Question 1

An experienced manager's knowledge is path-dependent.

Accepted Answer

An experienced manager's knowledge is path-dependent, meaning that their past experiences and the specific path they have taken in their career influence their current knowledge and decision-making abilities.

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.

Accepted Answer

The internal environment refers to how a firm's resources and capabilities are deployed to deliver its business strategy. It is a critical determinant of a firm's success and cannot be left to just the HR department to manage. The other options are incorrect as the internal environment is not limited to the structure of an industry and has not become less important in explaining firms' profitability.

Question 3

Resources are ultimately more important than capabilities.

Accepted Answer

Capabilities, which include a company's ability to effectively utilize its resources, are often more crucial for sustaining competitive advantage. This is because while resources are necessary, how a company leverages and combines these resources through its capabilities can create unique value and differentiation in the market.

Question 4

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

Accepted Answer

Competitive advantage is indeed 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.

Accepted Answer

The statement accurately describes the concept of brand value. Customers are more likely to have a positive perception of a brand if they believe that the brand can deliver the benefits they seek. This confidence can lead to increased loyalty, repeat business, and positive word-of-mouth recommendations. Ultimately, the value of a brand is based on the strength of this customer confidence and the resulting commercial success it generates.

Question 6

Combining several resources may create capabilities that deliver superior profitability.

Accepted Answer

Combining resources can create economies of scale, synergies, and other advantages that can lead to increased profitability.

Question 7

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

Accepted Answer

Competitive advantage remains crucial in explaining firms' profitability because it determines a company's ability to outperform its rivals. Industry attractiveness can influence overall profitability potential, but how a firm leverages its unique strengths (competitive advantage) within that industry plays a more significant role in its actual profitability.

Question 8

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

Accepted Answer

Path-dependent refers to the idea that a company's current capabilities and strategies are shaped by its past decisions and actions. Their development is influenced by a variety of factors, such as their initial resources, competitive environment, and prior strategic choices. Therefore, a company's history plays a crucial role in shaping its present and future capabilities.

Question 9

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

Accepted Answer

Good companies have a clear understanding of their own strengths and weaknesses, and they focus on building their resources and capabilities in areas where they are strongest. This enables these companies to compete effectively in the marketplace and to achieve long-term success.

Question 10

Dynamic capabilities are useful in fast changing environments.

Accepted Answer

Dynamic capabilities refer to a firm's ability to adapt quickly and effectively to changes in its external environment. Thus, it is true that dynamic capabilities are useful in fast changing environments as they enable firms to respond to new opportunities or threats in a timely manner.

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.

Accepted Answer

The historic cost book value of assets reflects the original cost of acquiring them and does not consider the changes in the market value or the improvements made to them over time. As a result, it may not accurately reflect the current value of the assets or their potential contribution to the firm's future performance. Thus, for strategic purposes, it may be better to use market value or replacement value methods to value a firm's productive assets.

Question 12

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

Accepted Answer

Human resources are not listed as an asset on a firm's balance sheet. Instead, their value is reflected in the firm's income statement through salaries, wages, and benefits expenses.

Question 13

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

Accepted Answer

Resources refer to the assets or inputs that a firm uses in its production processes, including tangible assets (e.g. machinery, buildings) and intangible assets (e.g. knowledge, patents). Capabilities, on the other hand, refer to a firm's ability to effectively utilize these resources through skills, knowledge, and processes. In other words, resources are passive inputs while capabilities are the active ways that a firm creates value.

Question 14

Superior capabilities can be acquired and owned by astute firms.

Accepted Answer

The answer of Superior capabilities can be acquired and owned...

Question 15

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

Accepted Answer

It is essential for a business strategist to know that resources refer to the inputs used for producing goods or services, such as labor, machinery, and raw materials. In contrast, capabilities are the firm's ability to use its resources effectively in achieving its objectives. Understanding the difference between the two can help a strategist create a sustainable competitive advantage for the firm by aligning resources and capabilities to the business's long-term goals.

Question 16

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

Accepted Answer

Core rigidities are the inherent limitations or constraints that arise as a result of the firm's past successes and capabilities. They can hinder a firm's ability to adapt and learn new skills quickly, rather than provide a spine that helps the firm learn faster.

Question 17

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

Accepted Answer

The answer of We need to honestly appraise our resources...

Question 18

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

Accepted Answer

Remedying strategic weaknesses in capabilities is a complex and time-consuming process that often requires significant changes and investments in various areas such as technology, human resources, processes, and organizational culture. It typically involves developing new skills, acquiring new resources, and implementing new strategies that align with the company's goals and objectives. As a result, it may take several years before the organization can successfully address its strategic weaknesses and improve its capabilities to compete effectively in the market.

Question 19

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

Accepted Answer

Core competencies refer to the unique capabilities and resources that a company possesses and that give it a competitive advantage over its rivals. Therefore, having a capability that is necessary to defeat competitors is a core competence.

Question 20

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

Accepted Answer

While having good resources is important, achieving good results also depends on other factors such as effective strategies, skills, and consistent effort.

Quiz 3: Resources and Capabilities