MGT ch4

Which of the following is NOT one of the six questions that comprise the task of evaluating a company’s resources and competitive position?

A. What are the company’s most profitable geographic market segments?
B. How well is the company’s present strategy working?
C. How do a company’s value chain activities impact its cost structure and customer value proposition?
D. Is the company competitively stronger or weaker than key rivals?
E. What strategic issues and problems merit front-burner managerial attention?

A. What are the company’s most profitable geographic market segments?

Which of the following is NOT an analytical tool for revealing a company’s competitiveness and for helping to match the strategy to the company’s own particular circumstances?

A. Resource and capability analysis
B. SWOT
C. Value chain analysis
D. Best practice concept
E. Competitive strength analysis

D. Best practice concept

The best indicator of how well a company’s strategy is working is whether the company:

A. is achieving its stated financial objectives, its financial performance equates to the industry average, and market share gains reflect short-term preferences for capacity maximization.
B. is attentive to its poor execution in functional areas, business goals are stretch, and the value proposition has a product focus.
C. is geared to initiatives designed to build market share and to promote corporate responsibility.
D. is achieving its stated financial and strategic objectives, its financial performance is better than the industry average, and it is gaining customers and increasing its market share.
E. is geared to initiatives to promote corporate social responsibility.

D. is achieving its stated financial and strategic objectives, its financial performance is better than the industry average, and it is gaining customers and increasing its market share.

One important indicator of how well a company’s present strategy is working is whether:

A. it has more core competencies than close rivals.
B. its strategy is built around at least two of the industry’s key success factors.
C. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.
D. it is customarily a first-mover in introducing new or improved products (a good sign) or a late-mover (a bad sign).
E. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or stronger competitive forces and pressures (a bad sign).

C. the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.

Key "functional" strategies of a company include all of the following EXCEPT:

A. R&D, technology, and product design strategies.
B. production and information technology and supply chain management strategies.
C. human resource and finance strategies.
D. sales, marketing, and distribution strategies.
E. alliance and partnerships as well as merger and acquisition growth strategies.

E. alliance and partnerships as well as merger and acquisition growth strategies.

A company’s resources and capabilities represent:

A. the firm’s net working capital and related determinants for measuring operating performance and capabilities.
B. the firm’s competitive assets, which are considered determinants of its competitiveness and ability to succeed in the marketplace.
C. whether the firm has the industry’s most efficient value chain.
D. the management’s source of funding of new strategic initiatives.
E. positive trends with relevant cultural factors related to buyers’ choices and product modifications

B. the firm’s competitive assets, which are considered determinants of its competitiveness and ability to succeed in the marketplace.

A powerful tool for sizing up the company’s competitive assets and determining whether they can provide the foundation necessary for competitive success in the marketplace is termed:

A. resource and capability analysis.
B. SWOT.
C. competitive analysis.
D. financial and asset management analysis.
E. value chain analysis.

A. resource and capability analysis.

The difference between a resource and a capability is:

A. a resource is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently.
B. a resource is a reserve supply or back-up supply function, whereas a capability is the ability to manage the resource function.
C. a resource is a mechanism used for carrying out some responsibility, whereas a capability possesses the ability to monitor the resource
D. a resource represents the firm’s fixed assets, whereas a capability defines whether the firm is competent to perform some function with these assets.
E. a resource represents the firm’s human assets, whereas a capability defines the skills and knowledge of these human resources.

A. a resource is a productive input or competitive asset, whereas a capability is the capacity of the firm to perform some internal activity competently.

A useful way to identify a company’s resources is to view them as:

A. divided into two main categories, tangible and intangible.
B. productive inputs or competitive assets, except human assets and intellectual capital, which are considered capabilities or competencies.
C. physical resources, such as the company’s brand, image, and reputation assets.
D. an inventory or a collection of the firm’s strengths, weaknesses, opportunities, and threats.
E. intangible resources such as patents, copyrights, and technological processes.

A. divided into two main categories, tangible and intangible.

While listening or categorizing company resources, what matters is that:

A. all tangible resources are categorized correctly.
B. important resources are reported against strategically subjective activities.
C. resources are prioritized in terms of value propositions.
D. strategically placed resources are manageable.
E. all the different types of resources are included in the inventory.

E. all the different types of resources are included in the inventory.

Tangible resources do not include:

A. physical resources.
B. financial resources.
C. human assets.
D. technological assets.
E. organizational resources.

C. human assets.

Tangible resources include:

A. human assets and intellectual capital, which can include the talent of the work force and the creativity and innovativeness of certain personnel.
B. reputational assets, which can include the company’s reputation for quality, service, and reliability as well as their reputation for fair dealings with suppliers.
C. relationships such as alliances that provide access to technologies, specialized know-how, or geographic markets.
D. technological assets such as patents, copyrights, and innovation technologies.
E. company culture and incentive system, which includes the norms of behavior and business principles.

D. technological assets such as patents, copyrights, and innovation technologies.

The two approaches that can make the process of uncovering and identifying a firm’s capabilities more systematic are:

A. resources assessment and the functional approach.
B. strengths valuations and weaknesses estimations.
C. sustainability resource allocation and resource bundling.
D. cross-functional analysis and collaborative resource methodology.
E. financial statement analysis and management support analysis.

