chapter 3

Question 1

resource-based view (RBV)

Answer 1

is a model of a firms performance that focuses on the resources and capabilities controlled by a firm as sources of competitive advantage

Question 2

resources

Answer 2

the tangible and intangible assets that a firm controls that it can use to conceive and implement its strategies. Examples of resources include a firm’s factories (a tangible asset), its products (a tangible asset), its reputation among customers (intangible asset), and teamwork among its managers

Question 3

capabilities

Answer 3

are a subset of a firm’s resources and are defined as the tangible and intangible assets that enable a firm to take full advantage of the other resources it controls. Skills and abilities to use resources example is marketing skills.

Question 4

financial resources

Answer 4

include all the money, from whatever source, that firms use to conceive and implement strategies. These financial resources include cash from entrepreneurs, equity holders, bondholders, and banks. Retained earnings, or the profit that a firm made earlier in its history and invests in itself, are also an important type of financial resource.

Question 5

physical resources

Answer 5

include all the physical technology used in a firm.

Question 6

human resources

Answer 6

include the training, experience, judgment, intelligence, relationships, and insight of individual managers and workers in a firm

Question 7

organizational resources

Answer 7

are an attribute of groups of individuals. Organizational resources include a firm’s formal reporting structure; its formal and informal planning, controlling, and coordinating systems; its culture and reputation; and informal relations among groups within a firm and between a firm and those in its environment.

Question 8

what are the 4 categories of resources

Answer 8

1.financial resources
2.physical resources
3.human resources
4.organizational resources

Question 9

what are the critical assumptions of the resources-based view (RBV)

Answer 9

1. resource heterogeneity
   2.resource immobility

Question 10

resource heterogeneity

Answer 10

implies that for a given business activity, some firms may be more skilled in accomplishing this activity than other firms. different firms may possess different bundles of resources and capabilities, even if they are competing in the same industry. In product design, Apple continues to be more skilled than, say, IBM

Question 11

resource immobility

Answer 11

resources controlled by some firms may not diffuse to others. some of these resource and capability differences among firms may be long lasting because it may be very costly for firms without certain resources and capabilities to develop or acquire them

Question 12

What does VRIO framework stand for

Answer 12

values, rarity, imitability, organization

Question 13

VRIO framework

Answer 13

stands for four questions one must ask about a resource or capability to determine its competitive potential: the question of Value, the question of Rarity, the question of Imitability, and the question of Organization.

Question 14

the question of value

Answer 14

Does a resource enable a firm to exploit an environmental opportunity and/or neutralize an environmental threat ?

Question 15

The question of the value of outcomes

Answer 15

yes- resources are valuable
no-resources are weaknesses

Question 16

tracking impact in terms of values

Answer 16

o Examine changes in a firm’s revenues and costs when using resources.
o Successful use leads to:
 Increased net revenues
 Decreased net costs
 Or both compared to when resources are not used.

Question 17

value chain analysis

Answer 17

A value chain is a set of business activities that a firm engages in to:
* Develop products/services
* Produce products/services
* Market products/services

Question 18

the question of Rarity

Answer 18

How many competing firms already possess particular valuable resources and capabilities?”

Question 19

if a firms resources are not valuable than

Answer 19

competitive disadvantage

Question 20

if a firms resources are valuable but not rare

Answer 20

competitive parity

Question 21

if a firms resources are valuable and rare

Answer 21

competitive advantage

Question 22

the question of imitability

Answer 22

“Do firms without resources or capability face a cost disadvantage in obtaining or developing it compared to firms that already possess it?”

Question 23

if a firms resources are valuable, rare but not costly to imitate then

Answer 23

temporary competitive advantage

Question 24

if a firms resources are valuable, rare, and costly to imitate

Answer 24

sustained advantage

Question 25

Forms of imitation

Answer 25

1. direct duplication
2. substitution

Question 26

question of organization

Answer 26

“Is a firm organized to exploit the full competitive potential of its resources and capabilities ?”

Question 27

components of an organization

Answer 27

1. Formal Reporting Structure:
   o Is a description of whom in the organization reports to whom; it is often embodied in a firms organizational chart.
2. Management Control Systems:
   o include a range of formal and informal mechanisms to ensure that managers are behaving in ways consistent with a firm’s strategies.
   o Formal Controls: include a firm’s budgeting and reporting activities that keep people higher up in a firm’s organizational chart informed about the actions taken by people lower down in a firm’s organizational chart.
   o Informal Controls: include a firm’s culture and the willingness of employees to monitor each other’s behavior.
3. Compensation Policies:
   o are the ways that firms pay employees. Such policies create incentives for employees to behave in certain ways.

Question 28

Complementary resources and capabilities

Answer 28

resources and capabilities that have a limited ability to generate competitive advantage in isolation but in combination with other resources can enable a firm to realize its full potential for competitive advantage

Question 29

If a resource is not valuable and not exploited by the organization is it a strength or weakness

Answer 29

weakness

Question 30

if a resources is valuable but not rare is it strength or weakness

Answer 30

strength

Question 31

if a resource is valuable and rare but not costly to imitate is it a strength or weakness ?

Answer 31

strength and distinctive competence

Question 32

if a resource is valuable, rare, and costly to imitate and exploit by the organization is it a strength or weakness?

Answer 32

strength and sustained distinctive competence

Question 33

competitive dynamics

Answer 33

How one firm responds to the strategic actions of competing firms. Other firms in the industry can respond to a competitor’s advantages

Question 34

limit response

Answer 34

one way to respond to competitors strategic actions

Question 35

why would a firm limit response

Answer 35

1. firm has own competitive advantage
   2.lack of resources
2. reducing rivalry

Question 36

changing tactics

Answer 36

one way to respond to competitors strategic actions

Question 37

tactics

Answer 37

Tactics are specific actions taken to implement strategies and change more frequently. o Example: If one detergent brand adds a lemon scent, others follow suit.

Question 38

leapfrogging

Answer 38

o A firm may develop new tactics that surpass competitors.
o Example: Procter & Gamble’s Tide introduced a concentrated formula, creating a delay for competitors due to new manufacturing processes.