All competitive advantages have

a. a limited life.

b. an expiration date.

c. the ability to earn above-average returns indefinitely.

d. the ability to lead to more competitive advantages.

It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the
effects of globalization and

a. the rapid development of the Internet's capabilities.

b. extensive use of outsourcing within the borders of the United States.

c. the declining number of inventions and patents developed by U.S. citizens.

d. the simultaneous erosion of the U.S. work ethic and the U.S. education system.

Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above-
average returns from its core competencies?

a. Core competencies must be acquired.

b. Core competencies must be bundled.

c. Core competencies must be internationalized.

d. Core competencies must be leveraged.

Which of the following is NOT a factor affecting sustainability of a competitive advantage?

a. the availability of substitutes for a firm's core competence

b. the rate at which obsolescence of the core competence occurs because of environmental changes

c. the imitability of a core competence

d. the length of time the core competence has existed

Internal analysis enables a firm to determine what the firm

a. can do.

b. should do.

c. will do.

d. might do.

The proper matching of what a firm can do with what it might do

a. balances the internal characteristics of the firm with the characteristics of the external environment.

b. overcomes the rigidity and inertia resulting from a history of success.

c. yields insights the firm requires to select its strategy.

d. develops core competencies based on human knowledge

The key to achieving competitiveness, earning above-average returns, and remaining ahead of
competitors in the long run is to manage current core competencies

a. in a way that uniquely bundles and leverages the firm's existing resources.

b. while simultaneously developing new ones.

c. and imitate the core competencies of successful competitors.

d. in order to preserve and enhance them against the firm's competitors.

B

Which of the following is NOT a component of internal analysis leading to competitive advantage?

a. tangible and intangible resources

b. analysis of supplier power

c. capabilities

d. core competencies

Value consists of

a. a product's proprietary characteristics and attributes for which customers are willing to pay.

b. a product's performance characteristics and attributes for which customers are willing to pay.

c. a product's proprietary characteristics and attributes for which customers consider paying.

d. a product's performance characteristics and attributes for which customers consider paying.

(BLANK) are the source of a firm's (BLANK which are the source of the firm's (BLANK)

a. Resources; capabilities; core competencies

b. Capabilities; resources; core competencies.

c. Capabilities; resources; above-average returns.

d. Core competencies; resources; competitive advantage/

(BLANK) is measured by a product's performance characteristics and its attributes for which customers
are willing to pay
a. Competitive advantage

b. Profit potential

c. Contribution

d. Value

By emphasizing core competencies when formulating strategies, companies learn to compete primarily
on the basis of

a. intangible resources.

b. their primary activities.

c. firm-specific differences.

d. efficiency of production.

The challenge and difficulty of making effective decisions are implied by preliminary evidence that
(BLANK) of organizational decisions fail.

a. one-fourth

b. one-fifth

c. one-tenth

d. one-half

A decision that results in failure

a. is a career-ending event because it is so unusual.

b. often results from lack of accountability.

c. fosters organizational inertia.

d. allows for learning.

Today, a substantially slimmed-down Polaroid is introducing a number of new products, including GL20
Camera Glasses which have a built-in camera and LCDs. This wave of new product development is
explained by

a. the funds provided by a patent-infringement lawsuit won by Polaroid.

b. weaker competitors in its industry.

c. the learning that occurred from making earlier mistakes.

d. an easing of regulations governing intellectual property protection.

The three conditions that characterize difficult managerial decisions concerning resources, capabilities,
and core competencies are

a. complexity, rarity, and human intellectual capital.

b. uncertainty, complexity, and intraorganizational conflicts.

c. imitability, complexity, and interorganizational conflicts.

d. imitability, comparability, and human intellectual capital.

In the television show Mad Men, Don Draper is in charge of the creative department at an advertising
agency. He appears to spend most of his time drinking and relaxing, but occasionally he has a flash of
insight that leads to a new ad campaign. He provides which valuable intangible resource?

a. trust

b. ideas

c. brand name

d. capacity to innovate
B

Supply and demand impacts the level at which people are paid. If there are few people with a proven
record of using judgment effectively then they will be in high demand and offered high compensation.
CEOs are valued for their judgment as

a. resource allocators.

b. capability counters.

c. strategic leaders.

d. core competency accumulators.

A person who has made a successful decision when no obviously correct model or rule is available or
when relevant data are unreliable or incomplete has exercised

a. foresight.

b. judgment.

c. effective strategic thinking.

d. decisiveness.

One reason executive judgment can be a particularly important source of competitive advantage is that
judgment

a. allows a firm to build a strong reputation.

b. gains the loyalty of shareholders.

c. increases human intellectual capacity.

d. allows for superior bundling of resources.

A
Judgment is the capacity for making a successful decision when

a. there are multiple decision criteria.

b. no obviously correct model or rule is available.

c. cognitive biases create barriers to rationality.

d. there are contradictions between the firm's vision and its implemented strategy

The most numerous of the following organizational characteristics are

a. resources.

b. capacities.

c. capabilities.

d. core competencies

Capabilities typically come from

a. individual resources.

b. one unique resource.

c. several outstanding resources used independently.

d. combining resources.

All of the following are tangible resources EXCEPT

a. production equipment.

b. distribution centers.

c. a firm's reputation.
d. formal reporting structures.

Tangible resources include

a. assets that are people-dependent, such as know-how.

b. assets that can be observed and quantified.

c. organizational culture.

d. a firm's reputation.

Compared to intangible resources, tangible resources are (BLANK) constrained becayse they are (BLANK)
to leverage.

a. less; easier

b. less; harder

c. more; harder

d. more; easier

Compared to tangible resources, intangible resources are

a. of less strategic value to the firm.

b. less likely to be the focus of strategic analysis.

c. a superior source of capabilities.

d. more likely to be reflected on the firm's balance sheet.

