Chapter 3 - Internal Environment

Question 1

• Value-chain analysis

Answer 1

a strategic analysis of an organization that uses value-creating activities

Question 2

o Primary activities:

Answer 2

sequential activities of the value chain that refer to the physical creation of the product or service, its sale and transfer to the buyer, and its service after sale, including inbound logistics, operations, outbound logistics, marketing and sales, and service.

Question 3

o Support activities:

Answer 3

activities of the value chain that either add value by themselves or add value through important relationships with both primary activities and other support activities, including procurement, technology development, human resource management, and general administration.

Question 4

 Interrelationships:

Answer 4

collaborative and strategic exchange relationships between value-chain activities either (a) within firms or (b) between firms. Strategic exchange relationships involve exchange of resources such as information, people, technology, or money that contribute to the success of the firm.

Question 5

o Resource-based view of the firm (RBV):

Answer 5

perspective that firms’ competitive advantages are due to their endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute.

Question 6

 Tangible resources:

Answer 6

organizational assets that are relatively easy to identify, including physical assets, financial resources, organizational resources, and technological resources.

Question 7

 Intangible resources

Answer 7

organizational assets that are difficult to identify and account for and are typically embedded in unique routines and practices, including human resources, innovation resources, and reputation resources. Culture, knowledge, brand equity, reputation, intellectual property.

Question 8

o The VRIS Framework:

Answer 8

 Valuable: attractive features, lower costs and price (higher profits),
 Rare: only a few firms posses
 Costly to imitate: unable to develop or buy at a reasonable price
 Difficult to substitute: no equivalent strategic resources or capabilities

Question 9

o Sources of inimitability:

Answer 9

Physical uniqueness, path dependency, casual ambiguity, social complexity

Question 10

 Physical uniqueness

Answer 10

difficult to copy.

Question 11

 Path dependency:

Answer 11

a characteristic of resources that is developed and/or accumulated through a unique series of events. Firm’s past has impact on what it is doing now.

Question 12

 Casual ambiguity

Answer 12

a characteristic of a firm’s resources that is costly to imitate because a competitor cannot determine what the resource is and/or how it can be re-created.

Question 13

 Social complexity

Answer 13

a characteristic of a firm’s resources that is costly to imitate because the social engineering required is beyond the capability of competitors, including interpersonal relations among managers, organizational culture, and reputation with suppliers and customers.

Question 14

o Environmental scanning:

Answer 14

surveillance of a firm’s external environment to predict environmental changes and detect changes already under way.

Question 15

o Environmental monitoring

Answer 15

a firm’s analysis of the external environment that tracks the evolution of environmental trends, sequences of events, or streams of activities.

Question 16

o Competitive intelligence

Answer 16

a firm’s activities of collecting and interpreting data on competitors, defining and understanding the industry, and identifying competitors’ strengths and weaknesses.

Question 17

• Environmental Forecasting:

Answer 17

the development of plausible projections about the direction, scope, speed, and intensity of environmental change.

Question 18

3. How can managers create value by establishing important relationships among the value-chain activities both within their firm and between the firm and its customers and suppliers?

Answer 18

a. 1. interrelationships among activities within the firm
2. relationships among activities within the firm and other stakeholders that are part of the firm’s expanded value chain

Question 19

4. Briefly explain the four criteria for sustainability of competitive advantages.

Answer 19

a. 1. resource must be valuable in that it exploits opportunities and neutralizes threats
2. must be rare among the firm’s current and potential competitors
3. difficult for competitors to imitate
4. must have no strategically equivalent substitutes

Question 20

Core Competencies

Answer 20

a firm’s strategic resources that reflect the collective

learning in the organization.

Question 21

Core competencies reflect the collective learning

in a firm:

Answer 21

• How to coordinate diverse production skills
• How to integrate multiple streams of
  technologies
• How to market diverse products and services

Question 22

Three criteria of core competencies

Answer 22

• enhance competitive advantages
• different business in firm must be similar in at least one way
• difficult to imitate or substitute