A. resources assessment and the functional approach.

Organizational capabilities are virtually always:

A. knowledge-based, residing in people and in the company’s intellectual capital, or in organizational processes and systems, which embody tacit knowledge.
B. more complex than resources and are exercised only through key personnel.
C. require constant evaluation to ensure cooperative support from management.
D. are easier and less challenging to categorize than resources because there are fewer to be concerned about.
E. reflective of the industry’s driving forces.

A. knowledge-based, residing in people and in the company’s intellectual capital, or in organizational processes and systems, which embody tacit knowledge.

A linked and closely integrated set of competitive assets centered around one or more cross-functional capabilities is termed:

A. organizational assets.
B. a resource bundle.
C. a resource capability.
D. functional method compilation.
E. an integrated asset advantage.

B. a resource bundle.

A sustainable competitive advantage is gained:

A. when a company has durable competitive assets that are central to its strategy and superior to those of rival firms.
B. when a company has sufficient resources to expedite its strategy.
C. when a company realizes its inherent weaknesses are transformable to advantages.
D. when a company can stand out relative to rivals because of resource utilization.
E. when a company has resources in well-populated geographical locations

A. when a company has durable competitive assets that are central to its strategy and superior to those of rival firms.

The four tests of a resource’s competitive power are often referred to as the:

A. SCIR test, which asks if a resource is sustainable, competitive, internalized, and reproducible.
B. competitive advantage sustainable method test.
C. reliability resources simulation.
D. VRIN test, which asks if a resource is valuable, rare, inimitable, and non-substitutable.
E. organizational capability metric analysis.

D. VRIN test, which asks if a resource is valuable, rare, inimitable, and non-substitutable.

The spotlight in analyzing a company’s resources, internal circumstances, and competitiveness includes such questions/concerns as:

A. whether the company is located all over the globe.
B. whether the company’s key success factors are more dominant than the key success factors of close rivals.
C. whether the company has the industry’s most efficient and effective value chain.
D. what the company’s resource strengths and weaknesses are in relation to the market opportunities and external threats.
E. what new acquisitions the company would be well advised to make in order to strengthen its financial performance and overall balance sheet position.

D. what the company’s resource strengths and weaknesses are in relation to the market opportunities and external threats.

Which of the following is NOT pertinent in identifying a company’s present strategy?

A. The key functional strategies (R&D, supply chain management, production, sales and marketing, HR, and finance) a company is employing
B. Management’s planned, proactive moves to outcompete rivals (via better product design, improved quality or service, wider product lines, and so on)
C. The company’s mission, strategic objectives, and financial objectives
D. Moves to respond and react to changing conditions in the macro-environment and in industry and competitive conditions
E. The strategic role of its collaborative partnerships and strategic alliances with others

C. The company’s mission, strategic objectives, and financial objectives

The best quantitative evidence of whether a company’s present strategy is working well is:

A. whether the company has more competitive assets than it does competitive liabilities.
B. whether the company is in the industry’s best strategic group.
C. the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.
D. whether the company has a shorter value chain than close rivals.
E. whether the company is in the Fortune 500.

C. the caliber of results the strategy is producing, specifically whether the company is achieving its financial and strategic objectives and whether it is an above-average industry performer.

Which of the following is NOT a reliable measure of how well a company’s current strategy is working?

A. Whether the company’s sales are growing faster, slower, or about the same pace as the industry as a whole, thus resulting in a rising, falling, or stable market share
B. Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product
C. The firm’s image and reputation with its customers
D. Whether its profit margins are rising or falling and how large its margins are relative to those of its rivals
E. Evidence of improvement in internal processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee productivity

B. Whether it has a larger number of competitive assets than competitive liabilities and whether it has a superior quality product

How are a company’s organizational capabilities developed and enabled?

A. By strengthening the traditions that company executives are committed to maintaining
B. Through deployment of a company’s resources or some combination of its resources
C. By talking openly about the problems of the present company and determining how new behaviors will improve performance
D. By shifting from decentralized to centralized decision-making
E. By urging company personnel to search outside the company for work practices and operating approaches that may be an improvement over what the company is presently doing

B. Through deployment of a company’s resources or some combination of its resources

The BEST example of a company resource is:

A. having higher earnings per share and a higher return on shareholders’ equity investment than key rivals.
B. being totally self-sufficient such that the company does not have to rely in any way on key suppliers, partnerships with outsiders, or strategic alliances.
C. having proven technological expertise and an ability to churn out new and improved products on a regular basis.
D. having a larger number of competitive assets than competitive liabilities.
E. having more built-in key success factors than rivals.

C. having proven technological expertise and an ability to churn out new and improved products on a regular basis.

Which of the following is NOT a good example of a company’s resources?

A. More intellectual capital and better e-commerce capabilities than rivals
B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product quality and performance
C. Having higher earnings per share and a higher stock price than key rivals
D. A well-known brand name and enjoying the confidence of customers
E. A lower-cost value chain than rivals

C. Having higher earnings per share and a higher stock price than key rivals

If a company doesn’t possess standalone resource strengths capable of contributing to competitive advantage:

A. all potential for competitive advantage is lost.
B. it is unlikely to survive in the marketplace and should exit the industry.
C. it may have a bundle of resources that can be leveraged to develop a distinctive competence.
D. it is virtually blocked from using offensive strategies and must rely on defensive strategies.
E. its best strategic option is to revamp its value chain in hopes of creating stronger competitive capabilities.

