Chapter 4 Terms

Question 1

Rationale for the RBV Approach:

Answer 1

• When the external environment is subject to rapid change, internal resources and capabilities offer a more secure basis for strategy than market focus.
• Resources and capabilities (R&Cs) are the primary sources of profitability.

Question 2

• Benchmarking:

Answer 2

− Examining whether a firm has the resources and capabilities to perform activities in a manner superior to competitors

Question 3

• SWOT analysis:

Answer 3

A tool for determining a firm’s strengths (S), weaknesses (W), opportunities (O), and threats (T)

Question 4

− The intuition-based view deals with the:

Answer 4

external O and T, enabled and constrained by formal and informal rules of the game.

Question 5

− The resource-based view concentrates on the:

Answer 5

internal S and W to identify and leverage sustainable competitive advantage.

Question 6

• Resource and capability:

Answer 6

The tangible and intangible assets a firm uses to choose and implement its strategies

Question 7

• Tangible resource and capability:

Answer 7

Assets that are observable and easily quantified

Question 8

Intangible resource and capability:

Answer 8

Assets that are hard to observe and difficult (if not impossible) to quantify

Question 9

Examples of Tangible Resources:

Answer 9

Financial, Physical, Technological

Question 10

Examples of Intangible Resources:

Answer 10

Human, Innovation, Reputation

Question 11

• Value chain:

Answer 11

A stream of activities from upstream to downstream that add value

Question 12

• Commoditization:

Answer 12

A process of market competition through which unique products that command high prices and high margins gradually lose their ability to do so, thus becoming commodities

Question 13

• Offshoring

Answer 13

Outsourcing to an international or foreign firm

Question 14

• Onshoring

Answer 14

Outsourcing to a domestic firm

Question 15

• Captive sourcing

Answer 15

Setting up subsidiaries abroad so that the work done is in-house but the location is foreign; Also known as foreign direct investment (FDI)

Question 16

• Reshoring

Answer 16

Moving formerly offshored activities back to the home country of the focal firm

Question 17

VRIO framework:

Answer 17

A resource-based framework that focuses on the value (V), rarity (R), imitability (I), and organizational (O) aspects of resources and capabilities

Question 18

Value:

Answer 18

• Value-adding resources lead to competitive advantage.
• Non-value-adding capabilities may lead to competitive disadvantage.

Question 19

Rarity:

Answer 19

• Valuable and rare resources provide competitive advantage.
• Valuable and common resources lead to competitive parity.

Question 20

Imitability:

Answer 20

• Valuable and rare resources offer competitive advantage when they are hard for competitors to imitate.

Question 21

• Causal ambiguity:

Answer 21

The difficulty of identifying the actual cause of a firm’s successful performance

Question 22

Organization

Answer 22

• Firms must be properly organized to take full advantage of the resources and capabilities they possess.

Question 23

• Complementary asset:

Answer 23

The combination of numerous resources and assets that enable a firm to gain a competitive advantage

Question 24

• Social complexity:

Answer 24

The socially intricate and interdependent ways that firms are typically organized

Question 25

High Commoditization & Industry Specific =

Answer 25

Outsource

Question 26

High Commoditization & Common Across Industries =

Answer 26

Outsource

Question 27

Low Commoditization & Industry Specific =

Answer 27

In-House

Question 28

Low Commoditization & Common Across Industries=

Answer 28

??? Note: At present, no clear guidelines exist for Cell 4, where firms either choose to perform activities in-house or outsource.

Question 29

In-House & Foreign Location =

Answer 29

Captive Sourcing (FDI)

Question 30

In-House & Domestic Location =

Answer 30

Domestic In-House

Question 31

Outsourcing & Foreign Location =

Answer 31

Offshoring

Question 32

Outsourcing & Domestic Location =

Answer 32

Onshoring

Question 33

Support Activities:

Answer 33

1. Firm Infarstructure/Corporate Management
2. Human Resource Management
3. Technology Development (R&D)
4. Procurement / Information Systems

Question 34

Primary Activities:

Answer 34

1. Inbound Logistics
2. Operations (production, service, retail)
3. Outbound logistics
4. Marketing & Sales
5. Service

Question 35

Implications for Action:

Answer 35

1. Managers need to build firm strengths based on the VRIO Framework
2. Relentless imitation or benchmarking , while important, is not likely to be a successful strategy
3. Managers need to build up resources and capabilities for future competition
4. Students need to make themselves into untouchables whose job cannot be easily outsourced.