Compared to tangible resources, intangible resources are (BLANK) and (BLANK)

a. less visible; more difficult to copy.

b. less visible; less difficult to copy.

c. more visible; more difficult to copy.

d. more visible; less difficult to copy

The critical executive skill of the current business age is the ability to

a. manage technological innovation.

b. manage human intellect.

c. initiate change and overcome inertia.

d. coordinate tangible and intangible resources.

Which of the following is NOT a reputational resource?

a. customer opinion that the firm's products are high quality

b. employees' opinion of the firm as a terrible place to work

c. suppliers' opinion that the firm pays its bills in a timely manner

d. customer opinion that using the firm's products makes them attractive

An investor is considering buying a restaurant that has been in operation for a number of years. The
restaurant has a highly regarded chef, and many long-term kitchen and wait staff who work together
smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere.
What should the investor consider when making a decision?

a. The investor will find that the success of this restaurant is so heavily based on human resources that
the business will likely be subject to inertia in the future.
b. The investor will find that the restaurant's financial statements undervalue the true value of its
resources.

c. The investor should be aware that intangible assets are difficult to leverage into additional business.

d. The investor should search for a firm which has competitive advantages based on tangible resources.

Which of the following is a true statement about capabilities?

a. Capabilities are often developed in specific functional areas such as manufacturing, R&D, and
marketing.

b. Valuable capabilities are based almost entirely on tangible resources.

c. Capabilities based on human capital are more vulnerable to obsolescence than other intangible
capabilities because of the tendency for employee knowledge to become outdated.

d. The link between firm financial performance and capabilities is dependent on whether the capabilities
are based on tangible or intangible resources.

When firms lay off employees, they are

a. treating employees as an intangible resource.

b. recognizing the reduced value of labor in the value chain.

c. eroding the organization's knowledge resources.

d. temporarily sacrificing a tangible asset that is easily replaced.

Because firms combine tangible and intangible resources to create capabilities,

a. these capabilities are fragile and subject to sudden loss of value.

b. capabilities are often based on developing, carrying, and exchanging information and knowledge
through the firm's human capital.

c. capabilities are easily transferred from one firm to another as employees change jobs.

d. these types of capabilities are considered primary activities in the value chain.
B

(BLANK) can be viewed as the capacity to take action.

a. Strategic assets

b. Human capital

c. Core competencies

d. Functional capabilities

(BLANK) is an example of a capability that is based in the functional area of distribution.

a. Effective use of logistics management techniques

b. Effective control of inventories through point-of-purchase data collection

c. Effective organizational structure

d. Product and design quality

Capabilities

a. tend to be developed through firm-wide interactions and reside in the firm as a whole.

b. tend to be concentrated in the support activities of the value chain.

c. tend to be concentrated in the primary activities of the value chain.

d. are often developed in specific functional areas.

Samsung has core competencies in manufacturing its own components and components for other
competitors, which help it to predict future innovations and bring them to market quickly. It is in direct
competition with Apple in the smartphone market. Its competencies allow Samsung to (BLANK) Apple's
innovations.
a. get a first-mover advantage over

b. prevent

c. block

d. imitate

Innovation, consumer understanding, brand-building, go-to-market, and scale are activities that P&G
performs well and are examples of the company's

a. tangible resources.

b. intangible resources.

c. core competencies.

d. capabilities.

To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria
EXCEPT

a. be technologically innovative.

b. be hard for competing firms to duplicate.

c. be without good substitutes.

d. be valuable to customers.

From a customer's point of view, for an organization's capability to be a core competence it must be

a. inimitable and unique.

b. valuable and unique.

c. inimitable and nonsubstitutable.

d. valuable and nonsubstitutable.

Valuable capabilities

a. allow the firm to exploit opportunities in its external environment.

b. allow the firm to neutralize threats in its internal environment.

c. allow the firm to exploit opportunities or neutralize threats in its external environment.

d. allow the firm to neutralize opportunities in its internal environment.

Capabilities that other firms cannot develop easily are classified as

a. costly to imitate.

b. rare.

c. valuable.

d. nonsubstitutable.

A major department store chain has a strict policy of banning photographs or videos of its sales floor or
back-room operations. It also does not allow academics to conduct studies of it for publication in
research journals. In fact, some of its own top managers refer to the management's policies on secrecy
as "verging on paranoid." These policies indicate that the top management of the firm believes the
organization's core competencies are

a. causally ambiguous.

b. unobservable.

c. imitable.

d. common

C
Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many
customers go to the restaurant just for the appetizer, and it was at the center of a recent highly positive
review by a food critic. Preparation involves common ingredients and average culinary skills but requires
a very high oven temperature, which significantly increases utility costs. Several competing restaurants
have since added their own version of the appetizer to their menu. Which criterion for assessing
capabilities/core competencies is met?

a. The restaurant has the capability to develop something that is valuable.

b. The restaurant has the capability to develop something that is rare.

c. The restaurant has the capability to develop something that is costly to imitate.

d. All of these criteria are met.

In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of
capabilities that are

(BLANK) but no longer (RARE)

a. rare; valuable.

b. valuable; rare.

c. socially complex; rare.

d. valuable; causally ambiguous.

The capabilities used to create the sustainability/green initiatives at Walmart and Target are (BLANK) but
less likely to be (BLANK)

a. rare; valuable.

b. valuable; rare.

c. socially complex; rare.

d. valuable; causally ambiguous.

