3. The Internal Organization

Question 1

Resources are a foundation for ______.

Answer 1

strategy

Question 2

Unique bundles of resources lead to ____________.

Answer 2

competitive advantages

Question 3

What is “smart growth”?

Answer 3

A firm’s ability to manage needs to grow and growth itself.

Question 4

Sustainability of a competitive advantage depends on which 3 factors?

Answer 4

1) Rate of core competence obsolesce because of environmental changes.
2) Availability of substitutes for the core competence.
3) Imitability of the core competence.

Question 5

Core rigidities prevent firms from developing new _____________.

Answer 5

competitive advantages

Question 6

Define a ‘global mindset’.

Answer 6

Ability to manage an internal organisation without depending on assumptions about a single country, culture or context.

Question 7

Resources are the source of ____________________.

Answer 7

capabilities that develop core competences or competitive advantages.

Question 8

Value is measured by ___________.

Answer 8

a product’s performance and attributes to which customers are willing to pay for.

Question 9

Exploiting core competences creates _________ for customers.

Answer 9

value

Question 10

Firms create value by ________________.

Answer 10

bundling/leveraging resources and capabilities.

Question 11

Firms’ most important sources of competitive advantages are _____________.

Answer 11

core competences and product-market positions

Question 12

True or false: One half of organisational decisions fail.

Answer 12

True

Question 13

3 conditions that affect managerial decisions about resources, capabilities and core competencies:

Answer 13

1) uncertainty
2) complexity
3) intraorganisational conflicts (among managers within organisation)

Question 14

What is judgement?

Answer 14

The capability of making correct decision when no models/rules/data are reliable or complete.

Question 15

GE managers’ ability to exercise good judgement is seen in two ways:

Answer 15

1) GE created more value for its stakeholders than other companies.
2) Former GE managers are now CEOs of other companies.

Question 16

Tangible resources are ______________.

Answer 16

assets that can be observed and quantified

Question 17

Intangible resources are ______________.

Answer 17

assets that are difficult for competitors to analyse and imitate

Question 18

List four types of tangible resources.

Answer 18

1) financial
2) organisational
3) physical
4) technological

Question 19

List three types of intangible resources.

Answer 19

1) human
2) innovation
3) reputational

Question 20

List two financial resources.

Answer 20

1) borrowing capacity

2) ability to generate internal funds

Question 21

List one organisational resource.

Answer 21

Firm’s formal reporting structure; formal planning, controlling and coordinating systems.

Question 22

List two physical resources.

Answer 22

1) sophistication and location of a firm’s plant and equipment
2) access to raw materials

Question 23

List one technological resource.

Answer 23

Stock of technology (patents, trademarks, copyrights, trade secrets).

Question 24

List four human resources.

Answer 24

1) knowledge
2) trust
3) managerial capabilities
4) organisational routines

Question 25

List three innovation resources.

Answer 25

1) ideas
2) scientific capabilities
3) capacity to innovate

Question 26

List five reputational resources.

Answer 26

1) reputation with customers
2) brand name
3) perceptions of product quality, durability, reliability
4) reputation with suppliers
5) interactions and relationships

Question 27

Intangible resources are usually more ________.

Answer 27

sustainable

Question 28

What are core competencies?

Answer 28

Capabilities that give competitive advantages.

Question 29

It is recommended to have ____ core competencies per strategy.

Answer 29

3 to 4

Question 30

What are two tools that identify and build core competencies?

Answer 30

VRIN model and Value Chain model.

Question 31

What does the VRIN model stand for?

Answer 31

Value, rare, imitable, substitutable.

Answer 32

True.

Core competencies are capabilities, but not all capabilities are core competencies.

Question 33

What does a valuable capability do?

Answer 33

Helps firms neutralise threats or exploit opportunities.

Question 34

What does a rare capability entail?

Answer 34

It is not possessed by others, or only by few.

Question 35

What are three aspects of inimitable capabilities?

Answer 35

1) Historical: unique organisational culture or brand name
2) Ambiguous cause: the causes and uses of a competence are unclear.
3) Social complexity: interpersonal relationships, trust

Question 36

What does a non-substitutable capability entail?

Answer 36

It has no strategic equivalent.

Question 37

What are performance implications of a competitive disadvantage?

Answer 37

Below-average returns

Question 38

What are performance implications of a competitive parity?

Answer 38

Average returns

Question 39

What are performance implications of a temporary competitive advantage?

Answer 39

Average to above-average returns

Question 40

What are performance implications of a sustainable competitive advantage?

Answer 40

Above-average returns

Question 41

What does a Value Chain Analysis do?

Answer 41

Helps identify parts of operations that create value and those that do not.

Question 42

What are the two categories the Value Chain Analysis consist of?

Answer 42

Primary and secondary activities.

Question 43

What are the five primary activities of value chain?

Answer 43

1) Inbound logistics
2) Operations
3) Outbound logistics
4) Marketing & Sales
5) Service

Question 44

What are the four support activities of value chain?

Answer 44

1) Firm infrastructure (general management, finance, accounting, etc.)
2) Human resource management
3) technological development
4) Procurement

Question 45

Creating value from value chain activities often requires alliances with _________ and strong relationships with __________.

Answer 45

suppliers , customers

Question 46

What is outsourcing?

Answer 46

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

Question 47

Why do companies outsource?

Answer 47

Few companies have competitive advantages for all primary and supporting activities.

Companies can focus on core competencies.

Question 48

What are consequences of outsourcing?

Answer 48

• potential loss of firm’s innovative ability (although companies can also learn from then)
• loss of jobs within firms

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Question 49

What generates inertia?

Answer 49

Emphasising a core competence that is no longer competitively relevant, causing weakness.