Question 1

Prahalad and Hamel use the term _____ to refer to a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace.

Accepted Answer

Prahalad and Hamel use the term "core competencies" to refer to a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace.

Question 2

According to Porter's five-force model,the more suppliers there are,providing similar supplies to a particular industry:

Accepted Answer

According to Porter's five-force model, the power of suppliers is higher when there are fewer suppliers providing similar supplies to a particular industry. Therefore, the more suppliers there are, the less powerful those suppliers will be.

Question 3

Scripts & Scrolls Co.supplies printing paper to select publishing houses.When its customers asked for a discount in the cost of supplies,the company had to oblige fearing that the customers might withdraw pending contracts.This shows the increased:

Accepted Answer

The bargaining power of buyers has increased as they are able to negotiate a discount in the cost of supplies. The company fears losing their business and thus has to oblige to their demands.

Question 4

Sam's Sugar Co.is a leading cane sugar manufacturer.The company faced a threat of going out of business when a rival company introduced a zero-calorie sweetener to replace the high-calorie cane sugar.According to Porter's five-force model,the two products are:

Accepted Answer

The rival company's zero-calorie sweetener is a substitute for Sam's Sugar Co.'s high-calorie cane sugar, as consumers can opt for the former instead of the latter to satisfy their sweetening needs. This represents a threat to Sam's Sugar Co.'s business, and thus, the two products can be considered substitutes as per Porter's five-force model.

Question 5

Allure Fabrics supplied cotton,linen,and silk fabrics to various designer wear boutiques in and around Florida.The firm recently launched a boutique in Florida,under its brand name,which sells women's fashion apparel.Allure Fabrics is practicing:

Accepted Answer

Forward vertical integration involves a company expanding its operations upstream towards the production of raw materials or downstream towards the distribution and sale of its products. Allure Fabrics has expanded downstream by launching a boutique under its own brand name to sell its fabrics as women's fashion apparel.

Question 6

Ceramic Customs Co.requires a specific type of ceramic to make custom-made tiles.Since only one supplier makes that particular ceramic,the firm is forced to source all of its supplies from it.The firm tried negotiating the price at which it purchases the material,but failed to get any reduction on the cost.This is because:

Accepted Answer

The fact that Ceramic Customs Co. failed to negotiate a lower price suggests that the supplier has more bargaining power than the firm. This could be due to reasons such as the supplier being the only one who produces the specific ceramic, having a dominant market position, or having high switching costs for the firm to switch to another supplier.

Question 7

According to Michael Porter's model of a value chain,which of the following is a support activity?

Accepted Answer

Accounting activities are a support activity in the value chain, which provide support to primary activities such as inbound and outbound logistics, operations, and marketing. Inbound logistics involve activities such as receiving, storing, and handling raw materials, while outbound logistics involve activities such as transporting finished goods to customers. Marketing involves activities such as promoting and selling products, while accounting activities involve activities such as bookkeeping, financial analysis, and budgeting. Therefore, among the given options, accounting activities are a support activity.

Question 8

A resource can be extremely difficult to imitate if:

Accepted Answer

A resource that arises through the complex interaction of multiple people makes it difficult to imitate because it involves both tacit knowledge and social complexity, which are difficult to codify and replicate. Therefore, it creates a unique, non-replicable advantage for the organization.

Question 9

Factors that make it difficult or expensive to change suppliers or buyers are referred to as _____ costs.

Accepted Answer

The factors that make it difficult or expensive to change suppliers or buyers are referred to as switching costs. Option A (transactional costs) refers to the costs associated with making a transaction or conducting business, Option B (opportunity costs) refers to the potential benefits that are foregone when choosing one option over the other, and Option C (marginal costs) refers to the cost of producing an additional unit of a product or service. Therefore, D (switching costs) is the correct answer.

Question 10

Perfecto Espresso is a coffeehouse located opposite Ching's Kitchen,a restaurant.According to Porter's five-force model,the services and products provided by both are most likely to be classified as:

Accepted Answer

The answer of Perfecto Espresso is a coffeehouse located opposite...

Question 11

Which of the following statements is true of Porter's five-force model?

