1. Nike has come a long way from its humble beginnings. It has been able to outperform adidas in sales and become the undisputed leader in the athletic shoe and apparel industry. Which of the following statements accurately explains one of the main reasons for Nike’s success?
B.
C.
D. |
B |
2. _____ are best described as unique strengths, embedded deep within a firm, that 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.
B.
C.
D. |
B |
3. Dandelions Max is a consumer electronics company. It has acquired an edge over its competitors through its ability to provide breakthrough technology at the lowest price in the market. This advantage of Dandelions Max best exemplifies a _____.
B.
C.
D. |
D |
4. Organizational and managerial skills that find their expression in a company’s structure, routines, and culture are referred to as _____.
B.
C.
D. |
D |
5. Amazon.com’s ability to provide the largest selection of items online, combined with superior IT systems and customer service, can be referred to as its _____.
B.
C.
D. |
C |
6. Which of the following is an example of a firm’s resources?
B.
C.
D. |
C |
7. 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?
B.
C.
D. |
D |
8. Which of the following is an example of a firm’s intangible resources?
B.
C.
D. |
C |
9. True Sync Inc. is a software company, which has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of True Sync Inc. will best enable it to gain and sustain a competitive advantage?
B.
C.
D. |
C |
10. Which of the following statements accurately brings out the difference between tangible and intangible resources?
B.
C.
D. |
B |
11. 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?
B.
C.
D. |
B |
12. Coral Think Inc. is a new company in the publishing industry. It has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Coral Think Inc. to acquire using its capital?
B.
C.
D. |
D |
13. Intangible assets add great value to a firm primarily because the firm’s:
B.
C.
D. |
B |
14. True Home Inc., Super Cart Inc., and Daily Things Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Which of the following is an implication of the market condition indicated in this scenario?
B.
C.
D. |
D |
15. The resource-based view of a firm assumes that the:
B.
C.
D. |
C |
16. Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.’s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area where One Electro Inc. lacks. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated?
B.
C.
D. |
B |
17. As a result of _____, a critical assumption in the resource-based model of a firm, the resource differences that exist between firms are difficult to replicate.
B.
C.
D. |
A |
18. Maroon Inc. is a leading international apparel company. Competitors across the globe have failed to imitate Maroon Inc.’s production models, supply chain systems, knowledge systems, and culture. These attributes have remained unique to Maroon Inc. for a long time. Which of the following assumptions of the resource-based model of competitive advantage does this scenario best illustrate?
B.
C.
D. |
D |
19. In the context of the resource-based model of competitive advantage, if a successful firm exhibits resource immobility it means that the:
B.
C.
D. |
B |
20. Due to resource immobility, a critical assumption in the resource-based model of a firm, the:
B.
C.
D. |
C |
21. Trust Machines Inc. is a company that manufactures and markets consumer electronics. The unique microprocessors developed by the company contribute to its high resource immobility. According to the resource-based view of competitive advantage, which of the following is an implication of this situation?
B.
C.
D. |
C |
22. In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility?
B.
C.
D. |
D |
23. The perfectly competitive industry structure differs from the resource-based model in its view that:
B.
C.
D. |
A |
24. How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure?
B.
C.
D. |
C |
25. The competitive advantage that one firm has will be short-lived in an industry where:
B.
C.
D. |
B |
26. Onyx Tech Inc.’s competency in designing and manufacturing efficient microprocessors has made its laptops the most advanced computers in the market. This competency, along with the just-in-time manufacturing system, has enabled Onyx Tech Inc. to increase its profitability by lowering its production costs. Thus, Onyx’s competency in designing and manufacturing microprocessors will be considered a(n) _____ resource in the VRIO framework.
B.
C.
D. |
A |
27. If a resource is common:
B.
C.
D. |
B |
28. Gene Craft Inc. is the market leader in the pharmaceutical industry. Though most of its resources are common to those of its competitors, a few rare resources have helped the company gain and sustain a competitive advantage. Which of the following assets of Gene Craft Inc. is most likely to be considered a rare resource that is best contributing to its competitive advantage?
B.
C.