C. it may have a bundle of resources that can be leveraged to develop a distinctive competence.

Resource and capability analysis is designed to:

A. ascertain the internal marketplace of non-distinct divisions of the company.
B. ascertain which of a company’s resources and capabilities are competitively valuable.
C. stimulate demand for a product.
D. ascertain to what extent a competitor can sustain a competitive advantage.
E. stimulate economic growth for companies within the industry.

B. ascertain which of a company’s resources and capabilities are competitively valuable.

Resource and capability analysis is achieved by:

A. probing the caliber of a firm’s competitive assets relative to those of rival firms.
B. attaining price stability.
C. analyzing only internal strengths and weaknesses through a matrix comparison model.
D. cost-benefit analysis of the company’s core product sales.
E. performing resource-specific activities within the organization to allocate available capital.

A. probing the caliber of a firm’s competitive assets relative to those of rival firms.

A company that has competitive assets that are central to its company strategy and superior to those of rival firms creates a:

A. long-term derivative strategy.
B. cash flow feasibility analysis.
C. competitive advantage over other companies.
D. resource deployment strategic plan.
E. cost underestimation and benefit overestimation.

C. competitive advantage over other companies.

The competitive power of a company resource strength or competitive capability hinges on all of the following EXCEPT:

A. how hard it is for competitors to copy.
B. whether it is rare and something rivals lack.
C. whether it is really competitively valuable and has the potential to contribute to a competitive advantage.
D. whether it is nonsubstitutable
E. whether it available in plenty.

E. whether it available in plenty.

What two factors inhibit the ability of rivals to imitate a firm’s most valuable resources and capabilities?

A. Social ambiguity and causal uncertainty
B. Social simplicity and causal complexity
C. Collective complexity and causal ambiguity
D. Social complexity and causal ambiguity
E. Social simplicity and causal uncertainty

D. Social complexity and causal ambiguity

A competitively valuable resource or capability is a company’s:

A. enabling foundation of its business model.
B. equally valuable substitute resource providing a competitive advantage.
C. assessment of the availability of superior substitutes.
D. unsurpassed worker productivity and product quality.
E. unique piecework incentive system, providing a competitive advantage.

A. enabling foundation of its business model.

For a particular company resource/capability to have real competitive power and perhaps qualify as a basis for competitive advantage, it should:

A. be hard to copy, be rare and something rivals lack, be competitively valuable, and not be easily trumped by substitute resource strengths possessed by rivals.
B. be something that a company does internally rather than in collaborative arrangements with outsiders.
C. be patentable.
D. bean industry key success factor and occupy a prime position in the company’s value chain.
E. have the potential for lowering the firm’s unit costs.

A. be hard to copy, be rare and something rivals lack, be competitively valuable, and not be easily trumped by substitute resource strengths possessed by rivals.

The competitive power of a company’s resource strength is NOT measured by which one of the following tests?

A. Is the resource rare and something rivals lack?
B. Is the resource strength something that a company has internally rather than in collaborative arrangements with outsiders?
C. Is the resource strength easily trumped by the substitute resources/capabilities of rivals?
D. Is the resource strength hard to copy?
E. Is the resource strength competitively valuable, having the potential to contribute to a competitive advantage?

B. Is the resource strength something that a company has internally rather than in collaborative arrangements with outsiders?

A company requires a dynamically evolving portfolio of resources and capabilities to:

A. assist the strategic planning team in overall direction.
B. sustain complex manufacturing systems as a strategic recall.
C. sustain its competitiveness and help drive improvements in its performance.
D. sustain benefits of high market share as an interest in growth strategies.
E. transform knowledge into a management style supporting competition in a globally diverse world.

C. sustain its competitiveness and help drive improvements in its performance.

Which of the following is NOT an example of a company’s dynamic capability?

A. A capacity to improve existing resources and capabilities
B. Upgrades to R&D resources to drive product innovation
C. A capacity to add new resources and capabilities to the competitive asset portfolio
D. An ability to replace degraded resources with acquired capabilities
E. An ability to keep antiquated resources by disregarding innovative capabilities

E. An ability to keep antiquated resources by disregarding innovative capabilities

A dynamic capability is the:

A. ongoing capacity to modify existing resources and capabilities to create new ones.
B. improvement evaluation process for eliminating waste in the firm.
C. functional and operating resources management process.
D. ongoing capability to understand and establish a commitment to resource alignment.
E. improvement evaluation process for repurposing waste in the firm.

A. ongoing capacity to modify existing resources and capabilities to create new ones.

Identifying and assessing a company’s resource strengths and weaknesses and its external opportunities and threats is called:

A. a SWOT analysis.
B. a competitive asset/liability analysis.
C. a competitive positioning analysis.
D. a strategic resource assessment.
E. a company resource mapping.

A. a SWOT analysis.

SWOT analysis is a simple but powerful tool for:

A. gauging whether a company has a cost-competitive value chain.
B. sizing up a company’s resources and capabilities, strengths and deficiencies, its market opportunities, and the external threats to its future well-being.
C. evaluating whether a company is in the most appropriate strategic group.
D. determining a company’s competitive strength vis-à-vis close rivals.
E. identifying the market segments in which a company is strongly positioned and weakly positioned.

B. sizing up a company’s resources and capabilities, strengths and deficiencies, its market opportunities, and the external threats to its future well-being.

