BPL 5100 CHAPTER 3 1) CAPABILITIES ARE A SUBSET OF A FIRM’S RESOURCES AND ARE DEFINED AS TANGIBLE

BPL 5100 chapter 3

Chapter 3 

1) Capabilities 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.

Answer:

Diff: 1

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

2) Resources in the resource based view are defined as the tangible and intangible assets that a firm controls, which it can use to conceive and implement its strategies.

Answer:

Diff: 1

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

3) Financial resources include only the profits a firm has made earlier in its history and that it has reinvested in itself.

Answer:

Diff: 2

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

4) Organizational resources include the training, experience, judgment, intelligence, relationships and insight of individual managers and workers in a firm, while human resources are an attribute of collections of individuals.

Answer:

Diff: 2

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

5) One of the key assumptions of the RBV is resource homogeneity.

Answer:

Diff: 2

Learning Obj.:  3.1: Describe the Critical Assumptions of the Resource-Based View

AACSB:  Analytical Thinking

6) The assumption of resource immobility holds that it may be very costly for firms without certain resources and capabilities to develop or acquire them.

Answer:

Diff: 2

Learning Obj.:  3.1: Describe the Critical Assumptions of the Resource-Based View

AACSB:  Analytical Thinking

7) Inputs whose quantity of supply is fixed and whose demand does not respond to price increases are said to be elastic in supply.

Answer:

Diff: 2

Learning Obj.:  3.1: Describe the Critical Assumptions of the Resource-Based View

AACSB:  Analytical Thinking

8) A firm’s plant and equipment, its geographic location and its access to raw materials are all examples of physical resources.

Answer:

Diff: 1

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

9) In the VRIO framework, the R represents resources.

Answer:

Diff: 2

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

10) Within the VRIO framework, valuable resources and capabilities are also known as strengths.

Answer:

Diff: 1

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

11) Within the VRIO framework, resources and capabilities that are not valuable are also known as weaknesses.

Answer:

Diff: 1

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

12) In general, firms that use their resources and capabilities to exploit opportunities or neutralize threats will see no increase in their net revenues nor a decrease in their net costs compared to the situation where they are not using these resources and capabilities to exploit opportunities or neutralize threats.

Answer:

Diff: 2

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

13) Many firms have resources and capabilities that are used to neutralize threats and the use of these resources enables the firms to increase their net revenues.

Answer:

Diff: 2

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

14) Studying a firm’s value chain forces us to think about firm resources in an aggregated way.

Answer:

Diff: 2

Learning Obj.:  3.4: Apply Value Chain Analysis to Identify a Firm’s Valuable Resources and Capabilities

AACSB:  Analytical Thinking

15) If a firm creates environmental pollution in the process of manufacturing its goods, the pollution is known as an externality.

Answer:

Diff: 2

Learning Obj.:  3.4: Apply Value Chain Analysis to Identify a Firm’s Valuable Resources and Capabilities

AACSB:  Analytical Thinking

16) The value chain model developed by McKinsey and Company divides value-creating activities into two large categories: primary activities and secondary activities.

Answer:

Diff: 2

Learning Obj.:  3.4: Apply Value Chain Analysis to Identify a Firm’s Valuable Resources and Capabilities

AACSB:  Analytical Thinking

17) A resource can be a source of competitive advantage even if the resource is controlled by numerous firms.

Answer:

Diff: 3

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

18) Most firms have a resource base that is composed primarily of valuable but common resources and capabilities, some of which are essential if a firm is to gain competitive parity.

Answer:

Diff: 2

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

19) 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 rare and a potential source of competitive advantage.

Answer:

Diff: 2

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

20) When firms without a resource or capability face a cost disadvantage in obtaining or developing it compared to firms that already possess it, this resource or capability is described as perfectly imitable.

Answer:

Diff: 3

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

21) A sustained competitive advantage can be competed away by strategic imitation if competing firms face an important cost disadvantage in duplicating a successful firm’s valuable resources.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

22) In general, imitation can occur in one of two ways: direct duplication or substitution.

Answer:

Diff: 1

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

23) The ability of firms to acquire, develop, and use resources often depends upon their place in time and space, and firms that do not have space-and-time-dependent resources face a significant cost disadvantage in obtaining and developing them.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

24) A process is said to be path dependent when imitating firms are not able to understand the relationship between the resources and capabilities controlled by a firm and that firm’s competitive advantage.

