firms enter and compete away profits. Therefore, option B is least likely a characteristic of profit persistence in an industry.

Question 17

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

Accepted Answer

The sunk cost effect refers to a firm's reluctance to abandon its current technology or product concept due to the sunk costs (past investment) associated with it, even if it may not be the profit-maximizing decision going forward.

Question 18

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

Accepted Answer

The answer of What type of isolating mechanisms increase the...

Question 19

Which of the following terms best describes a place in which a firm can sell its ideas for full value?
A) Industry for ideas
B) Community of ideas
C) Innovation market
D) Market for ideas
E) Idea environment

Accepted Answer

The term "Market for ideas" best describes a place where a firm can sell its ideas for full value, as it implies a platform or ecosystem where ideas are exchanged, bought, and sold, similar to how goods and services are traded in traditional markets.

Question 20

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

Accepted Answer

The answer of What term best describes firm-specific assets such...

Quiz 11: Sustaining Competitive Advantage

What term best describes a resource that cannot "sell itself" to the highest bidder?

What term best describes assets that are more valuable when used together than when separated?

Which of the following terms best describes an idea,developed by Gary Hamel and C.K.Prahalad,which combines commitment to the firm's ambitions with the flexibility to change with circumstances?

What term describes the optimal allocation of society's resources at a given point in time?

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?

What term best refers to fundamental changes that lead to major shifts of competitive positions in a market?

Which of the following is the weakest an example of a "shock"?

Which of the following terms best describes a phenomenon whereby,despite equal innovative capabilities,an entrant is willing to spend more to develop an innovation?

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?

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?

Which of the following is not an impediment to imitation?

What term best characterizes the battle between firms to innovate first?

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?

What term best describes clusters of activities that a firm does especially well in comparison with other firms?

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?

Which of the following is least likely a characteristic of profit persistence in an industry?

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?

What type of isolating mechanisms increase the economic power of a competitive advantage over time once a firm has acquired that advantage?

Which of the following terms best describes a place in which a firm can sell its ideas for full value?

What term best describes firm-specific assets such as patents and trademarks,brand-name reputation,installed base,and organizational culture?