A company’s strengths are important because they:

A. pave the way for establishing a low-cost advantage over rivals.
B. represent the quality of its competitive assets that enhance its competitiveness in the marketplace.
C. provide extra muscle in helping lengthen the company’s value chain.
D. give it competitive protection against the industry’s driving forces.
E. provide extra organizational muscle in turning a core competence into a key success factor.

B. represent the quality of its competitive assets that enhance its competitiveness in the marketplace.

When an activity becomes something a company has learned to perform proficiently and capably, the company is said to have:

A. a competence.
B. a competitive advantage over rivals.
C. a key value chain proficiency.
D. a distinctive capability.
E. a resource advantage.

A. a competence.

When a company has a proficiency in performing a strategically and competitively important value chain activity better than its rivals, it is said to have:

A. a company competence.
B. a core competence.
C. a distinctive competence.
D. a key value chain proficiency.
E. a competitive advantage over rivals.

C. a distinctive competence.

The difference between a core competence and a distinctive competence is that:

A. a distinctive competence refers to a company’s strongest resource or competitive capability, whereas a core competence refers to a company’s lowest-cost and most efficiently executed value-chain activity.
B. a core competence usually resides in a company’s base of intellectual capital, whereas a distinctive competence stems from the superiority of a company’s physical and tangible assets.
C. a core competence is a competitively and strategically relevant activity that a firm performs well compared to its other activities, whereas a distinctive competence is a competitively relevant activity a firm performs well compared to other rival firms.
D. a core competence represents a resource strength, whereas a distinctive competence is achieved by having more resource strengths than rival companies.
E. a core competence usually resides in a company’s technology and physical assets, whereas a distinctive competence usually resides in a company’s know-how, expertise, and intellectual capital.

C. a core competence is a competitively and strategically relevant activity that a firm performs well compared to its other activities, whereas a distinctive competence is a competitively relevant activity a firm performs well compared to other rival firms.

A core competence:

A. detracts from a company’s arsenal of competitive capabilities and competitive assets and is not a resource strength considered to be genuine.
B. is typically results-based, residing in a company’s tangible physical assets on the balance sheet.
C. is often grounded in a single department’s set of knowledge and expertise.
D. is an activity that a firm performs proficiently that is also central to its strategy and competitive success.
E. is a proficiently performed external activity.

D. is an activity that a firm performs proficiently that is also central to its strategy and competitive success.

A core competence:

A. is a more competitively valuable strength than a competence because of the key role the activities play in the company’s strategy.
B. typically has competitive value, the amount of which is reflected in the physical and tangible assets on a company’s balance sheet.
C. usually is grounded in the technological expertise of a particular department or work group.
D. is more difficult for rivals to copy than a distinctive competence.
E. refers to a company’s lowest-cost and most efficiently executed value-chain activity.

A. is a more competitively valuable strength than a competence because of the key role the activities play in the company’s strategy.

When a company performs a particular competitively important activity truly well in comparison to its rivals, it is said to have:

A. a company competence.
B. a strategic resource.
C. a distinctive competence.
D. a core competence.
E. a key success factor.

C. a distinctive competence.

Which of the following does NOT represent a potential core competence?

A. Skills in manufacturing a high-quality product at a low cost
B. Know-how in creating and operating systems for cost-efficient supply chain management
C. The capability to fill customer orders accurately and swiftly
D. Having a sprawling factory
E. The capability to speed new or next-generation products to the marketplace

D. Having a sprawling factory

Which of the following is NOT accurate as concerns a distinctive competence?

A. A distinctive competence is a competitively important activity that a company performs better than its rivals.
B. A distinctive competence is typically less restrictive for rivals to copy than a core competence.
C. A distinctive competence can be a basis for sustainable competitive advantage.
D. A distinctive competence qualifies as a superior internal strength.
E. A distinctive competence enables delivering stand-out value to customers (in the form of lower prices, better product performance, or superior service).

B. A distinctive competence is typically less restrictive for rivals to copy than a core competence.

A company’s resource weaknesses can relate to all of the following EXCEPT:

A. inferior or unproven skills, expertise, or intellectual capital in competitively important parts of the business.
B. something that it lacks or does poorly in comparison to rivals.
C. deficiencies in competitively important physical, organizational, or intangible assets.
D. missing or competitively inferior capabilities in key areas.
E. rare resources and capabilities.

E. rare resources and capabilities.

The external market opportunities which are MOST relevant to a company are the ones that:

A. can increase market share.
B. are reinforced by the overall business strategy and reflect the business model.
C. match up well with the firm’s competitive assets, offer the best prospects for growth and profitability, and present the most potential for competitive advantage.
D. qualify to correct its internal weaknesses and resource deficiencies.
E. are relevant for defending against the external threats to its well-being.

C. match up well with the firm’s competitive assets, offer the best prospects for growth and profitability, and present the most potential for competitive advantage.

The market opportunities most relevant to a particular company are those that:

A. offer the best prospects for growth and profitability.
B. provide a strong defense against threats to the company’s profitability.
C. embrace the most potential for product innovation.
D. provide avenues for taking market share away from close rivals.
E. hold the most potential to reduce costs.

A. offer the best prospects for growth and profitability.

Which of the following is NOT an example of an external threat to a company’s future profitability?

A. The lack of a distinctive competence
B. New legislation that entails burdensome and costly government regulations
C. Slowdowns in market growth
D. More intense competitive pressures
E. The introduction of restrictive trade policies in countries where the company does business

A. The lack of a distinctive competence

Which of the following is NOT an example of a threat to a company’s future profitability and well-being?

