Question 1

A firm can try to protect and sustain its competitive advantage by making it costly for rivals to imitate its capabilities.

Accepted Answer

Making it costly for rivals to imitate firm resources or capabilities is one way that a firm can try to protect and sustain its competitive advantage(s).

Question 2

Core competencies are built through the interplay of several firm attributes.These attributes include a firm's:
A) Resources, capabilities and activities.
B) Size, age and demographics.
C) Investments, industry and political climate.
D) All of these

Accepted Answer

Core competencies are built through an interplay of firm resources, capabilities and activities.

Question 3

According to the Ch.4 Opening Case on Circuit City,Best Buy was able to create competitive advantages partly due to receiving tacit knowledge about Circuit City's customer service and sales processes.

Accepted Answer

Best Buy recruited Circuit City's top salespeople after they were laid off and this resulted in a transfer of important tacit knowledge underlying some of Circuit City's core competencies.

Question 4

A firm's dynamic capabilities can actually create changes in the market in which it competes.

Accepted Answer

Not only do dynamic capabilities allow firms to adapt to changing market conditions they can also enable a firm to create market changes as evidenced by Apple.

Question 5

As noted in the Ch.4 Opening Case,Circuit City lost its market leadership in part because it laid off some of its most experienced and loyal salespeople.It can be said that Circuit City lost a resource that was:
A) valuable and common
B) valuable and rare
C) intangible and common
D) easy-to-imitate

Accepted Answer

When Circuit City laid off its highest-paid salespeople it lost a resource that was valuable, rare and difficult-to-imitate.

Question 6

Crocs Shoes lost its competitive advantage because patents did not protect the firm from direct imitation.

Accepted Answer

Even though Crocs owns several patents, numerous cheap imitators of Crocs entered the marketplace and Crocs lost its competitive advantage and its market.

Question 7

Intangible resources are more likely than tangible resources to help a firm create and sustain competitive advantage(s).

Accepted Answer

Competitive advantage is more likely to spring from intangible rather than tangible resources.

Question 8

Resource stocks are important to a firm because they are tangible and can be converted into capital quickly.

Accepted Answer

Resource stocks are the firm's current level of intangible resources.

Question 9

Performance differences that exist between rivals within the same industry are based primarily on the external environment.

Accepted Answer

When performance differences exist between rivals within the same industry the source for these differences are found inside the firm.

Question 10

Unique strengths that are embedded deep within a firm that allow a firm to differentiate itself and create higher value for customers is a:
A) Competitive advantage
B) Core competency
C) Resource competency
D) Value chain

Accepted Answer

A core competency is a unique strength that is embedded deep within a firm that allows a firm to differentiate itself and create higher value for customers.

Question 11

Value-creating activities need to be upgraded by managers periodically in order for strategic activity systems to be responsive to changing environments.

Accepted Answer

Managers need to adapt their firms strategic activity system by upgrading value-creating activities that respond to changing environments.

Question 12

Knowledge diffusion can make a resource less rare.

Accepted Answer

Knowledge diffusion occurs when information is diffused outside of the firm and can occur through benchmarking, consultants and college courses. This makes the resource less rare to the original firm as evidenced by Toyota.

Question 13

Under the SWOT analysis framework,factors that are external to the organization are more threatening to firm performance than are factors that are internal to the organization.

Accepted Answer

Under the SWOT analysis framework the focus is on both internal and external factors because both can impact the firm in a positive or negative way.

Question 14

When a firm combines __________ and ___________ it builds core competencies.
A) resources; capabilities
B) activities; processes
C) capabilities; skills
D) knowledge; information

Accepted Answer

Core competencies are built through the interplay of resources and capabilities.

Question 15

Achieving dynamic capabilities is important to a firm because the rate of change in the external environment is accelerating.

Accepted Answer

Dynamic capabilities are particularly relevant today given the accelerated pace of technological change, deregulation, globalization and demographic shifts.

Question 16

Under the VRIO framework,it is important to develop as many core competencies as possible because it allows the firm to compete in many markets simultaneously.

Accepted Answer

Only a few competencies turn out to be core competencies that fulfill the VRIO requirements and a company cannot do everything equally well and thus must make necessary trade-offs.

Question 17

Under the VRIO framework,direct imitation is a bigger threat to a firm's competitive advantage than is the threat of substitution.

Accepted Answer

Under the VRIO framework both direct imitation and the threat of substitution are equally threatening to a firms competitive advantage; thus a firm should attempt to have resources that are costly to imitate.

Question 18

One assumption made under the resource-based model is that resources do not move easily from firm to firm.

Accepted Answer

One of the two assumptions made under this model is resource immobility.

Question 19

The general lesson from the Ch.4 Opening Case on Circuit City is the importance of ______________ to a firm when it is attempting to gain and sustain competitive advantages.
A) tangible resources
B) core competencies
C) the economy
D) socio-cultural factors

Accepted Answer

Circuit City neglected to upgrade and protect its core competencies and thus was outflanked by Best Buy and online retailers.

Question 20

Under the value chain concept only primary activities add incremental value.

Accepted Answer

Under the value chain concept both primary and secondary activities add incremental value.

Quiz 4: Internal Analysis: Resources, Capabilities, and Activities