Ch. 4

Question 1

Def: Core Competencies

Answer 1

Unique strengths
Embedded deep within a firm
Allow a firm to differentiate its products and services from those of its rivals

Question 2

What is the benefit of a firm’s core competencies?

Answer 2

Creating higher value for the customer or
Offering products and services at lower cost
V>C

Question 3

Competitive Advantage is driven by _____ _________.

Answer 3

Competitive advantage is driven by core competencies

Question 4

Def: Resources

Answer 4

Any assets that a firm can draw on (intangible and tangible)

Question 5

Def: Capabilities

Answer 5

Organizational and managerial skills; things we know

Question 6

Def: Activities

Answer 6

Distinct and fine-grained business processes

leverage our core competencies through

Question 7

What is the Resource Based View (RBV)?

Answer 7

A model that sees certain types of resources (VRIO) as key to superior firm performance

Question 8

What does VRIO stand for?

Answer 8

Valuable (V)
Rare (R)
Costly to Imitate (I)
Organized to Capture Value (O)
(supports SWOT)

Question 9

Tangible v. Intangible goods

Answer 9

Can sell tangible(hold more liquidity) goods, but not intangible
Resources vary from firm to firm within an industry = creates CA

Question 10

Value of a company is based on their _________ ___________.

Answer 10

Value of a company is based on their Market Capitalization.

Question 11

Market Capitalization =

Answer 11

Market Capitalization = # of outstanding shares * price/share

Question 12

Def: Isolating Mechanisms

Answer 12

Barriers to imitation that prevent rivals from competing away the advantage a firm has.
They protect resources, capabilities, or competencies that underlie a firm’s competitive advantage.

Question 13

What are the 5 isolating mechanisms?

Answer 13

1. Better expectations of future resource value (vision for future performance of the market)
2. Path dependence (constrained by decisions that were made in the past)
3. Causal ambiguity (idk)
4. Social complexity
5. Intellectual property (IP) protection

Question 14

A firm may be able to protect its competitive advantage – even for long periods of time – when its managers have consistently: (three points)

Answer 14

1. Better expectations about the future value of resources.
2. Have accumulated a resource advantage that can be imitated only over long periods of time.
3. When the source of their competitive advantage is causally ambiguous or socially complex.

Question 15

Def: Dynamic Capabilities

Answer 15

A firm’s ability to create, deploy, modify, reconfigure, upgrade, and leverage its resources over time – in the quest for competitive advantage.

Question 16

Dynamic Capabilities helps prevent a core rigidity, what is core rigidity?

Answer 16

• A former core competency that turned into a liability as the environment changed
• So good at something for so long that you can’t let go of it “we’ve always done it that way”
• So rigid in your belief that you miss opportunities

Question 17

Def: Resource stocks

Answer 17

The firm’s current level of intangible resources

Question 18

Def: Resource flows

Answer 18

The firm’s level of investments to maintain or build a resource

Question 19

Def: Value Chain

Answer 19

Internal activities a firm engages in when transforming inputs into outputs

• Each activity adds incremental value
• This concept can be applied to any firm, good or service

Question 20

What is the goal of the value chain?

Answer 20

The value chain helps to assess which parts add value and which do not.

Question 21

Def: Primary firm activities

Answer 21

add value directly by transforming inputs into outputs as the firm moves a product or service horizontally along the internal value chain

Question 22

Def: support activities

Answer 22

add value indirectly and are necessary to sustain primary activities

Question 23

Purpose of the SWOT analysis

Answer 23

Leverage internal strengths to exploit external opportunities
Mitigate internal weaknesses and external threats

Question 24

How to use the SWOT to your advantage

Answer 24

1. Evaluate the pros and cons of each strategic alternative.
2. Select one or more alternatives to implement.
3. Carefully explain decision rationale.
   - Including why other strategic alternatives were rejected