B

Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT

a. lack of scientific transference.

b. social complexity.

c. unique historical conditions.

d. causal ambiguity.

A financial management firm has existed for more than 70 years. Some of its original clients'
grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most
or all of their careers with the firm. Many have even married into each other's families. This firm has
capabilities that would be costly to imitate because of its

a. access to large amounts of financial capital.

b. causally ambiguous core competencies.

c. social complexity.

d. unique historical conditions.

Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways
that other airlines cannot, such as jokes on flights or the cooperation between gate personnel and pilots.
These examples illustrate which of the following criteria for sustainable competitive advantage?

a. valuable

b. rare

c. costly to imitate

d. nonsubstitutable

C
McDonald's culture, with an emphasis on cleanliness, consistency, service, and the training that
reinforces the value of these characteristics, illustrates which of the following criteria for sustainable
competitive advantage?

a. valuable

b. rare

c. costly to imitate

d. nonsubstitutable

Organizational culture is

a. amorphous and changeable.

b. not easily imitable.

c. so difficult to analyze that most firms should choose to ignore it.

d. typically fragile in the face of changes in the external environment.

Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years.
Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has
observed as much of the firm's internal functioning and technology as it can legally, yet Gamma cannot
understand why Ardent has a competitive advantage over it. The source of Ardent's success is

a. impregnable.

b. causally ambiguous.

c. rationally obscure.

d. elusive.

B
If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service,
the firm will

a. achieve competitive parity.

b. have a competitive disadvantage.

c. have a temporary competitive advantage.

d. gain a sustainable competitive advantage.

ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed
circuit-board technology. ACME has protected its market leadership with continued advancements in
this technology, which it patents. A competitor has developed a radio for this market with equal
performance but uses a software-based technology instead of circuit boards. ACME's technology
leadership fails which capability test?

a. the value test

b. the rareness test

c. the substitutability test

d. the costly-to-imitateIt fails all three of these tests

Firms that achieve competitive parity can expect to

a. earn below-average returns.

b. earn average returns.

c. earn above-average returns.

d. initially earn above-average returns, declining to average returns.

A veterinary practice has added a pet boarding and grooming facility. Most of the practice's competitors
also provide these services. The veterinary practice is gaining competitive
a. advantage.

b. parity.

c. disadvantage.

d. neutrality.

A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely
on organically raised chicken and beef, and organic seasonal produce. It has opened new locations in
other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at
best, its competitive advantage will be

a. permanent.

b. sustainable.

c. temporary.

d. defensible.

Value chain activities are

a. the activities most likely to be imitated by competitors.

b. activities or tasks the firm completes in order to produce products and then sell, distribute, and
service those products in ways that create value for customers.

c. the core competencies of the organization.

d. the activities most crucial to implementing the firm's business strategy.

Value chain activities include all of the following EXCEPT

a. supply-chain management.
b. operations.

c. management information systems.

d. distribution.

Examples of support activities include all of the following EXCEPT

a. finance.

b. human resources.

c. follow-up service.

d. management information systems.

Value chain analysis is a tool used to

a. analyze a firm's external environment for value-creating opportunities.

b. analyze a firm's value chain activities and support functions in isolation from its competitors' value
chain.

c. understand the parts of the firm's operation that create value and those that do not.

d. identify the firm's core competencies in each of the primary activities of the firm.

Firms that have strong positive relationships with suppliers and customers are said to have (BLANK) an
essential ingredient to creating value.

a. customer value

b. social capital

c. effective marketing

d. an attractive industry
B

Knowledge transfer and access to resources within the value chain are enhanced by

a. guidelines for sharing knowledge and resources.

b. social capital.

c. penalties for not sharing knowledge and resources.

d. training employees on how to cooperate.

To build social capital whereby resources such as knowledge are transferred across organizations
requires (BLANK) between the parties.

a. a contract

b. determination

c. confidence

d. trust

Outsourcing is the

a. spinning off of a value-creating activity to create a new firm.

b. selling of a value-creating activity to other firms.

c. purchase of a value-creating activity from an external supplier.

d. use of computers to obtain value-creating data from the Internet.

A major reason outsourcing is effective is that

a. it increases the innovative potential of the firm.

b. few firms possess superior capability in all primary and support activities.

c. it permits unlimited access to capital resources.

d. competitors do not have access to the same external sources.

Which of the following is TRUE about outsourcing?

a. Outsourcing allows firms to be more flexible and requires minimal coordination.

b. Outsourcing allows firms to concentrate on those areas in which they can create value.

c. Outsourcing strengthens the creative and innovative functions within the firm.

d. Outsourcing is effective only when it includes all support activities.

A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its
continuing development of innovative toys and games. The company is facing increasing competition on
price, and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST
function this firm should consider outsourcing is

a. operations.

b. research and development.

c. supply-chain management.

d. distribution.

The owner of a store that sells fine-quality fabrics for home seamstresses bemoans the fact that few
young women know how to do fine tailoring, much less simple dressmaking. Many potential customers
are unable to appreciate the premium quality of the fabrics and are deterred by the high prices, as well
as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for
women learning the fine points of sewing, and a reputation for excellent service and technical advice.
Now the store is earning lower-than-average returns. This case is an example of
a. the hazard of competitors being able to imitate a firm's core competency.

b. the need for firms to stick to their core competencies through temporary downturns in market
demand.

c. the lack of intangible resources undermining the core competencies of the firm.

d. core competencies that have become core rigidities.

Which of the following is NOT an external event that reveals the "dark side" of core capabilities?

a. A new competitor figures out a better way to serve the firm's customers.

b. New technologies emerge and replace those used by the firm.

c. A firm changes its focus to a new core competence.

d. Political or social events shift the foundation of current core capabilities.

Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and
skilled employees. For continued long-term success, Acme's owner should

a. concentrate on maintaining Acme's current core competencies.

b. focus on developing Acme's future competitive advantages.

c. place more emphasis on tangible resources, which are less vulnerable to obsolescence than intangible
resources.

d. recognize that core competencies derived from human resources are more subject to becoming core
rigidities than are core competencies based on other types of resources.

Borders had a competitive advantage in physical location. However, Amazon fundamentally changed
customer buying habits, and Borders' competitive advantage became a core

a. stagnation.
b. rigidity.

c. weakness.

d. inefficiency.

All of the following were traditional sources of competitive advantage EXCEPT

a. labor costs.

b. access to financial resources.

c. protected markets.

d. a highly educated labor market.

(BLANK) is the ability to analyze, understand, and manage an internal organization in ways that are not
dependent on the assumptions of a single country, culture, or context.

a. Strategic thinking

b. A global mind-set

c. Profit-pooling

d. Competency-discovering

A product's value is created by each of the following EXCEPT

a. high cost and highly differentiated features.

b. low cost.

c. highly differentiated features.

d. low cost and highly differentiated features.

A
A firm's core competencies, integrated with an understanding of the results of studying the conditions in
the external environment, should

a. guarantee profits.

b. lead to a first-mover advantage.

c. drive the selection of strategies.

d. increase the firm's market share.

All of the following are true about the strategic decisions managers make about their firm's internal
organization EXCEPT that

a. they are directly correlated to executive compensation.

b. they are non-routine.

c. they have ethical implications.

d. they significantly influence the firm's ability to earn above-average returns.

One capability that can be learned from failure is when to

a. repeat with a modification.

b. add more resources.

c. dig in.

d. quit.

Subscriptions to the New York Times have been decreasing as more customers receive their news
through other media. At the same time, advertisers have shifted portions of their spending to other
media. The NYT's managers are making decisions under
a. certainty.

b. uncertainty.

c. intraorganizational conflict.

d. interorganizational conflict.

(BLANK) may exist among managers making decisions as well as among those affected by the decisions.

a. Certainty

b. Simplicity

c. Intraorganizatioinal conflicts

d. Interorganizational conflicts

Amazon is building a new distribution facility in Robbinsville, New Jersey. It is immediately off the exit of
a major road. This is an example of a(n) resource.

a. financial

b. organizational

c. physical

d. technological

The corporate research division of Siemens files, on average, 25 patents a day. The patents are a(n)
(BLANK) resource.

a. financial

b. organizational
c. physical

d. technological

Government agencies are known for having so many layers and rules that decisions are made slowly and
inefficiently. In this case the (BLANK) resource is a detriment to taxpayers using and paying for the
bureaucracy.

a. financial

b. organizational

c. physical

d. technological

A food bank in Florida was struggling to serve its customers. It asked Walmart for help. Walmart sent a
team of managers who reorganized storage and transportation. The food bank was able to increase the
number of clients served by tenfold. Walmart shared its expertise in

a. distribution.

b. human resources.

c. marketing.

d. manufacturing.

Charmed by Claire is a successful retail boutique that sells women's accessories. Claire, the
owner/manager, knows that women have many options when buying jewelry. When customers enter
her store they are greeted by name and given prompt, friendly attention. Customers return to the store
because the service is excellent. Claire says the most important decision she makes is hiring the best
staff because customer service is vital to her business. Customer service is

a. a human resource.

b. an organizational resource.
c. a rare resource.

d. a core competency.

Many firms outsource the payroll function of paying employees to firms such as ADP. Payroll is a(n)

a. value-chain activity.

b. operation function.

c. support function.

d. supply-chain function.

The (BLANK) are those with the potential to be formed into core competencies as the foundation for
creating value.

a. "most" knowledge resources

b. "most" capabilities

c. "right" resources

d. "dark side" resources

Tools such as (BLANK) help the firm focus on its core competencies as the source of its competitive
advantages.

a. marketing

b. manufacturing

c. outsourcing

d. imitation

C
All core competencies have the potential to become core

a. rigidities.

b. stagnations.

c. inefficiencies.

d. weaknesses.

Tools such as (BLANK) help the firm focus on its core competencies as the source of its competitive
advantages.

a. marketing

b. manufacturing

c. outsourcing

d. imitation

QUIZ 1
1 / 1 point
It refers to the complex set of ideologies, symbols, and core values that are shared
throughout the firm and that influence how the firm conducts business.

Answer
Organizational culture
:
1/1
Question 2
point
In the global competitive landscape, there is an increased in blurring of market
boundaries. 

Question options:
Formulation and implementation of superior value-creating strategy only the what the
firm can do will follow. 

Question options:

Competitive Advantage is one of the commitments to achieve above-average

performance and returns. 

Question options:

Hypercompetition describes competition that is excessive such that it creates

inherent instability and necessitates constant disruptive change for the firms in the
competitive landscape. 

Question options:

These are returns in excess of what an investor expects to earn from other investments with
a similar amount of risk.

Answer
Above-average returns
:
0/1
Question 7
point
Generally, suppliers are part in capital market stakeholders. 

Question options:
For traditional competition, increasing importance of knowledge and people is part of
today's competitive market. 

Question options:

It describes competition that is excessive such that it creates inherent instability and
necessitates constant disruptive change for firms in the competitive landscape.

Answer
Hypercompetition
:
1/1
Question 10
point
In Five Forces Model of Competition, strategic decision makers are rational and
engage in profit-maximizing behaviors.
Question options:

In Resource-Based Model assumptions, resource differences among competitors are

short-lived due to resource mobility across firms.
Question options:

Market penetration is included in the firm's strategic choices.  