D. |
D |
29. If a resource is rare or unique to a particular firm, then:
B.
C.
D. |
C |
30. The "Gold Crisps" potato wafers manufactured by True Foods Inc. have been the highest selling wafers in the market. Though the market for wafers is flooded with competitors, True Foods Inc. has been able to maintain its market position for a long time. This is mainly attributed to the unique taste of the wafers that comes from the unique natural flavoring used by the company. This competency of True Foods Inc. will be considered as a(n) _____ resource in the VRIO framework.
B.
C.
D. |
B |
31. Connect Plus Cellular is a leading mobile network operator. Since most of the resources used by Connect Plus Cellular is easily available, the company’s brand name is the only resource that distinguishes it from the other operators. No other competitor in the industry has a strong brand name like that of Connect Plus Cellular. This unique asset that has helped the company gain a competitive advantage will be considered as a(n) _____ resource in the VRIO framework.
B.
C.
D. |
D |
32. TrueCandy Inc., a confectionery manufacturing company, lost its competitive advantage when its strategy of placing kiosks at prominent locations throughout the state was followed by most of its competitors. In this scenario, TrueCandy Inc.’s loss of competitive advantage can be primarily attributed to _____.
B.
C.
D. |
B |
33. When the knowledge of a valuable and rare resource diffuses throughout an industry, the:
B.
C.
D. |
A |
34. The "diagonal assembly system" was a production system pioneered by the automobile company Mova. During the period when diagonal assembly system was a rare resource, Mova was able to gain a temporary competitive advantage. Once competitors became aware of this unique competency and started applying it as an industry standard, Mova was unable to sustain its competitive advantage. This loss of Mova’s competitive advantage can be attributed to _____.
B.
C.
D. |
C |
35. With regard to the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were:
B.
C.
D. |
B |
36. A firm’s resource is most likely to be an internal strength and a core competency when the resource is:
B.
C.
D. |
B |
37. If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products that provide the same customer appeal as Invoro, a market leader in consumer electronics, then:
B.
C.
D. |
B |
38. Sarah has recently started a restaurant in a commercial area where there are many other established restaurants and popular fast food chains. Sarah owns the plot on which her restaurant is located and this makes her cost of operations lower than the competitors. This factor allows her to offer her products at a competitive price. Sarah has also invested a huge amount on the interiors of the restaurant and in equipping the kitchen with the latest appliances used by her competitors. In this scenario, which of the following is the most valuable resource for Sarah’s business?
B.
C.
D. |
D |
39. Otion Inc. is a relatively new firm in the consumer electronics industry. The company’s primary objective is to become the market leader in less than 5 years, for which it has to gain and sustain a competitive advantage. In the context of the VRIO framework, which of the following resources should Otion Inc. primarily focus on to achieve its objective?
B.
C.
D. |
D |
40. True Moto Corp. (TMC) is a leading automobile company. The company has been able to sustain its competitive advantage primarily due to its high quality and efficient electric motors. Most of its competitors have failed to develop similar electric motors at a reasonable price. Which of the following resource attributes listed in the VRIO framework has helped TMC sustain its competitive advantage?
B.
C.
D. |
D |
41. During market testing, Elixir Cosmetics (EC) realized that the cosmetics industry was dominated with multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. A new entrant like EC would require a different business model to be successful. Thus, EC started selling its products through direct marketing. In this scenario, Elixir Cosmetics accomplished substitution primarily through _____.
B.
C.
D. |
D |
42. Creating resources that meet the VRIO criteria is strategically important to a firm because it:
B.
C.
D. |
D |
43. Pulse Mobiles Inc. is a cell phone manufacturing company. Its latest range of smartphones bears a straight resemblance to the Y-series range of smartphones from Talkie Gen Inc., in terms of its shape and look-and-feel. Which of the following strategies has Pulse Mobiles Inc. used to replicate the valuable and rare resource of Talkie Gen Inc.?
B.
C.
D. |
A |
44. Even though many valuable, rare, and inimitable resources were generated at Xerox’s Palo Alto Research Center (PARC), the management at Xerox’s headquarters failed to gain a competitive advantage by exploiting the breakthroughs in computing software and hardware. What is the most likely implication of this example?