A. The likely entry of potent new competitors
B. The lack of a well-known brand name with which to attract new customers and help retain existing customers
C. Shifts in buyer needs and tastes away from the industry’s product
D. Costly new regulatory requirements
E. Growing bargaining power on the part of the company’s major customers and major suppliers

B. The lack of a well-known brand name with which to attract new customers and help retain existing customers

External threats may pose various degrees of adversity upon the company and can surface from many sources and examples, EXCEPT for:

A. the advent of cheaper or better technologies.
B. the entry of lower-cost foreign competitors and restrictive foreign trade policies.
C. new burdensome regulations.
D. higher overall unit costs relative to those of key competitors.
E. rising prices on key inputs (such as energy costs).

D. higher overall unit costs relative to those of key competitors.

The payoff of doing a thorough SWOT analysis is:

A. identifying whether the company’s value chain is cost-effective vis-à-vis the value chains of rivals.
B. helping strategy-makers benchmark the company’s resource strengths against industry key success factors.
C. enabling a company to assess its overall competitive position relative to its key rivals.
D. revealing whether a company’s market share, measures of profitability, and sales compare favorably or unfavorably vis-à-vis key competitors.
E. assisting strategy-makers in crafting a strategy that is well-matched to the company’s resources and capabilities, its market opportunities, and the external threats to its future well-being.

E. assisting strategy-makers in crafting a strategy that is well-matched to the company’s resources and capabilities, its market opportunities, and the external threats to its future well-being.

In doing SWOT analysis, which of the following is NOT an example of a potential resource weakness or competitive deficiency that a company may have?

A. Less productive R&D efforts than rivals
B. Having a single, unified functional strategy instead of several distinct functional strategies
C. Lack of a strong brand image and reputation (as compared to rivals)
D. Higher overall unit costs relative to rivals
E. Too narrow a product line relative to rivals

B. Having a single, unified functional strategy instead of several distinct functional strategies

In doing SWOT analysis and trying to identify a company’s market opportunities, which of the following is NOT an example of a potential market opportunity that a company may have?

A. Serving additional customer groups or market segments
B. Growing buyer preferences for substitutes for the industry’s product
C. Acquiring rival firms or companies with attractive technological expertise or capabilities
D. Expanding into new geographic markets
E. Openings to win market share away from rivals

B. Growing buyer preferences for substitutes for the industry’s product

Which of the following is NOT something that can be gleaned from a company’s SWOT?

A. How to improve a company’s strategy by using company strengths and capabilities as cornerstones for its strategy
B. Which market opportunities are best suited to a company’s strengths and capabilities
C. Which resource weaknesses and deficiencies need to be corrected so as to better enable the pursuit of important market opportunities and to better defend against certain external threats
D. How to turn a core competence into a distinctive competence
E. Whether any of the company’s resource strengths can be used to help lessen the impact of external threats

D. How to turn a core competence into a distinctive competence

One of the most telling signs of whether a company’s market position is strong or precarious is:

A. whether its product is strongly or weakly differentiated from rivals.
B. whether its prices and costs are competitive with those of key rivals.
C. whether it has a lower stock price than key rivals.
D. the opinions of buyers regarding which seller has the best product quality and customer service.
E. whether it is in a bigger or smaller strategic group than its closest rivals.

B. whether its prices and costs are competitive with those of key rivals.

Two analytical tools useful in determining whether a company’s prices and costs are competitive are:

A. SWOT analysis and key success factor analysis.
B. SWOT analysis and benchmarking.
C. value chain analysis and benchmarking.
D. competitive position assessment and competitive strength assessment.
E. driving forces analysis and SWOT analysis.

C. value chain analysis and benchmarking.

The three main areas in the value chain where significant differences in the costs of competing firms can occur include:

A. age of plants and equipment, number of employees, and advertising costs.
B. operating-level activities, functional area activities, and line of business activities.
C. the nature and makeup of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allies.
D. human resource activities (particularly labor costs), vertical integration activities, and strategic partnership activities.
E. variable cost activities, fixed cost activities, and administrative activities.

C. the nature and makeup of their own internal operations, the activities performed by suppliers, and the activities performed by wholesale distribution and retailing allies.

Activity-based costing is used to evaluate a company’s cost-competitiveness and:

A. determine whether the value chains of rival companies are similar or different.
B. benchmark the costs of primary value chain activities against the costs of the support value chain activities.
C. determine the costs of each primary and support activity comprising a company’s value chain and thereby reveal the nature and makeup of a company’s internal cost structure.
D. determine the costs of each strategic action a company initiates.
E. analyze the costs of each primary activity.

C. determine the costs of each primary and support activity comprising a company’s value chain and thereby reveal the nature and makeup of a company’s internal cost structure.

Activity-based costing:

A. is an accounting system that assigns a company’s expenses to whichever activity in a company’s value chain is responsible for creating the cost.
B. involves using benchmarking techniques to develop cost estimates for the value chain activities of each major rival.
C. is a powerful tool for identifying the different pieces of a company’s value chain and classifying them as primary activities and support activities.
D. involves determining which value chain activities represent variable costs and which represent fixed costs.
E. is a tool for identifying the activities that cause a company’s product to be strongly differentiated from the products of rivals.

A. is an accounting system that assigns a company’s expenses to whichever activity in a company’s value chain is responsible for creating the cost.

Costs and price differences among competing companies can have origins in activities performed by:

A. the company’s internally performed activities (its own value chain) compared to the cost structure of the internally performed activities of rival companies.
B. value chains of the company’s suppliers.
C. value chains of a company’s distributors and retail dealers and forward channel allies.
D. the company’s internally performed activities (its own value chain), but also on costs in the value chain of its suppliers and distribution channel allies.
E. whether the company has a longer or shorter value chain than its close rivals.

D. the company’s internally performed activities (its own value chain), but also on costs in the value chain of its suppliers and distribution channel allies.

Benchmarking involves:

A. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities.
B. checking whether a company has achieved more of its financial and strategic objectives over the past five years relative to the other firms it is in direct competition with.
C. studying whether a company’s resource strengths are more/less powerful than the resource strengths of rival companies.
D. studying how a company’s competitive capabilities stack up against the competitive capabilities of selected companies known to have world-class competitive capabilities.
E. comparing the best practices in one industry against the best practices in another industry.

A. comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs and effectiveness of these activities.

A much-used and potent managerial tool for determining whether a company performs particular functions or activities in a manner that represents "the best practice" when both cost and effectiveness are taken into account is:

A. competitive strength analysis.
B. activity-based costing.
C. resource cost mapping.
D. SWOT analysis.
E. benchmarking.

E. benchmarking.

Which of the following is NOT one of the objectives of benchmarking?

A. To identify the best practices in performing various value chain activities
B. To learn how best practice companies achieve lower costs or better results in performing benchmarked activities
C. To help construct a company value chain and identify which activities are primary and which are support activities
D. To develop cross-company comparisons of the costs of performing specific value chain activities
E. To take actions to improve a company’s cost competitiveness when benchmarking reveals that its costs and results of performing an activity are not as good as what other companies have achieved

C. To help construct a company value chain and identify which activities are primary and which are support activities

Benchmarking provides a company with which of the following?

A. Hard evidence of cost competitiveness
B. Proof of resource availability
C. A company strategy
D. Verification of total cost ownership
E. Improvements to internal processes

A. Hard evidence of cost competitiveness

The most difficult part of benchmarking is:

A. the decision of whether to do it at all.
B. how to gain access to information regarding rivals’ practices and costs.
C. when to initiate the process.
D. what information to utilize in the analysis process.
E. when to stop the process and move forward with strategy.

B. how to gain access to information regarding rivals’ practices and costs.

Obtaining cost information is a primary difficulty associated with benchmarking. The following are typical sources for collecting information, EXCEPT:

A. from published reports, industry research firms, and trade groups.
B. from talking to knowledgeable industry leaders.
C. from field trips to the facilities of competitors or non-competing firms.
D. from independent firms and consulting firms to gather best practices and comparative cost data without identifying competing firms.
E. from the classified government documents.

E. from the classified government documents.

Which of the following areas within a company’s total value chain system can managers use to improve efficiency and effectiveness?

A. A company’s own internal activity segments, the suppliers’ part, and the forward (distribution) channel portion of the value chain system
B. A company’s reinforced activities identified as efficiency measures for improved effectiveness
C. Only the internal activity segments
D. Only the suppliers’ part
E. Only the distributors’ channel portion

A. A company’s own internal activity segments, the suppliers’ part, and the forward (distribution) channel portion of the value chain system

An option for NOT remedying an internal cost disadvantage includes:

A. investing in productivity-enhancing, cost-saving technological improvements.
B. redesigning the product or some of its components to facilitate speedier and more economical manufacture or assembly.
C. implementing the use of best practices throughout the company, particularly for high-cost activities.
D. eliminating some cost-producing activities altogether by revamping the value chain.
E. performing activities in the same way as done earlier.

E. performing activities in the same way as done earlier.

Which of the following is NOT a good option for trying to remedy high internal costs vis-à-vis rivals’ firms?

A. Finding ways to detour around activities or items where costs are high
B. Redesigning the product or some of its components to permit more economical manufacture or assembly
C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction
D. Outsourcing high-cost activities to vendors or contractors who can perform them more economically
E. Relocating high-cost activities (like manufacturing) to geographic areas (like China or Latin America or Eastern Europe) where they can be performed more cheaply

C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction

A company’s strategic options for remedying cost disadvantages in internally performed value chain activities do NOT include:

A. revamping its value chain to eliminate or bypass some cost-producing activities (particularly low value-added activities).
B. implementing the use of best practices, particularly for high-cost activities.
C. investing in productivity-enhancing, cost-saving technological improvements.
D. switching to activity-based costing.
E. outsourcing the performance of high-cost activities to vendors that can perform them more cheaply.

D. switching to activity-based costing.

The options for remedying a supplier-related cost disadvantage include:

A. pressuring suppliers for more favorable prices, switching to lower-priced substitute inputs, and collaborating closely to identify mutual cost-saving opportunities.
B. instituting forward vertical integration.
C. shifting into the production of substitute products.
D. shifting from a low-cost leadership strategy to a differentiation or focus strategy.
E. cutting selling prices and trying to win a bigger market share.

A. pressuring suppliers for more favorable prices, switching to lower-priced substitute inputs, and collaborating closely to identify mutual cost-saving opportunities.

Which of the following is NOT an option for remedying a supplier-related cost disadvantage?

A. Integrate backward into the business of high-cost suppliers in an effort to reduce the costs of the items being purchased.
B. Negotiate more favorable prices with suppliers.
C. Collaborate closely with suppliers to identify mutual cost-saving opportunities.
D. Switch to lower-priced substitute inputs.
E. Persuade forward channel allies to implement best practices.

E. Persuade forward channel allies to implement best practices.

Which of the following is NOT an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers)?

A. Changing to a more economical distribution strategy such as putting more emphasis on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outlets
B. Enhancing differentiation through activities such as cooperative advertising at the forward end of the value chain
C. Pressuring distributors/dealers and other forward-channel allies to reduce their costs and markups
D. Insisting on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in-house, and those performed by distributors/dealers
E. Collaborating with forward channel allies to identify win-win opportunities to reduce costs

D. Insisting on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in-house, and those performed by distributors/dealers

The means to enhance differentiation through activities at the forward end of the value chain system do NOT include:

A. engaging in cooperative advertising and promotions.
B. creating exclusive arrangements with downstream sellers or other mechanisms that increase their incentives for enhanced-delivery customer value.
C. creating and enforcing standards for downstream activities.
D. assisting in training channel partners in business practices.
E. enhancing cost-reducing activities with defensive functionality designed to create incentives.

E. enhancing cost-reducing activities with defensive functionality designed to create incentives.

A company’s value-creating activities can offer a competitive advantage in one of two ways:

A. contribute to greater efficiency and lower costs and provide a basis for differentiation.
B. contribute expense savings and enhance product exclusivity.
C. reduce cost disadvantages and market price anomalies.
D. contribute customer experience value and conserve operating functionality.
E. contribute to competitive assets and discontinue distinctive competencies.

A. contribute to greater efficiency and lower costs and provide a basis for differentiation.

For a company to translate its performance of value chain activities into competitive advantage, it must:

A. undertake ongoing and persistent efforts to be cost-efficient and develop differentiation advantages.
B. have more core competencies than rivals.
C. have at least three distinctive competencies.
D. have competencies that allow it to produce the highest-quality product in the industry.
E. have more competitive assets than competitive liabilities.

A. undertake ongoing and persistent efforts to be cost-efficient and develop differentiation advantages.

To build a competitive advantage by out-managing rivals in performing value chain activities, a company must:

A. position itself in the industry’s more favorably situated strategic group.
B. develop resource strengths that will enable it to pursue the industry’s most attractive opportunities.
C. develop core competencies and maybe a distinctive competence that rivals don’t have or can’t quite match and that are instrumental in helping it deliver attractive value to customers.
D. outsource all of its value chain activities to world-class vendors and suppliers.
E. eliminate its resource weaknesses.

C. develop core competencies and maybe a distinctive competence that rivals don’t have or can’t quite match and that are instrumental in helping it deliver attractive value to customers.

When companies engage in value-creating activities, they do so by:

A. focusing on exploiting a company’s best-executed operating strategy.
B. concentrating on efficient performance of the company’s primary value chain activities.
C. concentrating on minimizing the costs associated with the design of a product or service.
D. drawing on specific company resources and capabilities that underlie and enable the activity.
E. focusing on working with forward-channel allies to develop capabilities to outmatch the capabilities of rivals.

D. drawing on specific company resources and capabilities that underlie and enable the activity.

The road to competitive advantage begins with management’s efforts to:

A. build organizational expertise in performing certain competitively important value chain activities.
B. understand the value chain activities providing opportunity for growth.
C. build value-creating activities all along the value chain.
D. ensure superiority over rivals in performing even unimportant tasks and activities extremely well.
E. maintain the existing chain of activities to lower costs.

A. build organizational expertise in performing certain competitively important value chain activities.

The value of doing competitive strength assessment is to:

A. determine how competitively powerful the company’s core competencies are.
B. learn if the company’s market opportunities are better than those of its rivals.
C. learn whether a company has a distinctive competence.
D. learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals.
E. determine whether a company’s resource strengths are sufficient to allow it to earn bigger profits than rivals.

D. learn how the company ranks relative to rivals on each of the important factors that determine market success and ascertain whether the company has a net competitive advantage or disadvantage vis-à-vis key rivals.

Understanding where the company is competitive requires:

A. determining whether a company has a cost-effective value chain.
B. developing quantitative strength ratings for the company and key rivals on each industry key success factor and each pivotal resource, capability, and value chain activity.
C. identifying a company’s core competencies and distinctive competencies (if any).
D. analyzing whether a company is well positioned to gain market share and be the industry’s profit leader.
E. developing quantitative measures of a company’s chances for future profitability.

B. developing quantitative strength ratings for the company and key rivals on each industry key success factor and each pivotal resource, capability, and value chain activity.

Assigning a weight to each measure of competitive strength assessment is generally analytically superior because:

A. a weighted ranking identifies which competitive advantages are most powerful.
B. an unweighted ranking doesn’t discriminate between companies with high and low market shares.
C. it singles out which competitor has the most competitively potent core competencies.
D. weighting each company’s overall competitive strength by its percentage share of total industry profits produces a more accurate measure of its true competitive strength.
E. all of the various measures of competitive strength are not equally important.

E. all of the various measures of competitive strength are not equally important.

Competitive strength can be determined by assigning measures based on perceived importance because:

A. it provides a more accurate assessment of the strength of competitive forces.
B. it eliminates the bias introduced for those firms having large market shares.
C. the different measures of competitive strength are unlikely to be equally important.
D. the results provide a more reliable measure of what competitive moves rivals are likely to make next.
E. weighting each company’s overall competitive strength by the size of its market share produces a more accurate measure of its true competitive strength.

C. the different measures of competitive strength are unlikely to be equally important.

In a weighted competitive strength assessment, the sum of importance weights should add up to:

A. 100%.
B. 1.00.
C. 10.
D. 100.
E. 1000.

B. 1.00.

In a weighted competitive strength analysis, each strength measure is assigned a weight based on:

A. its percentage share of total industry revenues.
B. its percentage share of total industry losses.
C. its perceived importance in determining a company’s competitive success in the marketplace.
D. its percentage share of total industry profits.
E. what it takes to provide better analytical balance between the companies with high ratings and the companies with low ratings and thus get the sum of the weights to add up to 1.0.

C. its perceived importance in determining a company’s competitive success in the marketplace.

Calculating competitive strength ratings for a company and its rivals using the industry’s most telling measures of competitive strength or weakness:

A. is a way of determining which competitor has the highest overall competitive advantage in the marketplace and which competitor is faced with the lowest overall competitive disadvantage.
B. is the most reliable indicator of which industry member has the highest overall product quality.
C. is a powerful way of revealing which competitors are in the best and worst strategic groups.
D. is the most reliable indicator of which industry member has the lowest overall costs and is the low-cost leader.
E. pinpoints which industry rivals are most insulated from the industry’s driving forces.

A. is a way of determining which competitor has the highest overall competitive advantage in the marketplace and which competitor is faced with the lowest overall competitive disadvantage.

Quantitative measures of a company’s competitive strength:

A. signal which competitor has the most distinctive competencies and which competitor has the fewest.
B. provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival.
C. reveal which competitors are in the best and worst strategic groups.
D. show which industry rival has the best overall market opportunities and which competitor has the poorest market opportunities.
E. pinpoint which industry rival is subject to the least amount of competitive pressures from the five competitive forces.

B. provide useful indicators of how a company compares against key rivals, factor by factor and capability by capability—thus indicating whether the company has a net overall competitive advantage or disadvantage against each rival.

The company with the highest rating on a given measure has an implied competitive edge on that specific measure, with the size of its edge:

A. providing the company with an overall net competitive score that is reduced by the weighted measure.
B. signaling a weak position and competitive disadvantage.
C. reflecting the difference between its weighted rating and rivals’ weighted ratings.
D. reflecting an area of potential improvement in order to achieve a sustainable competitive advantage.
E. requiring reevaluation of the weighted measure.

C. reflecting the difference between its weighted rating and rivals’ weighted ratings.

Calculating competitive strength ratings for a company and comparing them against strength ratings for its key competitors helps indicate:

A. which weaknesses and vulnerabilities of competitors the company might be able to attack successfully.
B. which competitors are in profitable strategic groups and which competitors are in unprofitable strategic groups.
C. which competitors are employing offensive strategies and which competitors are employing defensive strategies.
D. which competitors are likely to make money and which are likely to lose money in the years ahead.
E. what the industry’s key success factors are.

A. which weaknesses and vulnerabilities of competitors the company might be able to attack successfully.

A company’s competitive strength scores pinpoint its strengths and weaknesses against rivals and:

A. suggest the company use its strengths to exploit its own competitive liabilities.
B. point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive liabilities.
C. point directly to the company to use its weaknesses as offensive moves to challenge rivals’ weaknesses.
D. suggest receptivity for astute companies to drive their operating practices if the strength scores are very low.
E. point directly to accepting the competitive strength scores on face value.

B. point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive liabilities.

Identifying the strategic issues and problems that merit front-burner managerial attention:

A. is accomplished solely by analyzing the company’s internal working environment.
B. helps set management’s agenda for taking actions to improve the company’s performance and business outlook.
C. is done solely by evaluating the company’s own internal situation—its resources and competitive position—to help come up with a "worry list" of "how to…," "whether to…," and "what to do about…"
D. is done solely as a basis for drawing conclusions about whether to stick with a company’s present strategy or to modify it.
E. is accomplished solely by analyzing the company’s external environment.

B. helps set management’s agenda for taking actions to improve the company’s performance and business outlook.

Which of the following is NOT part of the task of identifying the strategic issues and problems that merit front-burner managerial attention?

A. Analyzing the company’s external environment
B. Evaluating the company’s own resources and competitive position
C. Surveying a company’s board members, managers, select employees, and key investors regarding what strategic issues they think the company faces
D. Developing a "worry list" of "how to…," "whether to…," and "what to do about…"
E. Assessing what challenges the company must overcome to be financially and competitively successful in the years ahead

C. Surveying a company’s board members, managers, select employees, and key investors regarding what strategic issues they think the company faces

Which of the following is NOT accurate as concerns the task of identifying the strategic issues and problems that merit front-burner managerial attention?

A. It entails drawing upon the results and conclusions from analyzing the company’s external environment.
B. It entails drawing on the results and conclusions from evaluating the company’s own resources and competitive position.
C. It entails developing a "worry list" of "how to…," "whether to…," and "what to do about…"
D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company’s internal and external environment.
E. Developing a list of issues and problems that management need to address (and to resolve) should always precede deciding upon a strategy and what actions to take to improve the company’s position and prospects.

D. Identifying the strategic issues and problems that the company faces is the first thing that company managers need to do before starting to analyze the company’s internal and external environment.