Question options:
These are capabilities that serve as a source of competitive advantage for a firm over its
rivals.

Answer: Core Competencies

1/1
Question 14
point
It is the full set of commitments, decisions, and actions required for a firm to achieve
strategic competitiveness and earn above-average returns.

Answer: Strategic Management Process

1/1
Question 15
point
It is the capacity for a set of resources to perform a task or an activity in an integrative
manner.

Capabilit
Answer:
y
1/1
Question 16
point
These are inputs into a firm’s production process, such as capital equipment, the skills of
individual and employees, patents, finances, and talented managers.

Answer
Resources
:
1/1
Question 17
point
It is one in which goods, services, people, skills, and ideas move freely across geographic
borders.

Answer
Global Economy
:
1/1
Question 18
point
It is a set of capabilities used to respond to various demands and opportunities existing in a
dynamic and uncertain competitive environment.

Answer
Strategic Flexibility
:
 0/1
Question 19
point
They are groups, individuals, and organizations who are affected by a firm's
performance and who have claims on its performance 

Answer
Primary Stakeholders
:
1/1
Question 20
point
It is achieved when a firm successfully formulates and implements a value creating strategy.

Strategic
Answer:
Competitiveness
1/1
Question 21
point
Risk is an investor’s uncertainty about the economic gains or losses that will result from a
particular investment.
Question options:

In competitive success factors, offering existing products and services will help the
firm become the top performers. 

Question options:

They are the primary customers, suppliers, host communities, and unions. 

Product Market
Answer:
Stakeholders
1/1
Question 24
point
It is an integrated and coordinated set of commitments and actions designed to exploit core
competencies and gain a competitive advantage.
 Answer
Strategy
:
1/1
Question 25
point
These are returns equal to those an investor expects to earn form other investment with a
similar amount of risk.

Answer: Average returns

1/1
Question 26
point
In global competitive landscape, there is a decreased of traditional sources of
competitive advantage.  

Question options:

This is when a firm implements a strategy that creates superior value for customers and that
its competitors are unable to duplicate or find too costly to imitate.

Answer
Competitive Advantage
:
1/1
Question 28
point
It assumes that each organization is a collection of unique resources and capabilities. 

Answer: Resource-Based Model

1/1
Question 29
point
It is an investor’s uncertainty about the economic gains or losses that will result from a
particular investment.

Answer
Risk
:
1/1
Question 30
point
It is a term used to describe how rapidly and consistently new, information-intensive
technologies replace older ones.

Perpetual
Answer:
Innovation
 1/1
Question 31
point
Strategic flexibility requires developing the capacity for continuous learning and
applying the new and updated skills sets and competencies to the firm’s competitive
advantage.
Question options:

In I/O Model above-average returns, the second step to be taken is locate an industry
with high potential for above-average returns.   

Question options:

It is the increasing economic interdependence among countries and their organizations as

reflected in the flow of goods and services.

Globalizatio
Answer:
n
1/1
Question 34
point
It is the basis of technology and its application.

Knowledg
Answer:
e
1/1
Question 35
point
One of the strategic options in hypercompetitive environments is the creation of new
know-how and use of first-mover advantage. 

Question options:

True
False
 0 / 1 point
The value of tangible assets, such as the firm's borrowing capacity and its physical plant, is
high because these assets can be easily leveraged to derive additional value.
Question options:

Technology has made it more difficult for companies to find ways to develop competitive
advantages.

Question options:

Walmart uses core competencies, such as information technology and distribution channels, to
create value for its customers through its "everyday low prices."
Question options:

Which of the following is NOT a factor affecting sustainability of a competitive advantage?

Question options:

f substitutes for a firm's core competence

obsolescence of the core competence occurs because of environmental changes

a core competence

e the core competence has existed

 Firms should seek to continually develop new core competencies because all core
competencies guarantee above-average profit.
Question options:

It is the ability to analyze, understand, and manage an internal organization in ways

that are not dependent on the assumptions of a single country, culture, or context.  

Answer: Global Mind-Set

0/1
Question 7
point
These are capabilities that do not have strategic equivalents. 

Answer
Non-substitutable capabilities
:
1/1
Question 8
point
In today's global economy, some resources that were traditionally critical to firms' efforts to
produce, sell, and distribute goods are now less likely to be a source of competitive
advantage.
Question options:

Tools such as __________ help the firm focus on its core competencies as the source of its
competitive advantages.

Question options:

ng 
 Firms achieve strategic competitiveness and earn above-average returns by acquiring,
bundling, and leveraging their resources for the purpose of taking advantage of opportunities
in the external environment in ways that create value for customers.
Question options:

Firms that achieve competitive parity can expect to:

Question options:

ve-average returns. 

returns. 

ow-average returns. 

y earn above-average returns, declining to average returns.

Include the activities or tasks the firm completes in order to support the work being
done to produce, sell, distribute, and service the products the firm is producing. 

Answer
support functions
:
1/1
Question 13
point
"Motivating, empowering, and retaining employees" is an example of a capability that resides
within the human resources functional area.
Question options:
 It is measured by a product's performance characteristics and by its attributes for
which customers are willing to pay. 

valu
Answer:
e
1/1
Question 15
point
One criterion for a resource or capability to be a source of competitive advantage is that it
must allow the firm to perform a value-creating activity that competitors cannot perform.
Question options:

Capabilities:

Question options:

veloped through firm-wide interactions and reside in the firm as a whole.

ncentrated in the support activities of the value chain

ncentrated in the primary activities of the value chain

eloped in specific functional areas

It is the purchase of a value-creating activity or a support function activity from an

external supplier. 

