Chapter 3 Notes

Question 1

resource based view (RBV)

Answer 1

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

Question 2

resources

Answer 2

tangible and intangible assets that a firm controls that it can use to conceive and implement its strategies

Question 3

capabilities

Answer 3

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

Question 4

financial resources

Answer 4

money, whatever source that firms use to implement strategies

Question 5

retained earnings

Answer 5

profit that a firm made earlier in its history and invests in itself, are also an important type of financial resource

Question 6

physical resource

Answer 6

include all the physical technology used in a firm

Question 7

human resources

Answer 7

include the training, experience, judgment, intelligence, relationships, and insight of individual mangers and workers

Question 8

organization resources

Answer 8

an attribute of groups of individuals

Question 9

resource heterogeneity

Answer 9

implies that for a given business activity, some firms may be more skilled in accomplishing this activity than others

Question 10

resource immobility

Answer 10

where it is very costly for firms to gain resources

Question 11

VRIO

Answer 11

can explain the return potential of a firm
Value 
Rarity
Imitability
Organization

Question 12

Question of Value

Answer 12

do resources and capabilities enable a firm to exploit an external opportunity or neutralize an external threat?

Question 13

Question of Rarity

Answer 13

is a resource currently controlled by only a small number of competing firms

Question 14

question of imtability

Answer 14

do firms without a resource face a cost disadvantage in obtaining or developing it

Question 15

question of organization

Answer 15

are a firm’s other policies and procedures organized to support the exploitation of its valuable, rare, and costly to imitate resources

Question 16

value chain

Answer 16

set of business activities in which it engages to develop, produce, and market its products or services

Question 17

question of rarity

Answer 17

how many competing firms already possess particular valuable resources and capabilities

Question 18

imperfectly imitable

Answer 18

firms have resources that are difficult for other firms to get

Question 19

question of imitability

Answer 19

Do firms without a resource or capability face a cost disadvantage in obtaining or developing it compared to firms that already possess it

Question 20

sustained competitive advantage

Answer 20

an advantage that is not competed away through strategic imitation

Question 21

direct duplication

Answer 21

copying exactly a resource or product

Question 22

substitution

Answer 22

making something that will substitute for a product

Question 23

sources of costly imitation

Answer 23

unique historical condition
causal ambiguity
social complexity
patents

Question 24

path dependence

Answer 24

a process is said to be path dependent when events early in its evolution have significant effects on subsequent events

Question 25

causally ambiguous

Answer 25

when firms don’t understand the relationship between the resources and capabilities controlled by a firm

Question 26

socially complex

Answer 26

resources and capabilities that involve interpersonal, social, or cultural links among individuals.

Question 27

question of organization

Answer 27

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

Question 28

formal reporting structure

Answer 28

description of whom in the organization reports to whom

Question 29

organizational chart

Answer 29

formal reporting structure is written in this

Question 30

management control systems

Answer 30

include a range of formal and informal mechanics to ensure that managers are behaving in ways consistent with a firm’s strategies.

Question 31

formal management controls

Answer 31

include a firm’s budgeting and reporting activities that keep people higher up in a firm’s org chart informed about the actions taken by people lower down in the org chart

Question 32

informal management controls

Answer 32

include a firm’s culture and willingness of employees to monitor each others’ behavior

Question 33

compensation policies

Answer 33

the ways that firms pay their employees

Question 34

complementary resources and capabilities

Answer 34

resources and capabilities that have 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 35

distinctive competence

Answer 35

a valuable and rare resource or capability

Question 36

sustainable distinctive competencies

Answer 36

valuable, rare, and costly to imitate resources and capabilities

Question 37

competitive dynamics

Answer 37

decisions made by other firms given the strategic choices of a particular firm define this

Question 38

tacit cooperation

Answer 38

any action a firm takes that have the effect of reducing the level of rivalry in an industry and that also do not require firms in an industry to directly communicate or negotiate with each other

Question 39

tacit collusion

Answer 39

when tacit cooperation has the effect of reducing supply and increasing prices, it is known as this

Question 40

tactics

Answer 40

specific actions a firm takes to implement its strategies