Ch.4

Question 1

Questions to ask when evaluating a company’s internal situation:

Answer 1

1. How well the firm’s strategy is working?
2. What are the firm’s competitively important resources and capabilities?
3. Are the firm’s cost structure and customer value proposition competitive?
4. Is the firm competitively stronger or weaker than key rivals?
5. What strategic issues and problems need prompt managerial attention?

Question 2

Strategy is working if

Answer 2

1. the firm is recording financial gains
2. the firm’s market standing is improving
3. Trends in sales and stock prices
4. Customer retention rate
5. Customer recruitment
6. Change in image and rep
7. Improvements in internal processes

Question 3

Steps of analyzing the resources and capabilities of a company

Answer 3

1. Identify the resources and capabilities

2. Apply the four tests of competitive power

Question 4

What are the four tests that evaluate the competitive power or resources and capabilities?

Answer 4

1. Valuable?
2. Rare?
3. Inimitable?
4. Non-substitutable?

Question 5

What if the company lack a stand-alone resource that is competitively powerful? What should it do?

Answer 5

Develop a competitive advantage through resource bundles that enable superior performance. Or they can develop entirely different resources that substitute for the strengths of the rival.

Question 6

What is the best tool to see if a company’s resources and capabilities are sufficient to allow it to seize market opportunities and nullify external threats?

Answer 6

SWOT Analysis

Benefit: improve strategy to match firm’s strengths and opportunities, and correct weakness and defend against threats.

Question 7

What is value chain?

Answer 7

Value chain identify the primary activities that create customer value and related support activities.

Question 8

What is benchmarking and what is it used for?

Answer 8

It is a tool for assessing whether a company’s value chain activities are competitive. It entails how different firms perform value chain maintenance, and compare the costs of these activities.

Question 9

Industry value chain:

Answer 9

(value chain consist of activities, costs, and margins)

Activities of suppliers ->
Internally performed activities ->
Activities of forward channel allies and strategic partners ->
Buyer and end-user value chains

Question 10

Strategic options for remedying a cost or value disadvantage:

Answer 10

make changes in the firm’s:

1. Own internal activities
2. suppliers activities
3. forward channel allies activities

Question 11

Steps in competitive strength assessment:

Answer 11

1. Identify industry’s key success factors
2. Assign a weight to each measure of competitive strength
3. Calculate strength ratings
4. Sum the weighted strength ratings
5. Draw conclusion

Question 12

Competence is

Answer 12

when a company is good at performing a particular internal activity.