Chapter 3 Flashcards
Which of the following is a disadvantage of the value chain process?
a) It does not help analyze a company’s strength compared to its competitors.
b) It does not span all of a firm’s economic activities.
c) It does not consider company infrastructure or human resource management.
d) It does not help managers to identify areas in which a firm has an absolute strength.
a) It does not help analyze a company’s strength compared to its competitors.
LittleHut Inc., an international food company, has several resources to its credit. Over the years, the company has acquired factories, machinery, in-depth knowledge, and a stable reputation. The elements mentioned in this scenario can be best categorized as LittleHut Inc.’s __________.
a) capabilities
b) equipment
c) personnel
d) assets
d) assets
Procedures, processes, and routines that continuously expand existing resources or improve operating capabilities most accurately define the term __________.
a) network externalities
b) competitive parities
c) dynamic capabilities
d) operating capabilities
c) dynamic capabilities
Resources that create ________ can be defined as those that create economic value for a firm.
a) opportunities
b) liabilities
c) costs
d) profits
d) profits
Leon Royal Hotel was the first inn in the county of Belvore. It had started out with only seven rooms, providing bed and breakfast to travelers who came to Belvore. After 20 years of giving unique and satisfying service to its customers, Leon Royal Hotels grew to have more than 1,500 rooms. The facilities and services provided by the hotel made it one of the best hotels in the county. Meltown Inn started out a decade after the Leon Royal Hotel opened. The Meltown Inn started losing profits and eventually shut down in 1968 due to bad service. Which of the following factors of inimitability is explained in this scenario?
a) Complexity
b) Casual ambiguity
c) Tacit knowledge
d) Path dependence
d) Path dependence
Michelle, the CEO of airline company Nariko Jets, stated that she owes the credit of her professional success to the time spent as a volunteer at a homeless shelter and her passion for artwork. Nariko Jets, according to Michelle, was the result of her life lessons at the homeless shelter and her paintings which provided her the inspiration to create an airline that would make travel easier and comfortable. Her competitors have always envied her success. Which of the following factors of inimitability is best reflected in this scenario?
a) Tacit knowledge
b) Causal ambiguity
c) Positive network externalities
d) First-mover advantage
b) Causal ambiguity
Kleo wants to start his own textile business. He believes that the best way to pull customers into buying his product is to be the first to create lightweight woolen jackets that would keep an individual warm and would also look good on the person. He decides to set up his store in the small town of Marida, which has a rough wintery season almost throughout the year. Kleo believes that he will be able to achieve plenty of profits with this idea with a commodity that is a needed all throughout the year. Which of the following statements strengthen Kleo’s idea?
a)Kleo feels his customers will not be willing to try out a lightweight jacket as they believe it will not be able to keep them warm.
b) The people of Marida are not ready to welcome any type of commercialism in their town.
c) Kleo requires a colder place than the town of Marida in order to make profits using these woolen jackets.
d) Kleo has access to all the clothing materials that will be needed to create these jackets.
d) Kleo has access to all the clothing materials that will be needed to create these jackets.
TumbleDry Inc., a washing machine company, has been able to make minimal profits in the market. However, TumbleDry has not been able to come up with any product innovations that are unique and hard to imitate. This scenario best exemplifies __________.
a) competitive failure
b) competitive parity
c) competitive success
d) competitive advantage
b) competitive parity
Bertha, a business analyst, wants to analyze Shop Wise Inc., a software company. She wants to know how the company, supplying its products and services for over a decade, still maintains competitive advantage over other companies. She does the analysis simply by walking around the company and taking notes. She even tries out one of the company’s software programs and finds it useful. This scenario illustrates the use of __________.
a) archival data
b) interviews
c) focus groups
d) observation
d) observation
Which of the following statements best describes a firm’s capabilities?
a) They depict a firm’s strength relative to its competitors.
b) They explain why firms allocate critical resources to achieve key objectives.
c) They refer to what a firm employs to create value and competitive advantage.
d) They represent how firms do things.
d) They represent how firms do things.
Identify a true statement about tacit knowledge.
a) It is easy to teach but difficult to learn.
b) It is mobile and easily imitated by competitors.
c) It is difficult to learn, teach, or coach.
d) It is easy to codify and learn.
c) It is difficult to learn, teach, or coach.
Identify a true statement about dynamic capabilities.
a) Companies that have developed strong coordination processes are likely to lose their competitive advantage.
b) Companies with strong dynamic capabilities have a less secure foundation for competitive advantage than those without them.
c) They depict a firm’s strength relative to its competitors.
d) They can help firms modify and evolve processes to keep pace with environmental changes.
d) They can help firms modify and evolve processes to keep pace with environmental changes.
Which of the following best describes competitive parity?
a) When firms introduce valuable products that are also unique and rare
b) When firms combine the legal, administrative, and cultural elements to produce an inimitable product
c) When a company survives but has no real competitive advantage over rivals
d) When firms that cannot create value for their stakeholders do not survive
c) When a company survives but has no real competitive advantage over rivals
A resource creates ________ if its contributions allow a company to produce a product or service that is of worth to end users.
value