B.
C.
D. |
C |
45. _____ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.
B.
C.
D. |
C |
46. The share price of Groupon, a daily-deal website, fell by 90 percent just a year after its successful initial public offering. The firm was not able to sustain its competitive advantage because of the emergence of other daily-deal sites that were able to better serve the needs of local markets and specific population groups. Which of the following is the most accurate inference from this example?
B.
C.
D. |
A |
47. Brown Foods Inc., a leading chocolate producer, anticipated that the prices of cocoa beans would double in less than three years. This would disrupt the availability of cocoa in the industry. Thus, Brown Foods Inc. decided to purchase cocoa plantations in Ghana. As predicted, the prices of cocoa increased twofold. Because of the company-owned cocoa plantations, Brown Foods Inc. was able to sustain its competitive advantage in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate?
B.
C.
D. |
D |
48. _____ describes a process in which the options one faces in a current situation are limited by decisions made in the past.
B.
C.
D. |
B |
49. Path dependence rests on the notion that:
B.
C.
D. |
A |
50. Mova Electronics, a leading pager manufacturer, recently declared itself bankrupt. This was attributed to a decision the company made in the past. While most of Mova’s competitors were shifting their research focus toward cell phones, Mova invested most of its retained earnings on improvising its pagers. Once the pager market drastically declined, Mova Electronics was unable to capitalize on the new technology. Which of the following does this scenario best illustrate?
B.
C.
D. |
D |
51. Vior Systems Inc. took many decades to build its core competencies, and these competencies were based primarily on the decisions made by the company’s top management in the past. This process is called:
B.
C.
D. |
A |
52. Which of the following is NOT a condition that can help a firm sustain its competitive advantage?
B.
C.
D. |
C |
53. A firm’s resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm’s competitive advantage is protected against imitation by _____.
B.
C.
D. |
C |
54. When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.’s management channeled all of the company’s efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because most of its competitors had already been in the laptop market for five years. Blue Tech Inc’s models were inferior to the ones in the market. In this scenario, Blue Tech Inc.’s failure can be best attributed to:
B.
C.
D. |
C |
55. Due to path dependence:
B.
C.
D. |
A |
56. Microsoft’s eventual industry dominance is largely credited to the:
B.
C.
D. |
A |
57. _____ describes a situation in which the cause and effect of a phenomenon are not readily apparent.
B.
C.
D. |
B |
58. How does causal ambiguity act as an isolating mechanism for organizations?
B.
C.
D. |
A |
59. Competitors have found it extremely difficult to imitate Gene Electronics Inc.’s valuable resources, capabilities, or competencies. This is primarily because the source for the company’s success has been unclear. The competitors are uncertain if Gene Electronics Inc.’s success is due to its strong leadership, the skills of its research and development team, or the timing of the company’ s product introductions. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of _____.
B.
C.
D. |
C |
60. True Autos Inc. has been trying to directly copy the strategies of Red Autos Inc. Even though it is evident that Red Auto’s Inc.’s success comes from its just-in-time inventory system, True Auto’s Inc. has not been able to effectively apply the system in the same way. This is because the organizational structures, employees, cultures, and the overall business systems of both the companies vary from each other. Which of the following barriers to imitation does this scenario best illustrate?
B.
C.
D. |
B |
61. When evaluating the sustainability of a firm’s competitive advantage, which of the following statements is NOT true?
B.
C.
D. |
B |
62. It is difficult even for Apple’s managers to pinpoint the underlying cause of the company’s phenomenal success. The term that best applies to this difficulty is known as _____.
B.
C.
D. |
C |
63. An observer may conclude that the organizational culture of Zappos, an online retailer for shoes and clothing, might be the basis for its competitive advantage. However, reverse social engineering to crack Zappos’ code of success might be much more difficult for a company trying to exactly imitate its strategy. Thus, the source of Zappos competitive advantage is said to be _____.
B.
C.
D. |
A |
64. _____ describes a firm’s ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources over time in its quest for competitive advantage.
