Question 1

One of Rolex's tangible resources is its well-known brand name and reputation for quality timepieces.

Accepted Answer

Brand equity is an example of an intangible resource. Tangible resources include a well-trained workforce, advanced machinery, or expansive facilities.

Question 2

Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premium headphone market. Which of the following statements accurately explains one of the main reasons for the success of Beats?
A) It produced the highest-quality headphones.
B) It created a perception that owning its products was cool.
C) It emphasized marketing over core competency.
D) It focused on sponsoring future athletic superstars.

Accepted Answer

As discussed in Chapter Case 4, Beats has been able to outperform its competitors by creating a perception that owning its headphones is cool. As a result, Beats headphones outsell the higher-quality headphones produced by its competitors.

Question 3

Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's
A) core competency.
B) intangible resources.
C) tangible resources.
D) capabilities.

Accepted Answer

Physical infrastructure, such as Amazon.com's distributions centers, is a tangible resource.

Question 4

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as
A) tangible resources.
B) reserves.
C) capital gains.
D) capabilities.

Accepted Answer

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as capabilities. Capabilities are the organizational and managerial skills necessary to orchestrate a diverse set of resources and to deploy them strategically. Capabilities are by nature intangible.

Question 5

High demand for online video streaming options is one of Netflix's core competencies.

Accepted Answer

Core competencies are unique strengths possessed by a firm which allow it to differentiate its products and services from its rivals. Consumer demand is external to the firm. An example of Netflix's core competencies is its use of proprietary algorithms to determine its customer's needs.

Question 6

Dynamic strategic activity systems help a firm to maintain a competitive advantage for extended periods of time.

Accepted Answer

Strategic activity systems, or the idea of the firm as a set of interconnected activities, are socially complex and causally ambiguous, making them difficult to replicate elsewhere. As long as managers ensure that activities evolve in response to changes in the external environment, strategic activity systems can help establish and maintain a competitive advantage.

Question 7

Smooth Fusion Inc. is a software company that has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage?
A) the cloud computing service that it uses
B) the capital the company raised from its shareholders
C) the expertise acquired by the employees in the company
D) the headquarters building owned by the company

Accepted Answer

The expertise acquired by the employees in the company is the asset that will best enable Smooth Fusion Inc. to gain and sustain a competitive advantage. The resource-based view is a model that sees certain types of resources as key to superior firm performance. If a resource exhibits VRIO attributes, the resource enables the firm to gain and sustain a competitive advantage. Competitive advantage is more likely to spring from intangible rather than tangible resources.

Question 8

Cartech Inc. is a manufacturer of automobile parts, which it sells to retail auto supply stores. Its core competencies include superior design and engineering capabilities, as well as a highly integrated and efficient supply chain. To sustain its competitive advantage, Cartech should first
A) seek to replicate its nearest competitor's competency in innovative marketing.
B) attempt to cut costs by replacing assembly line workers with robots.
C) upgrade its engineering department and improve its supply chain.
D) diversify its product offerings by developing parts for construction equipment.

Accepted Answer

Core competencies that are not continuously nourished will lose their ability to yield a competitive advantage. Cartech should prioritize upgrading or improving its core competencies to ensure that competitors do not develop superior skills in those areas.

Question 9

A music distributor that decides to launch a proprietary music streaming service to respond to changes in music consumption trends exhibits dynamic capabilities.

Accepted Answer

Dynamic capabilities allow a firm to change its internal resources and capabilities to adapt to changes in the external environment.

Question 10

Cloud Cones is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of Cloud Cones best exemplifies a
A) markup.
B) resource flow.
C) capital gain.
D) core competency.

Accepted Answer

Core competencies allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost.

Question 11

A SWOT analysis would provide a definitive answer as to whether a firm's growing footprint in overseas markets is a strength or weakness.

Accepted Answer

The results of a SWOT analysis are sometimes ambiguous, with certain features serving simultaneously as both opportunities and threats. A growing presence overseas can be seen both as a strength (increased brand exposure and a more diverse revenue stream) and a weakness (higher shipping costs, increased exposure to external threats such as economic downturns in foreign economies).

Question 12

Intellectual property (IP) protections such as trademarks or patents are proven methods of establishing permanent barriers to imitation.

Accepted Answer

Intellectual property protections are temporary barriers to imitation. Once the protections expire, imitation becomes common.

Question 13

Accounting, human resources, and research and development (R&D) are examples of primary activities that add value directly to the value chain.

Accepted Answer

Accounting, human resources, and research and development are examples of support activities that add value indirectly.

Question 14

GN Corp. and BC Inc. are two competing firms in the same industry. GN Corp.'s tangible assets are valued at $15 billion and its intangible assets are valued at $35 billion. BC Inc.'s tangible assets are valued at $5 billion and its intangible assets are valued at $45 billion. What can be concluded from this information?
A) BC Inc. will be less competitive than GN Corp. because of its smaller investment in tangible assets.
B) It is likely that BC Inc. is better enabled than GN Corp. to gain and sustain a competitive advantage.
C) Judging from the assets listed, BC Inc. has probably been in the industry a much shorter time than GN Corp.
D) There is no resource heterogeneity between the two firms, BC Inc. and GN Corp., as they operate in the same industry.

