Chapter 3 Flashcards
According to the Chapter 3 Opening Case, all of the following are core competencies of Subway EXCEPT
The challenging economic environment in which even affluent consumers are choosing to dine at quick-service restaurants such as Subway.
It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and
the rapid development of the Internet’s capabilities.
Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above-average returns from its core competencies?
Core competencies must be internationalized.
Which of the following is NOT a factor affecting sustainability of a competitive advantage?
The length of time the core competence has existed.
Internal analysis enables a firm to determine what the firm
can do
The proper matching of what a firm can do with what it might do
yields insights the firm requires to select its strategy.
The key to achieving competitiveness, earning above-average returns, and remaining ahead of competitors in the long run is to manage current core competencies
while simultaneously developing new ones.
Which of the following is not a component of internal analysis leading to competitive advantage?
Analysis of supplier power.
Value consists of
A product’s performance characteristics and by its attributes for which customers are willing to pay.
____ is/are the source of a firm’s ____, which is/are the source of the firm’s ____.
Resources, capabilities, core competencies
____ is measured by a product’s performance characteristics and its attributes for which customers are willing to pay.
value
By emphasizing core competencies when formulating strategies, companies learn to compete primarily on the basis of
firm-specific differences.
____ of organizational decisions fail.
about half
A decision that results in failure
allows for learning.
Today, a substantially slimmed-down Polaroid is introducing a number of new products including GL20 Camera Glasses which have a built-in camera and LCDs. This wave of new product development is explained by
the learning that occured from making earlier mistakes.
The three conditions that characterize difficult managerial decisions concerning resources, capabilities, and core competencies are
uncertainty, complexity, and intraorganizational conflicts.
As discussed in the Chapter 3 Strategic Focus, CEOs of companies such as Viacom, the Oprah Winfrey Network, the Gap, and Cisco frequently had to make decisions about __________________ and the success of those decisions affected the tenure of those CEOs.
use of the firm’s resources
The overall lesson from the Chapter 3 Strategic Focus about decision-making at several companies was the importance of _________
making decisions about use of the firm’s resources under conditions of uncertainty.
A person who has made a successful decision when no obviously correct model or rule is available or when relevant data are unreliable or incomplete has exercised
judgement
One reason executive judgment can be a particularly important source of competitive advantage is that judgment
allows a firm to build a strong reputation.
Judgment is the capacity for making a successful decision when
no obviously correct model or rule is available.
The most numerous of the following organizational characteristics are
resources
Capabilities typically come from
combining resources
All of the following are tangible resources EXCEPT
firms reputation
Tangible resources include
assets that can be observed and quantified.
Complete the following about the difference between tangible and intangible resources. Tangible resources are ____ constrained because they are _____ to leverage.
more; harder
Compared to tangible resources, intangible resources are
a superior source of capabilities.
Compared to tangible resources, intangible resources are ____ and ____.
less visible; more difficult to copy.
The critical executive skill of the current business age is the ability to
manage human intellect.
Which of the following is NOT a reputational resource?
Employees viewing the firm as a terrible place to work.
An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly-reputed chef, and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere.
The investor will find that the restaurant’s financial statements will undervalue the true value of its resources.
Which of the following is a true statement about capabilities?
Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing..
When firms lay off employees they are
eroding the organization’s knowledge resources.
Because the firm combines tangible and intangible resources to create capabilities,
they are often based on developing, carrying, and exchanging information and knowledge through the firm’s human capital.
____ can be viewed as the capacity to take action.
core competencies
____ is an example of a capability that is based in the functional area of distribution.
Effective use of logistics management techniques
capabilities
are often developed in specific functional areas.
The Chapter 3 Strategic Focus on P&G illustrates that the company uses its capabilities and core competencies to grow
through cooperative relationships.
Innovation, consumer understanding, brand-building, go-to-market, and scale are activities that P&G (Chapter 3 Strategic Focus) performs well and are examples of the company’s __________ .
core competencies
To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT
be technologically innovative.
