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.

Question

Quizplus · 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.

GN Corp and BC Inc