Outsourcin
Answer:
g
1/1
Question 18
point
 •Firms achieve strategic competitiveness and earn above-average returns when their
core competencies are effectively acquired, bundled, and leveraged.
Question options:

Which of the following is NOT required for a firm to achieve strategic competitiveness and
earn above-average returns from its core competencies?
Question options:

encies must be acquired. 

encies must be bundled.

encies must be internationalized. 

encies must be leveraged. 

Allow the firm to exploit opportunities or neutralize threats in its external

environment. 

valuable
Answer:
capabilities
0/1
Question 21
point
From a customer's point of view, for an organization's capability to be a core competence, it
must be:

Question options:

table and unique.

e and unique.

able and nonsubstitutable.

ble and nonsubstitutable.

 The length of time a firm can expect to create value by using its core competencies is a
function of how quickly competitors can successfully imitate a good, service, or process.  
Question options:

Resources are the source of capabilities, some of which lead to the development of core
competencies.  In turn, some core competencies may lead to a competitive advantage for the
firm.
Question options:

Government agencies are known for having so many layers and rules that decisions are made
slowly and inefficiently.  In this case, the __________ resource is a detriment to taxpayers
using and paying for the bureaucracy.
Question options:

al 

l 

A company can earn above-average returns only when the value it creates is less than the
costs incurred to create that value.
Question options:
 These are assets that are rooted deeply in the firm's history, accumulate over time,
and are relatively difficult for competitors to analyze and imitate. 

Answer
Intangible resources
:
1/1
Question 27
point
These are activities or tasks the firm completes in order to produce products and then
sell, distribute, and service those products in ways that create value for customers. 

Value Chain
Answer:
Activities
1/1
Question 28
point
Which of the following is NOT a component of internal analysis leading to competitive
advantage?
Question options:

d intangible resources

upplier power

encies

These are assets that can be observed and quantified. 

Answer: Tangible resources

1/1
Question 30
point
Valuable capabilities allow the firm to exploit strengths or neutralize weaknesses in the
internal environment.

Question options:
 True
False

The external environment facing business stays relatively constant over time.

(A) True

(B) False

False

Demographic, economic, political/legal, sociocultural, technological, global, and physical are the seven
elements comprising the industry environment.

(A) True

(B) False

True

Firms can directly control the elements of the seven segments of the general environment.

(A) True

(B) False

False
The bankruptcy filings by General Motors and Chrysler Corporation during the Great Recession illustrate
that firms cannot directly control the general environment's segments.

(A) True

(B) False

True

The industry environment directly influences a firm and its competitive actions and responses.

(A) True

(B) False

True

Competitor analysis is focused on the factors and conditions influencing an industry's profitability

potential.

(A) True

(B) False

False

When firms analyze the external environment, they typically have complete and unambiguous data.

(A) True

(B) False

False

Monitoring involves the development of a forecast of what might happen at a future point in time.

(A) True

(B) False

False

Scanning involves detecting meaning through early signals of environmental trends.

(A) True

(B) False

False

When Google studies the internet user privacy policies of various nations, it is engaged in the forecasting
component of the environmental analysis process.

(A) True

(B) False

False

The objective of assessing the external environment is to determine the timing and importance of the
effects of environmental changes and trends on the strategic management of the firm.

(A) True

(B) False

True

Age structure, geographic distribution, income distribution, interest rates, and process innovations are
all elements of concern when studying the demographic segment of the general environment.

(A) True

(B) False

False

00:03

01:35

This Day in History

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In recent times, business leaders have become more confident in the ability of economists to provide
valid and reliable predictions about the world's economic environment.

(A) True
(B) False

False

The legislation introduced in the U.S. Congress during the early tenure of the Obama administration
intended to reduce the amount of work U.S. companies outsource and is an example of a potential
change in the sociocultural segment of the general environment.

(A) True

(B) False

False

Developing a political strategy by the newly formed General Motors would likely be ineffective as firms
are generally unable to influence the political/legal environment.

(A) True

(B) False

False

Early adopters of new technology often achieve higher market shares and higher returns than later
adopters of the technology.

(A) True

(B) False

True

Contrary to popular belief, the global segment of the external environment does not provide many
opportunities for firms that recently experienced low growth and profits coming from emerging
markets.

(A) True

(B) False

False

Globalfocusing is often used by firms with high levels of international operations who further increase
their internationalization by focusing on global niche markets.
(A) True

(B) False

False

Global warming and energy consumption are aspects of the technological environment segment that
firms should monitor.

(A) True

(B) False

False

PepsiCo's strategy called "capital performance with a purpose" links green efforts in businesses

to the bottom line. This is an example of addressing concerns in the physical segment of the general
environment.

(A) True

(B) False

True

The five competitive forces model expands the arena of competitive analysis beyond direct competitors
(i.e., rivals) to include buyers and suppliers who may also be a source of competition.

(A) True

(B) False

True

Switching costs, access to distribution channels, economies of scale, large numbers of competing firms,
and slow industry growth are some of the entry barriers that may affect the threat of new entrants to an
industry.

(A) True

(B) False

False
An example of a government policy barrier to entry would be a scenario in which the Antitrust Division
of the Department of Justice disallows a merger because it creates a firm that is too dominant and
would thus create unfair competition.

(A) True

(B) False

True

Suppliers are powerful when the industry is dominated by a few large companies, no satisfactory
substitutes are available, the selling industry is relatively more concentrated than the purchasing
industry, or switching costs are high.

(A) True

(B) False

True

Exit barriers are especially low in the airline industry because aircrafts are not particularly

specialized and can easily be sold to other airlines, air cargo companies, the military, or even to wealthy
individuals who want to own a private jet.