Answer:

Diff: 3

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

25) The interpersonal relations among managers in a firm, a firm’s culture, and a firm’s reputation among suppliers and customers can all act to make a firm’s resources and capabilities socially complex.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

26) Whenever the sources for competitive advantage are widely diffused across people, locations, and processes in a firm, those sources will be costly to imitate.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

27) Most technological developments in an industry are diffused throughout firms in that industry in a relatively brief period of time, but only if the technology in question has not been patented.

Answer:

Diff: 3

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

28) A firm’s formal reporting structure is a description of who in an organization reports to whom and is often embedded in a firm’s organizational chart.

Answer:

Diff: 1

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

29) For Southwest Airlines, competitive advantage falls into two big categories: financial decisions made by Southwest and Southwest’s approach to managing people.

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

30) Compensation policies are the ways that firms pay employees, and such policies create incentives for employees to behave in certain ways.

Answer:

Diff: 1

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

31) If a resource or capability is valuable and rare but not costly to imitate, exploiting this resource will generate a sustainable competitive advantage for a firm.

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

32) Decisions made by other firms given the strategic choices of a particular firm define the nature of the competitive dynamics that exist in an industry.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

33) One reason a firm may not respond to another firm’s competitive advantage is because it does not have the resources or capabilities to do so.

Answer:

Diff: 1

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking
34) Any actions that 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 negotiate with each other can be thought of as explicit cooperation.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

35) When tacit cooperation has the effect of reducing supply and increasing prices, it is known as tacit collusion.

Answer:

Diff: 1

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

36) Tacit cooperation is only a viable strategy when an industry is perfectly competitive.

Answer:

Diff: 3

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

37) In the end, competitive advantage is so important to a firm’s success, it must remain the sole property of senior management.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

38) If there is a conflict between the resources a firm controls and the firm’s organization, the resources should be changed.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

39) If all a firm does is create value in the same way as its competitors, the best performance it can ever expect to gain is competitive parity.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

40) ________ in the RBV are defined as the tangible and intangible assets that a firm controls that it can use to conceive and implement its strategies.

A) Management controls

B) Capabilities

C) Resources

D) Compensation policies

Answer:

Diff: 1

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

41) ________ 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.

A) Retained earnings

B) Capabilities

C) Human resources

D) Financial resources

Answer:

Diff: 2

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

42) A firm’s marketing skills and teamwork as well as its cooperation among managers are examples of

A) financial resources.

B) human resources.

C) physical resources.

D) capabilities.

Answer:

Diff: 2

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

43) The training, experience, judgment, intelligence, relationships and insight of individual managers and workers in a firm are examples of

A) physical resources.

B) human resources.

C) organizational resources.

D) financial resources.

Answer:

Diff: 2

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking
44) Computer hardware and software technology, robots used in manufacturing and automated warehouses are examples of which type of resources?

A) financial resources

B) physical resources

C) human resources

D) organizational resources

Answer:

Diff: 2

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

45) A firm’s formal reporting structure, its formal and informal planning and its controlling and coordinating systems are examples of which type of resources?

A) financial resources

B) physical resources

C) human resources

D) organizational resources

Answer:

Diff: 2

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Analytical Thinking

46) The VRIO assumption that some of the resource and capability differences among firms may be long lasting because it may be very costly for firms without certain resources and capabilities to develop or acquire them is known as

A) resource mobility.

B) resource homogeneity.

C) resource immobility.

D) resource heterogeneity.

Answer:

Diff: 2

Learning Obj.:  3.1: Describe the Critical Assumptions of the Resource-Based View

AACSB:  Analytical Thinking

47) ________ implies that for a given business activity, some firms may be more skilled in accomplishing this activity than other firms.

A) Resource mobility

B) Resource homogeneity

C) Resource immobility

D) Resource heterogeneity

Answer:

Diff: 2

Learning Obj.:  3.1: Describe the Critical Assumptions of the Resource-Based View

AACSB:  Analytical Thinking
48) The theoretical roots of the resource-based view can be traced to research done by

A) David Ricardo.