From a customer’s point of view, for an organization’s capability to be a core competence it must be
valuable and unique.
Valuable capabilities
allow the firm to exploit opportunities or neutralize threats in its external environment.
Capabilities that other firms cannot develop easily are classified as
costly to imitate.
A major department store chain has a strict policy of banning photographs or videos of its sales floor or back room operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact, some of its own top managers refer to the management’s policies on secrecy as “verging on paranoid.” These policies indicate that the top management of the firm believes the organization’s core competencies are
imitable
Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many customers go to the restaurant just for the appetizer and it was at the center of a recent highly positive review by a food critic. Preparation involves common ingredients and average culinary skills levels, but requires a very high oven temperature which significantly increases utility costs. Several competing restaurants have since added their own version of the appetizer to their menu. Which criteria for assessing capabilities/core competencies is met?
The restaurant has the capability to develop something that is valuable.
In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are ____ but no longer ____.
valuable; rare
The capabilities used to create the sustainability/green initiatives at Walmart and Target are ____ but less likely to be ____.
valuable; rare
Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT
lack of scientific transference.
A financial management firm has existed for over 70 years. Some of its original clients’ grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other’s families. This firm has capabilities that would be costly to imitate because of its
social complexity
Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other airlines cannot (such as jokes on flights or the cooperation between gate personnel and pilots). These examples illustrate which of the following criteria for sustainable competitive advantage?
costly to imitate
McDonald’s culture with an emphasis on cleanliness, consistency, service, and the training that reinforces the value of these characteristics illustrates which of the following criteria for sustainable competitive advantage?
costly to imitate
Organizational culture is
not easily imitable.
Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the firm’s internal functioning and technology as it can legally, yet Gamma cannot understand why Ardent has a competitive advantage over it. The source of Ardent’s success is
causally ambiguous.
If a firm has a service that is valuable, rare, and costly-to-imitate, but a substitute exists for the service, the firm will
have a temporary competitive advantage.
ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed circuit board technology. ACME has protected its market leadership with continued advancements in this technology which it patents. A competitor has developed a radio for this market with equal performance but uses a software-based solution instead of circuit boards. ACME’s technology leadership fails which capability test?
The substitutability test
Firms that achieve competitive parity can expect to
earn average returns.
A veterinary practice has added a pet boarding and grooming facility. Most of the practice’s competitors also provide these services. The veterinary practice is gaining competitive
parity
A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu based solely on organically-raised chicken, beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be
temporary
Value chain activities are
activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers.
Value chain activities include all of the following EXCEPT
Management Information Systems
Examples of support activities include all of the following EXCEPT
Follow-up Service.
Value chain analysis is a tool used to
understand the parts of the firm’s operation that create value and those that do not.
Firms that have strong positive relationships with suppliers and customers are said to have _________________, an essential ingredient to creating value.
social capital
Knowledge transfer and access to resources within the value chain are enhanced by ________.
social capital
To build social capital whereby resources such as knowledge are transferred across organizations requires _________between the parties.
trust
Outsourcing is the
purchase of a value-creating activity from an external supplier.
A major reason outsourcing is effective is that
few firms possess superior capability in all primary and support activities.
Which of the following is TRUE about outsourcing?
Outsourcing allows firms to concentrate on those areas in which they can create value.
A major U.S. manufacturer of children’s toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is
research and development.
The owner of a store retailing fine quality fabrics for home-sewers bewails the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics available and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of
core competencies that have become core rigidities.
Which of the following is NOT an external event that reveals the “dark side” of core capabilities?
A firm changes its focus to a new core competence.
Acme Auto Repair has a thriving business based on its reputation for high-quality work, honesty, and skilled employees. For continued long-term success, Acme’s owner should
focus on developing Acme’s future competitive advantages.
It is possible that Borders’ core competencies of store locations and a desirable physical environment for customers became core rigidities eventually leading to the filing of bankruptcy as a result of
a new technology emerging and changing customer shopping patterns .
