0.0 Potential exam questions

Question 1

Describe the concept of sustainable competitive advantage.

Answer 1

Sustainable competitive advantage is when a firm alone implements a value-creating strategy that results in cost or differentiation advantages that other firms cannot imitate or duplicate.

Question 2

Explain the relationship between innovation and sustainable competitive advantage.

Answer 2

Innovation drives competitive advantage by creating unique offerings and higher value for buyers, while sustainable competitive advantage relies on ongoing innovation to adapt and stay ahead in the market.

Question 3

Define innovation.

Answer 3

Innovation is the “new combination” of resources and the process of converting ideas into cash, involving production, marketing, and profiting from new ideas.

Question 4

How can you protect an innovative product from being copied by competitors?

Answer 4

One way to protect an innovative product is by establishing strong resource position barriers, such as intellectual property (IP).

Question 5

Compare entry barriers and resource position barriers.

Answer 5

Entry barriers are factors new entrants face when trying to enter a market, including economies of scale, product differentiation, and legal policies. Resource position barriers are advantages gained through control or access to strategic resources that are difficult and costly for competitors to replicate.

Question 6

What happens if a firm has an entry barrier but no resource position barrier?

Answer 6

If a firm has an entry barrier but no resource position barrier, competitors may still replicate the firm’s strategic resources, reducing its competitive advantage.

Question 7

Name the three criteria of an innovation.

Answer 7

The three criteria of an innovation are:

1. It must be new or novel.
2. It must create value.
3. It must be feasible to implement.

Question 8

Why do new entrants in the most attractive markets have 30% lower returns compared to other industries? Name the three reasons.

Answer 8

The three reasons are:

1. Higher competition in attractive markets.
2. Increased costs associated with entering a competitive market.
3. Market saturation reducing profit margins.

Question 9

Outline the three approaches Bryce & Dyer (2007) propose for new entrants to break into profitable markets.

Answer 9

Bryce & Dyer (2007) propose:

1. Innovating to create a niche market.
2. Leveraging unique resources or capabilities.
3. Forming strategic alliances or partnerships.

Question 10

Name and define the two types of innovation.

Answer 10

The two types of innovation are:

1. Incremental Innovation:
   Small, continuous improvements to existing products or processes.
2. Radical Innovation:
   Significant breakthroughs that create entirely new markets or change existing ones.

Question 11

How can a weakness of a firm also be its resource? Explain with an example.

Answer 11

A firm’s weakness, such as limited financial resources, can be a resource by forcing the development of highly skilled employees. For example, a small firm may lack state-of-the-art machinery but have highly skilled employees who efficiently use existing equipment.

Question 12

Name and explain two reasons why a firm resource can be imperfectly imitable.

Answer 12

Two reasons are:

1. Unique historical conditions: Resources developed over time in unique circumstances are hard to replicate.
2. Causal ambiguity: Competitors cannot easily identify the exact source of a firm’s competitive advantage.

Question 13

How can strategies be derived from a SWOT analysis?

Answer 13

Strategies can be derived by leveraging strengths to capitalize on opportunities, addressing weaknesses to mitigate threats, and using strengths to defend against threats.