B) Adam Smith.

C) Oliver Williamson.

D) Joseph Schumpeter.

Answer:

Diff: 1

Learning Obj.:  3.1: Describe the Critical Assumptions of the Resource-Based View

AACSB:  Analytical Thinking

49) Inputs whose quantity of supply is fixed and does not respond to price increases are said to be

A) elastic in supply.

B) inelastic in supply.

C) elastic in demand.

D) perfectly competitive.

Answer:

Diff: 2

Learning Obj.:  3.1: Describe the Critical Assumptions of the Resource-Based View

AACSB:  Analytical Thinking

50) 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

A) temporary competitive advantages.

B) sustainable competitive advantages.

C) core competencies.

D) strengths.

Answer:

Diff: 2

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

51) The set of business activities in which a firm engages to develop, produce, and market its products or services is known as its

A) value chain.

B) physical resources.

C) organizational resources.

D) human resources.

Answer:

Diff: 2

Learning Obj.:  3.4: Apply Value Chain Analysis to Identify a Firm’s Valuable Resources and Capabilities

AACSB:  Analytical Thinking
52) 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)

A) capability.

B) externality.

C) competitive advantage.

D) weakness.

Answer:

Diff: 2

Learning Obj.:  3.4: Apply Value Chain Analysis to Identify a Firm’s Valuable Resources and Capabilities

AACSB:  Analytical Thinking

53) 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?

A) organization

B) imitability

C) competitive parity

D) rarity

Answer:

Diff: 3

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Application of Knowledge

54) Most firms have a resource base that is composed primarily of resources and capabilities that are

A) valuable but not rare.

B) neither valuable nor rare.

C) valuable and rare.

D) rare but not valuable.

Answer:

Diff: 2

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

55) Which of the following is not one of the six distinct activities in McKinsey and Company’s value chain model?

A) technology development

B) product design

C) manufacturing

D) inbound logistics

Answer:

Diff: 2

Learning Obj.:  3.4: Apply Value Chain Analysis to Identify a Firm’s Valuable Resources and Capabilities

AACSB:  Analytical Thinking

56) 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.

A) valuable

B) rare

C) inimitable

D) un-substitutable

Answer:

Diff: 2

Learning Obj.:  3.3: Apply the VRIO Framework to Identify the Competitive Implications of a Firm’s Resources and Capabilities

AACSB:  Analytical Thinking

57) If firms that do not possess valuable and rare resources 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

A) rare.

B) valuable.

C) imperfectly imitable.

D) perfectly imitable.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

58) Firms that possess and exploit costly-to-imitate, rare and valuable resources in choosing and implementing their strategies may enjoy a period of

A) temporary competitive advantage.

B) competitive disadvantage.

C) competitive parity.

D) sustained competitive advantage.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

59) 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

A) path dependence.

B) causal ambiguity.

C) unique historical conditions.

D) social complexity.

Answer:

Diff: 3

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

60) Resources and capabilities, such as interpersonal 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

A) socially complex.

B) causally ambiguous.

C) path dependent.

D) the result of unique historical conditions.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

61) According to the research in strategic human resources management,

A) 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.

B) firms that are able to use human resource practices to develop socially simplistic human and organizational resources are able to gain competitive advantage over firms that do not engage in these practices.

C) firms that are able to use human resource practices to develop socially complex human and organizational resources gain little advantage over firms that do not engage in these practices.

D) firms that are able to use human resource practices to develop socially complex human and organizational resources are at a competitive disadvantage when compared to firms that do not engage in these practices.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

62) Which of the following statements regarding patents is accurate?

A) Patents always increase the costs of imitation.

B) Patents may decrease, rather than increase, the costs of imitation.

C) Patents always decrease the costs of imitation.

D) Patents have no impact on the costs of imitation.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

63) 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

A) formal reporting structures.

B) organizational charts.

C) compensation policies.

D) management control systems.

Answer:

Diff: 1

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

64) Which of the following is an example of formal management controls?

A) a firm’s culture

B) the willingness of employees to monitor each other

C) budgeting and reporting activities

D) managerial motivation

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

65) 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)

A) informal management control.

B) formal management control.

C) compensation policy.

D) formal reporting structure.