B.
C.
D. |
A |
65. A firm will fail to create a sustained competitive advantage when the:
B.
C.
D. |
A |
66. According to the _____, competitive advantage is the outflow of a firm’s ability to modify and leverage its resource base in a way that enables it to gain and sustain competitive advantage in a constantly changing environment.
B.
C.
D. |
D |
67. Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will only be successful today if its:
B.
C.
D. |
D |
68. Which of the following statements fails to bring out the essence of the dynamic capabilities perspective?
B.
C.
D. |
A |
69. Onyxo Inc., a consumer electronics company, is the leading manufacturer of LCD televisions. LCD technology has been its core competency and the company holds 80 percent shares in that market. However, Onyxo Inc.’s competitors have now moved on to advance technologies like LED and 3D televisions. According to the dynamic capabilities perspective, what should Onyxo Inc. do?
B.
C.
D. |
A |
70. Which of the following resources is a firm’s resource stock?
B.
C.
D. |
B |
71. Which of the following statements accurately describes a firm’s resource stock?
B.
C.
D. |
C |
72. BioTree Inc. has used $350,000, from its total annual earnings of $1,250,000, to invest in the research and development of a multi-purpose vaccine. Its account receivable from customers is estimated to be $150,000 and accounts payable $80,000. In monetary terms, what would BioTree Inc.’s resource flows be?
B.
C.
D. |
D |
73. Which of the following statements accurately describes a firm’s resource flow?
B.
C.
D. |
A |
74. Which of the following is an implication of high employee turnover in a company?
B.
C.
D. |
A |
75. Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn Autos Inc., a rival company. What does this imply?
B.
C.
D. |
B |
76. The value chain describes the:
B.
C.
D. |
B |
77. According to the value chain analysis, which of the following is a primary activity?
B.
C.
D. |
D |
78. Talk Age Inc., a telecommunication company, had been drastically losing its market share due to tough competition in the industry. The management hired a reputed consulting firm to advice the company. The experts from the consulting firm pointed out that the company primarily lost out on its competitive advantage due to its tedious internal policies and procedures. These ineffective policies and procedures made the company operations, marketing, and after sales service inefficient. Talk Age Inc. can best solve its problem by working on its _____.
B.
C.
D. |
B |
79. In a generic value chain, a firm’s after-sales service will be referred to as its _____.
B.
C.
D. |
A |
80. To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to:
B.
C.
D. |
A |
81. _____ allows managers to synthesize insights obtained from an internal analysis of a company’s strengths and weaknesses with those from an analysis of external opportunities and threats.
B.
C.
D. |
B |
82. Jeremy a manager at a multinational organization is trying to carefully scan and link the firm’s internal environment to its external environment. The insights from this analysis will allow him to effectively leverage the company’s internal strengths to exploit external opportunities, while mitigating internal weaknesses and external threats. In this scenario, which of the following managerial tools is Jeremy employing?
B.
C.
D. |
D |
83. In the context of the SWOT matrix, which of the following best exemplifies a firm’s internal strength?
B.
C.
D. |
A |
84. Which of the following management tools will help determine whether a firm’s resources, capabilities, and competencies are strengths or weaknesses?
B.
C.
D. |
C |
85. In the context of SWOT analysis, a firm can develop an offensive strategic option primarily by:
B.
C.
D. |
D |
86. In the context of SWOT analysis, which of the following best exemplifies a firm’s internal weakness?
B.
C.
D. |
D |
87. In the context of SWOT analysis, which of the following best exemplifies a firm’s external opportunity?
B.
C.
D. |
C |
88. Which of the following is a drawback of the SWOT analysis?
B.
C.
D. |
C |
89. To make the SWOT analysis an effective management tool, a strategist must first:
B.
C.
D. |
D |
90. How did McDonald’s leverage internal strengths in brand name and consistency to minimize the external threat of easy-to-prepare grocery items?
B.
C.
D. |
C |
91. Which of the following factors is most likely to lead to a loss of competitive advantage for Nike?
B.
C.
D. |
C |
Management 464 CHAPTER 4
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