CH05 Flashcards
The main implication of the resource-based view of firm is:[See pp.108-109]
a. The boundaries of the firm are determined by the firm’s resources rather than by transaction costs
b. The resources of the firm are the foundation for its capabilities
c. Resources and capabilities are the principal basis for firm strategy and the primary source of profitability
d. Ricardian rents are a more important source of firm profitability than monopoly rents
c
The main strategic lesson to be drawn from the Biblical story of David and Goliath is:[See p.109]
a. The importance of first-mover advantage
b. Adapt strategy to your relative strengths
c. Conventional strategies don’t work for newcomers
d. The Israelis usually win
b
In 1990, C.K. Prahalad and Gary Hamel introduced the concept of “core competence.” Their argument was that:[See p.109]
a. Competence was more important than capability as a basis for sustainable competitive advantage
b. Management should accumulate the resources that form the basis of competences
c. Strategy should be focused on both developing and exploiting firms’ distinctive capabilities
d. Competitive advantage rather than industry attractiveness was the primary source of superior profitability
c
The difficulties faced by Eastman Kodak, Smith Corona. and Olivetti in adapting to radical technological change within their markets point to: [See p.111]
a. The failure of senior managers to understand the implications of new technologies.
b. The power of digital technology as a force for creative destruction
c. The need for firms to devote more resources to technological forecasting
d. The difficulties established firms experience in building the new capabilities
d
There are two types of economic rent (pure profit):[See pp.111]
a. Monopoly rent and Ricardian rent
b. Market power and competitive advantage
c. Monopoly rent and quasi rent
d. Cost advantage and differentiation advantage
a
One implication of the resource-based perspective is that:[See pp.111-112]
a. Firms tend to adopt similar or close strategies
b. Aligning strategies with resources and capabilities implies that firms emphasize their differences rather than their similarities
c. Firms focus on building a stronger portfolio of capabilities than their rivals
d. Firms focus on reducing their vulnerability by eliminating their weaknesses
b
Organizational culture is an important resource for most business enterprises because:[See p.114]
a. It help employees to understand one another
b. It has a powerful motivating effect
c. It influences the capabilities a business develops and how these capabilities are exercised
d. It shapes a business’s vision
c
For most organizations, geographical location should be regarded as:[See pp.113-115, 125]
a. A resource whose characteristics can be an important source of competitive advantage
b. A formerly-important resource which is becoming increasingly irrelevant in a digital world
c. An organizational characteristic, not a resource
d. A source of competitive advantage only if it offers access to an industry ecosystem such as Silicon Valley for IT firms and New York for advertising firms
a
Firm’s with outstanding capabilities are typically those which:[See pp.116-119]
a. Possess the best resources
b. Have developed their organizational routines over the longest periods of time
c. Are able to integrate their resources most effectively
d. Have the most effective leaders.
c
Enterprise Resource Planning software (such as that supplied by SAP) is unlikely, on its own, to be source of competitive advantage because:[See p.120]
a. It is expensive to install hence its benefits are offset by its costs
b. It is available to any firm that wishes to purchase it; hence, it is not scarce
c. It needs to be updated periodically, hence it lacks durability
d. Its benefits are limited to those activities that require substantial information processing
b
“Benchmarking” is:[See p.123]
a. A process to ensure that a firm is as similar to competitors as possible
b. An HR manager’s tool to set and justify the firm’s salary scheme versus the industry norm
c. A way to compare a firm’s resources and capabilities against those of competitors
d. All of the above
c
he firm’s ability to appropriate the rents generated by its organizational capabilities:[See pp.122-123]
a. Is guaranteed by the fact that firms have full ownership of their capabilities
b. Is greater for firms in high technology than in low technology industries
c. Is weakened if a firm uses independent contractors instead of full-time employees
d. Depends upon the extent to those capabilities are embedded in team-based processes that are heavily dependent upon corporate system
d
When a company has weaknesses relative to competitors among strategically important resources and capabilities, the appropriate strategic response is to:
a. Invest heavy in order to upgrade weaknesses
b. Diversify in order to find new areas of business where these resources and capabilities are unimportantto competitive advantage
c. Outsource those activities where third parties can offer superior capabilities while positioning the business to reduce vulnerable to remaining weaknesses
d. Employ management consultants to seek a solution.
c
If an organization possesses strengths in a resource or capability that bears little relationship to the industry’s key success factors it should:[See p.125]
a. Regard that resource or capability as strategically irrelevant
b. Seek to sell that resource r capability to another organization
c. Seek an innovative approach to making that resource or capability strategically relevant
d. Adopt a niche strategy
c