Accepted Answer

It can be concluded that BC Inc. is better positioned than GN Corp. to gain and sustain a competitive advantage. Competitive advantage is more likely to spring from intangible rather than tangible resources. Tangible assets, like buildings or computer servers, can be bought on the open market by any comers who have the necessary cash. However, a brand name must be built, often over long periods of time.

Question 15

The core competencies of a firm are determined by the interplay of its tangible resources and intangible capabilities.

Accepted Answer

Core competencies emerge when managers skillfully combine tangible resources such as machinery and cash with capabilities such as an efficient company culture.

Question 16

Which of the following statements accurately brings out the difference between tangible and intangible resources?
A) Tangible resources contribute to a company's competitive advantage, whereas intangible resources have little effect on competitive advantage.
B) Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased.
C) Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily.
D) Tangible assets are difficult for competitors to imitate, whereas intangible assets can be easily replicated.

Accepted Answer

Tangible assets, such as buildings or computer servers, can be bought on the open market by any comers who have the necessary cash. However, an intangible asset such as a brand name or corporate culture must be built, often over long periods of time.

Question 17

According to the resource-based view, a firm that differentiates itself from its competitors through its personalized approach to customer service is likely to sustain its competitive advantage for a long time.

Accepted Answer

Resource immobility, or the idea that differences in resources and capabilities are difficult to replicate and can last a long time, is one of the two critical assumptions of the resource-based view of the firm.

Question 18

Amazon's tendency to reinvest a large share of its profits into new services and capabilities exemplifies a low level of resource flows.

Accepted Answer

Resource flows are the firm's level of investments to maintain or build a resource. By reinvesting much of its profits into improving its intangible resources, Amazon exhibits a high level of resource flows.

Question 19

As manager of a relatively new company, you are tasked with analyzing company resources to identify core competencies capable of supporting a competitive advantage. Which of the following resources is most likely to generate a competitive advantage?
A) new production facilities
B) large cash holdings
C) stockpile of supplies
D) enthusiastic company culture

Accepted Answer

Competitive advantage is more likely to spring from intangible resources, such as an energetic and enthusiastic company culture, than from tangible resources, such as buildings, capital, or supplies.

Question 20

The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment?
A) a reputation for fast customer service
B) a culture of proactive communication
C) patents for electronic components
D) the punch presses that produce parts

Accepted Answer

The company's plant and machinery will be included in the assessment of the value of all the tangible resources the company owns. Tangible resources have physical attributes and are visible. Examples of tangible resources are labor, capital, land, buildings, plant, equipment, and supplies.

Quiz 4: Internal Analysis: Resources, Capabilities, and Core Competencies

One of Rolex's tangible resources is its well-known brand name and reputation for quality timepieces.

Beats Electronics has been able to outperform Audio-Technica, Bose, JBL, Skullcandy, Sennheiser, and Sony in the high-end, premium headphone market. Which of the following statements accurately explains one of the main reasons for the success of Beats?

Amazon.com's network of distribution centers allow it to drastically reduce its delivery times compared to other online retailers. These distribution centers are examples of Amazon's

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as

High demand for online video streaming options is one of Netflix's core competencies.

Dynamic strategic activity systems help a firm to maintain a competitive advantage for extended periods of time.

Smooth Fusion Inc. is a software company that has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of Smooth Fusion Inc. will best enable it to gain and sustain a competitive advantage?

Cartech Inc. is a manufacturer of automobile parts, which it sells to retail auto supply stores. Its core competencies include superior design and engineering capabilities, as well as a highly integrated and efficient supply chain. To sustain its competitive advantage, Cartech should first

A music distributor that decides to launch a proprietary music streaming service to respond to changes in music consumption trends exhibits dynamic capabilities.

Cloud Cones is a fast-growing chain of ice cream shops. It has acquired an edge over its competitors through its ability to provide a wide array of unique flavors and a hip atmosphere in stores. This advantage of Cloud Cones best exemplifies a

A SWOT analysis would provide a definitive answer as to whether a firm's growing footprint in overseas markets is a strength or weakness.

Intellectual property (IP) protections such as trademarks or patents are proven methods of establishing permanent barriers to imitation.

Accounting, human resources, and research and development (R&D) are examples of primary activities that add value directly to the value chain.

The core competencies of a firm are determined by the interplay of its tangible resources and intangible capabilities.

Which of the following statements accurately brings out the difference between tangible and intangible resources?

According to the resource-based view, a firm that differentiates itself from its competitors through its personalized approach to customer service is likely to sustain its competitive advantage for a long time.

Amazon's tendency to reinvest a large share of its profits into new services and capabilities exemplifies a low level of resource flows.

As manager of a relatively new company, you are tasked with analyzing company resources to identify core competencies capable of supporting a competitive advantage. Which of the following resources is most likely to generate a competitive advantage?

The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment?