Chapter 3 – Evaluating a Firm’s Internal Capabilities

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_______________ in the RBV are defined as the tangible and intangible assets that a firm controls that it can use to conceive of and implement its strategies.
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Resources
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__________ are a subset of a firm’s resources and are defined as tangible and intangible assets that enable a firm to take full advantage of other resources it controls.
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Capabilities
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A firm’s marketing skills and teamwork as well as its cooperation among managers are examples of
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capabilities
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The training, experience, judgment, intelligence, relationships and insight of individual managers and workers in a firm are examples of
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human resources
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Computer hardware and software technology, robots used in manufacturing and automated warehouses are examples of which type of resources?
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Physical resources
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A firm’s formal reporting structure, its formal and informal planning and its controlling and coordinating systems are examples of which type of resources?
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Organizational resources
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The VRIO assumption that some of the resource and capability differences among firms may be long lasting is known as
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resource immobility
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______________ implies that for a given business activity, some firms may be more skilled in accomplishing this activity than other firms
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Resource heterogeneity
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The theoretical roots of the Resource-Based View can be traced to research done by
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David Ricardo
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Inputs whose quantity is fixed and whose demand does not respond to price increases are said to be
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inelastic in supply
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To the extent that a firm’s resources and capabilities enhance a firm’s competitive position by enabling a firm to exploit its opportunities or neutralize its threats, these resources and capabilities are valuable and are known as
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strengths
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The set of business activities in which it engages to develop, produce, and market its products or services is known as its
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value chain
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If in the process of maximizing its performance, a firm engages in activities that pollute the environment, the impact of that pollution is a(n)
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externality
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In Porter’s value chain model, which of the following activities would be considered a primary activity?
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Inbound logistics
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ESPN’s development of an extensive offering of X-Games coverage that is unmatched by any other sports outlet is an example of which element of the VRIO framework?
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Rarity
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Most firms have a resource-base that is composed primarily of resources and capabilities that are
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valuable but not rare
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Which of the following is not one of the six distinct activities in McKinsey and Company’s value chain model?
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Inbound logistics
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In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered __________ and a potential source of competitive advantage.
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rare
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If firms that do not possess resource or capabilities face a cost disadvantage in obtaining these resources or capabilities compared to the firms that already possess them, these resources and capabilities are termed
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imperfectly imitable
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Firms that possess and exploit costly-to-imitate, rare and valuable resources in choosing and implementing their strategies may enjoy a period of
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sustained competitive advantage
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If a firm’s resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm’s competitive advantage, this competitive advantage is said to be protected from imitation by
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casual ambiguity
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Resources and capabilities, such as relations among managers and a firm’s culture, that may be costly to imitate because they are beyond the ability of firms to systematically manage and influence are referred to as
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socially complex
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According to the research in strategic human resources management
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firms that are able to use human resource practices to develop socially complex human and organizational resources are able to gain competitive advantage over firms that do not engage in these practices
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Which of the following statements regarding patents is accurate?
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Patents may decrease, rather than increase the costs of imitation
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The range of formal and informal mechanisms to ensure that managers are behaving in ways consistent with a firm’s strategies are referred to as
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management control systems
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Which of the following are examples of formal management controls?
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Budgeting and reporting activities
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Southwest Airlines’ strong internal culture that helps ensure that employees act in ways consistent with the company’s strategy is an example of a(n)
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informal management control
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Resources that are valuable-but-not-rare can be categorized as
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organizational strengths
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Resources that generate a temporary competitive advantage are
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valuable and rare but not costly to imitate
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If a resource or capability is valuable and rare but not costly to imitate, exploiting this resource will generate a(n)
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temporary competitive advantage
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Resources and capabilities that are valuable, rare, and costly to imitate are best described as
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sustainable distinctive competencies
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If Delta Airlines were to significantly change its fare structure and flight schedule to enhance its competitive position in response to aggressive price cutting by Southwest Airlines, this would be an example of
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competitive dynamics
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Any actions a firm takes that have the effect of reducing the level of rivalry in an industry that also do not require firms in an industry to directly communicate or negotiate with each other can be thought of as
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tacit cooperation
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When tacit cooperation has the effect of reducing supply and increasing prices, it is known as
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tacit collusion
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Tacit cooperation is only a viable strategy when
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there is a strong market share leader in the industry
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The specific actions a firm takes to implement its strategies are known as
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tactics
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Which of the following statements regarding the resource based view is accurate?
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Competitive advantage is too important to remain the sole property of senior management
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Which of the following statements regarding competitive parity and competitive advantage is accurate?
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Some firms develop valuable, rare, and costly-to-imitate resource and capabilities in being efficient second movers-that is, imitating and improving on the product and technological innovations of other firms
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A firm that has a sustained competitive advantage in its domestic market
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can expect that resources that are valuable, rare and costly to imitate in one country may not be valuable, rare and costly to imitate in other countries
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Each of these is one of the three critical determinants of the firm’s ability to develop new resources and capabilities through its international operations except
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having a sustained competitive advantage in its home market
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LaserTech’s new technology appears to be
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valuable, rare and costly to imitate
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If one of LaserTech’s rivals were to decide to divest its industrial laser manufacturing business in response to LaserTech’s new technology this would be an example of
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competitive dynamics
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If LaserTech’s new technological development was due to proprietary investments the company made when it was first founded twenty years ago this would be an example of
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path dependence
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LaserTech’s new technology is an example of
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physical resources
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The inability of rivals to develop or acquire technology similar to that of LaserTech is an illustration of
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resource immobility
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Bates’ culture is an example of a(n)
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informal management control
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The budgeting and reporting activities that Bates uses are examples of
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formal management controls
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The reward system Bates uses to encourage employees to find ways to reduce costs is an example of a(n)
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compensation policy
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The fact that it would be would be difficult and costly for firms to match Bates’ capabilities in the tool industry indicates that these capabilities are
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imperfectly imitable
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It would be costly for competitors to duplicate Bates due to
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path dependence and unique historical conditions

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