MGNT 428 Ch.4 Quiz – Flashcards
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In the context of the VRIO framework, a resource is said to be valuable if it:
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allows a firm to take advantage of an external opportunity
(A resource is valuable if it helps a firm increase the perceived value of its product or service in the eyes of consumers, either by adding attractive features or by lowering price because the resource helps the firm lower its costs)
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Onivo Auto Inc. has been the leader in low-cost and fuel-efficient technology for many years. It has been able to sustain its competitive advantage primarily because of its highly efficient automobile engines, which competitors have been unable to develop or buy at a reasonable price. In the context of the VRIO framework, which of the following resource attributes most likely underpins Onivo's competitive advantage?
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The resource is costly to imitate.
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In a perfectly competitive industry structure:
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any competitive advantage that one firm has will be short-lived
(in perfect competition, all firms have access to the same resources and capabilities)
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While most of Couture Inc.'s competitors were moving toward developing and emerging markets, Couture Inc. decided to keep its operations
limited to its home country so that it could gain some advantage. A few years later, however, Couture Inc. lost its footing in the home market
due to a sharp fall in demand. It then decided to invest in large scale operations in the same developing nations as its competitors, within a
short period of six months. However, its costs kept increasing and it could not compete against the already established brands. In this
scenario, the failure of Couture Inc. can be best attributed to _____.
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time compression diseconomies
(This failure of Couture Inc. can be best attributed to time compression diseconomies. When attempting to compress lots of effort and resources such as research and development into a short time period, it will not be as effective as when a firm spreads out its effort and investments over a longer period of time. Trying to achieve the same outcome in a short time period, even with higher investments tends to lead to inferior results. )
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Leather Love Inc. manufactures shoes. From procuring the leather to servicing the customer at the store, the cost incurred by the company
per pair of shoes is estimated to be approximately $100. However, with each step in the value chain, the value of the product also increases.
Thus, Leather Love can sell a pair of shoes costing $100 at $130. In this scenario, the difference between the value and the cost is best
termed as the _____.
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Economic contribution.
(In this scenario, the difference between the value and the cost is best termed as the economic contribution. A careful analysis of the value chain allows managers to obtain a more detailed and fine-grained understanding of how the firm's economic contribution (V - C) breaks down into a distinct set of activities that help determine perceived value (V) and the costs (C) to create it. )
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Using the _____, managers can see how competitive advantage flows from a firm's distinct set of activities.
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value chain analysis
(Although the resource-based view of the firm helps to identify the integrated set of resources and capabilities that are the building blocks of core competencies, the value chain perspective enables managers to see how competitive advantage flows from the firm's distinct set of activities. )
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According to the value chain analysis, which of the following is a support activity?
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Research and development.
(According to the value chain analysis, research and development is a support activity. Support activities add value indirectly. These activities—such as research and development (R&D), information systems, human resources, accounting and finance, and firm infrastructure including processes, policies, and procedures—support each of the primary activities. )
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In the context of SWOT analysis, a firm can develop a defensive strategic option primarily by:
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eliminating an internal weakness to mitigate an external threat.
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In the context of the SWOT matrix, which of the following best exemplifies an external opportunity for a firm?
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Decreasing government interference in the target market
(Decreasing government interference in the target market best exemplifies an external opportunity for a firm. Strengths and weaknesses are internal to an organization, whereas opportunities and threats are external to the organization. )
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A firm's _____ are best described as distinct and fine-grained business processes such as order taking, physical delivery of products, or
invoicing customers.
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activities
(Activities are distinct and fine-grained business processes such as order taking, physical delivery of products, or invoicing customers. Each distinct activity enables firms to add incremental value by transforming inputs into goods and services. )