Accepted Answer

Porter's five-force model is often used to assess the external environment of an industry, including factors such as the intensity of competition, bargaining power of suppliers and buyers, and the threat of new entrants and substitutes. It is not specifically focused on stakeholder management or the overall attractiveness of an industry. Option A is incorrect because the degree of rivalry is a key factor in determining industry attractiveness according to Porter's model. Option B is incorrect because substitutes are explicitly considered in the model.

Question 12

Andrew is a gifted musician,with an instinctive knack for composing tunes that catch the public's imagination.The means by which he has does this is unclear and cannot be defined.This makes him a _____ resource.

Accepted Answer

The phrase "means by which he has done this is unclear and cannot be defined" indicates that Andrew's skill is causally ambiguous, meaning it is unclear how he achieves his results.

Question 13

According to Porter's five-force model,if a buyer can threaten to backward vertically integrate,it will:

Accepted Answer

If a buyer can threaten to backward vertically integrate, it means that the buyer has the ability to start producing the supplier's product themselves, which decreases their dependence on the supplier. This increases the buyer's bargaining power, as the supplier now has to offer better terms and prices in order to keep the buyer as a customer.

Question 14

Many people dream of opening their own restaurant someday and restaurant supply houses provide easy finance options for equipment purchases.Also,a high growth is projected for the restaurant industry sector.According to Porter's five-force model,this is one of the reasons why the _____ in this industry is so high.

Accepted Answer

Porter's five-force model suggests that threat of potential entrants is high when there are low barriers to entry and attractive growth opportunities. In the case of the restaurant industry, a high growth is projected, making it an attractive industry for new entrants. This increases competition and makes it difficult for existing players to sustain their business, leading to a high failure rate. However, it does not necessarily affect exit barriers or technological breakthroughs in the industry.

Question 15

Mr.Crunchy Inc.is a firm that manufactures potato chips.With more and more people becoming health conscious,it made no profit in the last quarter.But with large initial investment,factories,and the high-technology chips-making machines,the firm found it difficult to abandon the industry.According to Porter's five-force model,the company was facing a(n):

Accepted Answer

The firm is facing exit barriers as it has made a large initial investment in factories and high-technology chips-making machines, making it difficult to abandon the industry despite the lack of profit.

Question 16

Socially complex resources refer to:

Accepted Answer

Socially complex resources are those that are created and maintained by interactions between multiple individuals or groups. Examples include language, culture, and social norms. These resources cannot be easily converted into numerical values, require cooperation among participants for their maintenance, and are abundant in non-Western societies.

Question 17

Perfecto Espresso is chain of coffee shops in the United States.Earlier it used to source its coffee from several coffee manufacturers.However,recently it started a coffee manufacturing firm under its own brand name.This is an example of:

Accepted Answer

Backward vertical integration occurs when a company expands its role to fulfill tasks formerly completed by businesses up the supply chain, such as a retailer starting to manufacture its own products.

Question 18

Which of the following is an example of a socially complex resource?

Accepted Answer

A team of graphic designers working together combines their individual skills and expertise to create a socially complex resource. The other options do not involve the combination of skills or knowledge to create a resource.

Question 19

Which of the following would be an example of a tacit resource?

Accepted Answer

A tacit resource is a type of knowledge or skill that is difficult to replicate, transfer or communicate. In this example, the oddsmaker's ability to predict outcomes with a high degree of accuracy is an example of tacit knowledge.

Answer: B 
 The ability to identify and purchase high-quality hand-woven fabrics requires a certain level of knowledge and expertise in the industry. This knowledge is difficult to replicate or communicate, making it a tacit resource.

Answer: C 
 The retail shoe chain's prime locations in 200 malls is not an example of a tacit resource. While this is a valuable asset, it is not a type of knowledge or skill.

Answer: D 
 A flashy ad campaign is not an example of a tacit resource, as advertising is a well-established field with many established methods and techniques.

Question 20

The Corner Shop is a leading supermarket in Chicago.According to Michael Porter's model of a value chain,which of the following activities of the firm is a primary activity?

Accepted Answer

Primary activities in Porter's value chain include inbound logistics, operations, outbound logistics, marketing and sales, and service. An advertising campaign is part of marketing and sales, which is a primary activity.

Quiz 6: Defining the Organizations Strategic Direction