Answer:

Diff: 3

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Application of Knowledge

66) Resources that are valuable but not rare can be categorized as

A) organizational weaknesses.

B) distinctive competencies.

C) organizational strengths.

D) complementary resources and capabilities.

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

67) Resources that generate a temporary competitive advantage are

A) valuable, rare and costly to imitate.

B) valuable but neither rare nor costly to imitate.

C) valuable and either rare or costly to imitate.

D) valuable and rare but not costly to imitate.

Answer:

Diff: 3

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

68) If a resource or capability is valuable and rare but not costly to imitate, exploiting this resource will generate a(n)

A) sustained competitive advantage.

B) perfectly competitive environment.

C) temporary competitive advantage.

D) environment characterized by competitive parity.

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

69) Resources and capabilities that are valuable, rare, and costly to imitate are best described as

A) distinctive competencies.

B) entry barriers.

C) complementary resources and capabilities.

D) sustainable distinctive competencies.

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Analytical Thinking

70) 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

A) explicit collusion.

B) tacit collusion.

C) competitive dynamics.

D) a harvest strategy.

Answer:

Diff: 3

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Application of Knowledge

71) 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

A) tacit cooperation.

B) tacit collusion.

C) explicit collusion.

D) competitive parity.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

72) When tacit cooperation has the effect of reducing supply and increasing prices, it is known as

A) monopolistic competition.

B) explicit collusion.

C) competitive parity.

D) tacit collusion.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

73) Tacit cooperation is only a viable strategy when

A) an industry is perfectly competitive.

B) an industry is heterogeneous with respect to the products it sells and their cost structure.

C) there is a strong market share leader in the industry.

D) there are low entry barriers in the industry.

Answer:

Diff: 3

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

74) The specific actions a firm takes to implement its strategies are known as

A) competitive advantages.

B) objectives.

C) goals.

D) tactics.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

75) Which of the following statements regarding the resource-based view is accurate?

A) Competitively valuable resources and capabilities are controlled only by a firm’s general managers.

B) Only lower level employees need to accept the responsibility of creating, nurturing and exploiting resources and capabilities that can generate competitive advantages for a firm.

C) Employees should define their jobs in functional terms instead of in competitive and economic terms.

D) Competitive advantage is too important to remain the sole property of senior management.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

76) Which of the following statements regarding competitive parity and competitive advantage is accurate?

A) Some firms develop valuable, rare, and costly-to-imitate resources and capabilities in being efficient second movers, that is, in rapidly imitating and improving on the product and technological innovations of other firms.

B) Firms that benchmark their performance against the performance of successful competitors can expect to develop at least a temporary competitive advantage.

C) Firms must be first movers to gain competitive advantages.

D) Even if all a firm does is create value in the same way as its competitors, the firm can expect to earn at least a temporary competitive advantage.

Answer:

Diff: 3

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

77) If there is a conflict between the resources a firm controls and that firm’s organization, ________ should be changed.

A) the resources

B) both

C) nothing

D) the organization

Answer:

Diff: 3

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Analytical Thinking

78) A process is said to be ________ when events early in the evolution of a process have significant effects on subsequent events.

A) causally ambiguous

B) path dependent

C) socially complex

D) path independent

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Analytical Thinking

LaserTech is a manufacturer of industrial lasers and has developed a new, patented technology that allows its customers to manufacture their products more precisely with a higher level of consistency and at a lower cost than they could previously. LaserTech’s executives believe that no rivals have a similar technology and that it would be very difficult for rivals to copy this technology since the benefits of the new technology can only be realized within LaserTech’s system, which includes processes that are protected by trade secrets, making it difficult for rivals to understand the relationship between the company’s new technology and its competitive advantage.

79) LaserTech’s new technology appears to be

A) valuable and rare but not costly to imitate.

B) valuable and either rare or costly to imitate.

C) valuable but neither rare nor costly to imitate.

D) valuable, rare and costly to imitate.

Answer:

Diff: 2

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Application of Knowledge

80) 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

A) competitive dynamics.

B) tacit collusion.

C) a sustainable distinctive competence.

D) competitive parity.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Application of Knowledge

81) If LaserTech’s new technological development were due to proprietary investments the company made when it was first founded twenty years ago, this would be an example of

A) social complexity.