(A) True

(B) False

True

Generally, industries with stronger competitive forces have higher profit potential.

(A) True

(B) False

False

An attractive industry is one that is characterized by high entry barriers, suppliers and buyers with strong
bargaining power, low threats from substitute products, or low rivalry among firms.

(A) True

(B) False

False
Strategic groups are firms in different industries following the same or similar strategies.

(A) True

(B) False

False

The strengths of the five competitive forces are similar across strategic groups within an industry.

(A) True

(B) False

False

The more distant strategic groups are in terms of their strategies, the greater the likelihood of rivalry
between the groups.

(A) True

(B) False

False

The competitor analysis is the final part of the external environment analysis and focuses on each
company against which a firm directly competes (for example, Coca-Cola and PepsiCo, Home Depot and
Lowe's, and Airbus and Boeing).

(A) True

(B) False

True

The process of competitor analysis should examine the competitors' future objectives, current strategy,
assumptions, and capabilities.

(A) True

(B) False

True
When Delta Air Lines wants to study Continental Airlines, it must examine both Continental and its
complementor, Star Alliance.

(A) True

(B) False

True

Eavesdropping is an ethical way to obtain information about competitors' actions.

(A) True

(B) False

False

Any competitor intelligence practice that is legal is also ethical.

(A) True

(B) False

False

Eavesdropping by the NSA on average Americans is ethical because it is a governmental organization

instead of a for-profit company.

(A) True

(B) False

False

BP, in response to the Deepwater Horizon oil spill, expected increased scrutiny from which of

the following segments of the general environment?

political/legal

Coca-Cola and PepsiCo have been accused of contributing to the obesity problem in the United States.
This accusation comes from the ______segment of the general environment.

sociocultural
Acme Valves, Inc., has been a successful player in the oil field supply industry in the last 15

years. Acme maintained its strategy and product characteristics over this time period. However, the
company has experienced declines in sales and profits over the last four quarters. The CEO of Acme
should

conduct an analysis of the external environment.

The three parts of the external environment that affect a firm's strategic actions are:

general, industry, and competitor.

The ______ environment is composed of dimensions in the broader society that can influence an
industry and the firms within it.

general

The environmental segments that make up the general environment typically will NOT include:

substitute products or services

Which of the following is NOT an activity used in the external environmental analysis process?

decrypting

Environmental scanning would be most important for which of the following organizations?

a web design company catering to a small business

The use of the Internet by Netflix to collect data on customer preferences is an example of:

scanning

When analysts develop feasible projections of future events and how quickly they will occur based on
observed changes and trends, they are: engaged in

forecasting

A general environmental analysis can be expected to produce all of the following EXCEPT
objective answers

In analyzing the demographic segment of the general environment, one typically examines all of the
following factors EXCEPT:

The average age of the population in his community is high.

An analysis of income distribution would include all of the following EXCEPT:

wage differentials between male and female employees working for a large manufacturer

Demographic changes include variations in income distribution. Which of the following

statements is true?

The general loss in real income has been somewhat offset by the increase in dual-career couples.

The Obama administration sought to pursue policies that would:

reduce the amount of work U.S. companies outsource to firms in other nations

An analysis of the economic segment of the external environment would include all of the following
EXCEPT:

income distribution

Characteristics of the current economic segment include all of the following EXCEPT:

a clear understanding of future economic opportunities and threats.

The economic environment refers to:

the nature and direction of the economy in which a firm competes or may compete

Which of the following would NOT be identified in an analysis of the economic portion of the general
environment?

The ability of Ford to issue new debt in light of its recent financial performance
The political/legal segment of an environment represents:

how organizations and governments mutually try to influence each other.

All of the following are aspects of the political/legal segment of the general environment except:

attitudes and values

An analysis of society's attitudes and values would be conducted when studying the ______ segment of
the general environment.

sociocultural

The technological segment of environmental analysis includes:

institutions and activities involved with creating new knowledge and translating that knowledge into
new outputs.

Understanding how new knowledge can develop new products, processes, or materials is a result of
analyzing the ______ segment of the general environment.

technological

The next critical technological opportunity for organizations is predicted to be:

wireless communications

Which of the following would be an example of the application of the next major technological
opportunity for organizations?

SpaceX's reusable space vehicle

The observation that China reached automotive production overcapacity in 2015, and has a glut of extra
cars, is an aspect of the ______ segment of the general environment.

global

Because of threats and risks in the global environment, some firms choose to take a more cautious
approach by:
focusing on global niche markets.

The concepts of Guanxi, Wa, and Inhwa all convey the general idea of:

interpersonal relationships.

Global warming and energy consumption trends are aspects of the ______ segment of the general
environment that firms should monitor.

physical

Green design, sustainable packaging, waste management, and energy efficiency are aspects of the
______ segment of the general environment that companies have sought to address with environmental
sustainability initiatives.

physical

All of the following are examples of efforts by firms to address the physical segment of the general:

increase in hiring of women and minorities at Microsoft.

One popular approach to taking care of the physical environment is:

producing and selling additional green products.

An industry is defined as:

a group of firms producing products that are close substitutes.

The likelihood of entry of new competitors is affected by ______ and ______.

barriers to entry; expected retaliation of current industry organizations

Which of the following is NOT an entry barrier to an industry?

Bargaining power of suppliers

New entrants to an industry are more likely when:

product differentiation in the industry is low.

Economies of scale refers to the fact that as the:

quantity of product produced in a given time period increases, the cost of manufacturing each unit
decreases.

The large amount of advertising by firms such as Procter & Gamble and Colgate-Palmolive is an example
of what kind of barrier to entry?

Product differentiation

Product differentiation refers to the:

belief by customers that a product is unique.

When consumers change mobile phone and data service providers, they may be required to maintain
service with the provider for a specified time period. This is an example of a:

one-time cost customers incur when buying from a different supplier.

Customer loyalty programs such as airline frequent-flyer miles are an attempt to:

increase customers' switching costs.

As customers come to believe that a firm's product is unique, this allows the firm to:

obtain loyal customers.

DWK Foods has developed a line of cookies and candies sweetened exclusively with organic honey.
Although DWK is selling some of the products over the Internet, in order to gain economies of scale the
products must be sold in retail outlets as well. The main barrier to entry DWK is likely to encounter here
is:

access to distribution channels.

For a restaurant business dependent on drive-thru customers, the major cost disadvantage independent
of scale would be if:
favorable locations are not available.

The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this
marble, and this marble only, for the project. Which of the following statements is most likely to be
true?

The cost of the marble will be expensive because of the bargaining power of the supplier.

Suppliers are powerful when:

they offer a credible threat of forward integration

How is consolidation among fuel providers serving airport facilities viewed in the five forces model of
competition?

As an increase in the bargaining power of suppliers of a critical input.

Blood banks are highly dependent on donors. In the terminology of industry analysis, which statement
about donors is accurate?

Blood donors are suppliers and are powerful because of the critical nature of what they provide to the
blood bank.

The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus.
The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from
airlines. What effect will these conditions have on the domestic airline industry?

It will make the airline industry more attractive because of decreased supplier power.

Golden Lotus, an exercise club targeting healthy individuals over 50, is located in a fast-growing city in
the Southwest. Which of the following factors that may have an effect on the success of Golden Lotus is
the most directly controllable by the company?

The power of the customers/buyers

Buyers are powerful when:

switching costs are low.

The highest amount a firm can charge for its products is most directly affected by:

the cost of substitute products.

The threat from substitutes is high when:

the substitute product's price is lower than the industry product's price.

Media content has moved from paper, tape, and film to a digital world based on Internet

technology. From the perspective of the five forces model, which force is most relevant here?

Substitutes

All of the following are forces that create high rivalry within an industry EXCEPT:

fast industry growth.

High-level maintenance on aircraft is performed by the manufacturer. This service after the sale means
that in the aircraft industry:

the competitive rivalry in the industry is severe.

A manufacturer of washing machines has expanded its plant and has created excess capacity,

just as the general economy has taken a downturn. The company is likely to:

offer rebates and incentives for customers who purchase washing machines.

When rival firms compete aggressively by trying to attract competitors' customers, this might be an
indication of:

slow industry growth.

Mighty Green, a residential lawn chemical manufacturer, is committed to gaining market share in its
industry. Mighty Green:

is likely to raise the level of competitive rivalry in the industry.

Which of the following explains, in part, why rivalry among McDonald's, Wendy's, and Burger King is
intense?

These companies are trying to find ways to differentiate their products.

Exit barriers to a firm include all of the following EXCEPT:

generic assets.

An owner of a stable of racehorses has been earning below-average returns for more than 15 years. To a
colleague, he expressed his determination to stay in horse racing until he died because "racing is in my
blood." This individual is probably still racing horses because of:

high barriers to exit.

According to the five forces model, an attractive industry would have all of the following characteristics
EXCEPT:

low barriers to entry.

According to the five forces model, an unattractive industry would include all of the following
characteristics EXCEPT:

low supplier power due to commodity inputs.

The competition within each strategic group is:

more intense than the competition between strategic groups.

Firms within strategic groups:

follow similar strategies across certain dimensions.

All of the following are implications of strategic groups EXCEPT:

the strength of the five forces is the same across strategic groups.

Competitor analysis focuses on:

firms with which the company competes directly.

Which of the following pairs of companies would be least likely to be examined together as part of
competitive analysis?

Netflix and Microsoft

Competitor intelligence is:

the data that the firm gathers to understand competitors' objectives, strategies, assumptions, and
capabilities.

Once a firm has determined its competitors' future objectives, current strategy, assumptions, and
strengths and weaknesses, its next step is to develop:

a response profile.

A competitor analysis includes all of the following about competitors EXCEPT:

traditions.

All of the following are ethical sources of data for external analysis EXCEPT:

a competitor's confidential memos.

Competitor intelligence could ethically come from all of the following EXCEPT:

eavesdropping.

Which of the following represents a competitive intelligence practice that is both legal and

ethical?

An executive attends a trade show solely to obtain a competitor's brochures, listen to sales pitches, and
ask questions about the competitor's products.

Which of the following intelligence-gathering techniques is most likely to be legal and ethical?

Attending trade show presentations given by a competitor's employees

The U.S. Hispanic market is the third-largest "Latin American" economy behind Brazil and Mexico. This
impacts the ______ aspect of demographic segment analysis.

ethnic mix

New Jersey and New York have the highest state taxes in the United States. They also have high ratios of
people moving out compared to people moving into the state. This impacts the ______ aspect of
demographic analysis.

geographic distribution

The communications industry is broadly defined as encompassing all of the following EXCEPT:

book retailers.

The Department of Defense buys aircraft from U.S. companies for national security reasons. This is an
example of a ______ barrier to entry.

government policy

After Amazon lowered the price on its tablets, Samsung eventually lowered the price on its

tablets. Samsung needed to do this because:

it is in the same strategic group.

Applications developed for iPhones make the phone more valuable to iPhone users. App developers are
______ to Apple.

complementors

Counterfeiting goods and exporting them from China is:

unethical and illegal.