B) tacit collusion.

C) path dependence.

D) causal ambiguity.

Answer:

Diff: 2

Learning Obj.:  3.7: Discuss How the Decision of Whether to Imitate a Firm with a Competitive Advantage Affects the Competitive Dynamics in an Industry

AACSB:  Application of Knowledge

82) LaserTech’s new technology is an example of

A) financial resources.

B) physical resources.

C) human resources.

D) organizational resources.

Answer:

Diff: 1

Learning Obj.:  3.2: Describe Four Types of Resources and Capabilities

AACSB:  Application of Knowledge

83) The inability of rivals to develop or acquire technology similar to that of LaserTech is an illustration of

A) resource immobility.

B) resource heterogeneity.

C) causal ambiguity.

D) path dependence.

Answer:

Diff: 3

Learning Obj.:  3.1: Describe the Critical Assumptions of the Resource-Based View

AACSB:  Application of Knowledge

The Bates Company has been producing tools for over fifty years. In that time the company has been acknowledged as a producer of high quality tools at a reasonable price. Bates’ competitive prices can be attributed to three factors. First, the company recognized early in its development that tools made from specific blends of various types of metal were less costly to produce and had superior performance compared to traditional metals. Accordingly, Bates made investments in developing tools made for specialty metals long before other competitors and has made a series of investments over its operating history that have put it far ahead of its competitors in terms of product development. Industry analysts believe that based on these investments it would be difficult and extremely costly, if it were even possible, for rivals to catch up with Bates. Second, in recognizing the importance of certain metals, Bates was able to sign long-term contracts with suppliers of the metals that have provided Bates with a lasting cost advantage. Finally, Bates maintains its cost advantages by using a thorough budgeting and reporting system that allows it to closely control costs, and these systems are supported by a frugal company culture and financial incentives that reward employees for finding ways to save money throughout the company.

84) Bates’ culture is an example of a(n)

A) informal management control.

B) formal management control.

C) compensation policy.

D) formal reporting structure.

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Application of Knowledge

85) The budgeting and reporting activities that Bates uses are examples of

A) informal management controls.

B) formal reporting structures.

C) formal management controls.

D) primary value chain activities.

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Application of Knowledge
86) The reward system Bates uses to encourage employees to find ways to reduce costs is an example of a(n)

A) sustained distinctive competence.

B) informal management control.

C) formal reporting structure.

D) compensation policy.

Answer:

Diff: 2

Learning Obj.:  3.6: Describe How a Firm Uses Its Structure, Formal and Informal Control Processes, and Compensation Policy to Exploit Its Resources

AACSB:  Application of Knowledge

87) 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

A) imperfectly imitable.

B) causally ambiguous.

C) substitutable.

D) perfectly imitable.

Answer:

Diff: 3

Learning Obj.:  3.5: Describe the Kinds of Resources and Capabilities that are Likely to be Costly to Imitate

AACSB:  Application of Knowledge

88) It would be costly for competitors to duplicate Bates due to

A) path dependence and causal ambiguity.

B) causal ambiguity and unique historical conditions.

C) path dependence and unique historical conditions.

D) causal ambiguity and patents.

Answer:

89) Describe the difference between resources and capabilities.

Answer:

90) Identify the four broad categories that a firm’s resources and capabilities can be classified into.

Answer:

91) Identify and describe the two fundamental assumptions about the resources and capabilities that firms may control that the RBV rests on.

Answer:

92) Identify the four questions represented in the VRIO framework that one must ask about a resource or capability to determine its competitive potential.

Answer:

93) Define the concept of a value chain.

Answer:

94) Discuss whether a firm must be must be the only one to possess a valuable resource or capability in order for the firm to benefit from the resource or capability’s rarity or if other firms may own it as well.

Answer:

95) Identify two forms of imitation and describe four sources of costly imitation.

Answer:

96) Identify four components of a firm’s organization that are relevant to the question of organization and discuss what role they play in building a competitive advantage.

Answer:

97) Discuss the questions underlying the VRIO framework and use these questions to differentiate between a simple distinctive competence and a sustained distinctive competence.

98) Define the nature of competitive dynamics and identify three reasons why a firm might not respond to another firm’s competitive advantage.

Answer: