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Q:
When using the RBV, what four steps can help a firm gauge which resources truly have strategic value?
Q:
When a firm operates in multiple industries simultaneously, it is said to be implementing a
A) product diversification strategy.
B) product-differentiation strategy.
C) geographic market diversification strategy.
D) geographic market differentiation strategy.
Q:
Cite the guidelines to the resource-based view and briefly describe their meaning.
Q:
What are core competencies? How are they different from distinctive competencies? How do distinctive competencies lead to competitive advantage?
Q:
A firm implements a ________ when it operates in multiple industries or markets simultaneously.
A) vertical integration strategy
B) corporate diversification strategy
C) business diversification strategy
D) product-differentiation strategy
Q:
Multipoint competition requires loose coordination between the different businesses in which a firm operates.
Q:
Describe the elements of the resource-based view. Give examples of each type.
Q:
Shared activities, risk reduction, tax advantages, and employee compensation as bases for corporate diversification are usually relatively easy to duplicate.
Q:
Explain the premise for the resource-based view of the firm. How is this different from other perspectives?
Q:
Internal capital allocation is an example of a less costly-to-duplicate economies of scope.
Q:
What are the problems created by using activity-based cost accounting?
Q:
Employee compensation is an example of a costly-to-duplicate economies of scope.
Q:
Describe the steps in conducting a value chain analysis.
Q:
Exploiting market power is an example of a costly-to-duplicate economies of scope.
Q:
Explain the difference between primary activities and support activities and give examples of both.
Q:
Core competencies are an example of a costly-to-duplicate economies of scope.
Q:
What are the limitations of SWOT analysis?
Q:
One substitute for diversification that exists is that instead of obtaining cost or revenue advantages from exploiting economies of scope across businesses in a diversified firm, a firm may decide to simply grow and develop each of its businesses separately.
Q:
How is SWOT analysis used in strategic analysis?
Q:
Strategic alliances are generally viewed as a poor substitute for diversification since the economies of scope in diversification can be found in strategic alliances.
Q:
Describe the elements of SWOT analysis.
Q:
(p. 176) ________ is one way to identify success factors against which executives can evaluate their firm's competencies relative to its key product or products.
A. Corporate strategy
B. Product life cycle
C. Diversification
D. Agglomeration
Q:
Shared activities and risk reduction are usually difficult-to-duplicate bases for corporate diversification, but tax advantages and employee compensation are usually relatively easy to duplicate.
Q:
(p. 176) A company producing toilet paper, tissues and other consumer paper goods can work to establish the right product lines, with reasonable sales volumes, profit margins and growth potential in order to generate:
A. Supplier power to face massive buyer power in retail customers
B. Buyer power for the end-consumers
C. Supplier power for the retail chains
D. Regional advantages over buyers
Q:
Core competencies and multipoint competition are usually costly-to-duplicate bases for corporate diversification.
Q:
A firm's stakeholders include all of those groups or individuals who have an interest in how a firm performs.
Q:
(p. 175) Which of the following is a useful framework against which to examine a firm's potential strengths and weaknesses in a given industry?
A. Isolating mechanisms
B. The value chain
C. Organizational capabilities
D. Porter's five forces
Q:
(p. 174) _______ involve(s) identifying the factors associate with successful participation in a given industry.
A. The resource-based view
B. Value chain analysis
C. Industry analysis
D. Porter's generic strategies
Q:
Diversification per se is usually not a rare firm strategy regardless of how rare the particular economies of scope associated with that diversification are.
Q:
The only two economies of scope that do not have the potential for generating positive returns for a firm's equity holders are diversification in order to maximize the size of a firm and diversification to reduce risk.
Q:
(p. 174) Company X's principal strength is its inbound and outbound logistics system; its relative weakness, however is after-sales service. Its competitor, Company Y, however is often plagued with lagging shipments and an inflexible distribution setup. Company Y remains successful because it maintains a fully staffed service department and as a result the company is known for its dependable service. _______ allows them to identify ways to build on relative strengths and avoid dependence on capabilities at which the other firm excels.
A. Industry comparison
B. Benchmarking
C. Past performance comparison
D. Disaggregating
Q:
Overall, related diversification is less likely to be consistent with the interests of a firm's equity holders than is unrelated diversification.
Q:
(p. 174) _______ is a method of comparing the way a company performs a specific activity with a competitor, potential competitor or company doing the same thing.
A. Benchmarking
B. Imitating
C. Value chain analysis
D. Vertical integration
Q:
(p. 172) The differences in internal resources among companies in the same industry:
A. Can become relative strengths or weaknesses depending on the strategy a firm chooses
B. Almost always result in competitive advantages based on relative strengths or weaknesses
C. Arise from benchmarking
D. Are easily observed and relative strengths are easily imitated
Q:
Both shared activities and internal capital allocation are examples of economies of scope that have the potential for generating positive returns for a firm's equity holders.
Q:
(p. 172) Using historical experience as a basis for identifying strengths and weaknesses can be likened to:
A. Market myopia
B. Tunnel vision
C. Management myopia
D. Benchmarking
Q:
Predatory pricing is a type of cross-subsidization in which a firm uses revenues from other businesses to set its prices in a particular business so that the prices are substantially more than the subsidized business's costs.
Q:
(p. 172) A manager's assessment of whether a certain internal factor--like financial capacity--is a strength or weakness will be most strongly influenced by:
A. The relative strength of other factors
B. The factor's flexibility within the organization
C. The manager's experience in connection with that factor
D. The manger's perception of that factor in other firms
Q:
Multipoint competition exists when two or more diversified firms simultaneously compete in multiple markets, and multipoint competition can serve to facilitate a particular type of tacit collusion called mutual forbearance.
Q:
(p. 172) When a strategist uses the firm's historical experience as a basis for evaluating internal factors, he or she is performing a:
A. Comparison with key competitors
B. Comparison with success factors in the industry
C. Comparison with past performance
D. Comparison with industry benchmarks
Q:
The businesses within a diversified firm always gain cost-of-capital advantages by being part of a diversified firm's portfolio.
Q:
(p. 169) Which of the following combinations provides the best sources of competitive advantage?
A. Resources/capabilities that are scarce, durable and sustainable
B. Resources/capabilities that are central to meeting a customer need better than other alternatives and are inimitable
C. Resources/capabilities that are durable, scarce and appropriable to the firm
D. Resources/capabilities that are directly appropriable to the firm, inimitable, durable and meet customer needs better than other alternatives
Q:
For an internal capital market to create value for a diversified firm, it must offer some efficiency advantages over an external capital market.
Q:
(p. 169) Which of the following illustrates what it means to utilize a functional perspective?
A. Looking at different functional areas of the firm, disaggregating tangible and intangible assets as well as organizational capabilities that are present, can begin to uncover important value-building resources that deserve further analysis
B. Dividing categories by function into more specific competencies can allow a more measurable assessment
C. Taking a creative look at what competencies the firm possesses (or has the potential to possess) can help identify sources of competitive advantage
D. The value chain approach can uncover organizational capabilities, activities and processes that are potential sources of competitive advantage
Q:
A firm's dominant logic is a common way of thinking about strategy across different businesses.
Q:
(p. 169) In the increasingly hypercompetitive global economy today, distinctive competencies and competitive advantages:
A. Are commonplace
B. Are a prerequisite to being in business for the short-term
C. Are particularly durable
D. Can fade quickly
Q:
Firms that may appear to be unrelated diversified firms, but that are, in fact, related diversified firms without any shared activities are referred to as seemingly related firms.
Q:
(p. 169) Which of the following statements is true?
A. The faster a resource depreciates, the more valuable it is
B. The slower a resource depreciates, the more valuable it is
C. The larger a resource or asset, the more slowly it depreciates
D. Intangible assets can have their depletion measures easily
Q:
A firm that diversifies by exploiting its resources and capability advantages in its original business will have higher costs than firms that begin new business without these revenues and capability advantages or lower revenues than firms lacking these advantages, or both.
Q:
Core competencies are complex sets of resources and capabilities that link different businesses in a diversified firm through managerial and technical know-how, experience, and wisdom.
Q:
(p. 168) Brand loyalty, employee satisfaction and a reputation for fairness are items that:
A. Are easy to imitate
B. Can be imitated, but may not be
C. Cannot be imitated
D. Are difficult to imitate
Q:
(p. 168) Which of the following involves large capital investments in capacity to provide products or services in a given market that are scale sensitive?
A. Path-dependence
B. Casual ambiguity
C. Physical uniqueness
D. Economic deterrence
Q:
Over the last decade, more and more diversified firms have been abandoning efforts at managing each business's activities independently in favor of increased activity sharing.
Q:
One of the limits of activity sharing is that sharing activities may limit the ability of a particular business to meet its specific customers' needs.
Q:
(p. 167) ________ are very difficult to imitate because of the difficult, sometimes complicated path another firm must follow to create the resource.
A. Path-dependent resources
B. Physically unique resources
C. Economic resources
D. Ambiguous resources
Q:
(p. 167) Which of the following is NOT an example of an isolating mechanism?
A. Physically unique resources
B. Capital ambiguity
C. Path-dependent resources
D. Economic deterrence
Q:
Shared activities can increase the revenues in diversified firms' businesses, and failure to exploit shared activities across businesses can lead to out-of-control costs.
Q:
Shared activities that can provide the basis for operational economies of scope are quite common among related-constrained and related-linked diversified firms, as well as firms following an unrelated diversification strategy.
Q:
(p. 167) _______ help the firm create resource scarcity by making resources hard to imitate.
A. Resource bundles
B. Capabilities
C. Isolating mechanisms
D. Tangible resources
Q:
Operational economies of scope include shared activities and risk reduction.
Q:
(p. 166) The availability of substitutes affects which of the RBV guidelines?
A. Resources are more valuable when they are scarce
B. Resources are more valuable when they are durable
C. Resource are more valuable when they are scarce
D. Resources are more valuable when they are critical to being able to meet a customer's need better than other alternatives
Q:
Currently, most scholars believe that when a firm implements a corporate diversification strategy it destroys about 25% of its market value.
Q:
(p. 166) Consider Company A, a financial services company specializing in small business issues, whose location is in a shopping mall in the suburbs and Company B, a similar business, whose location is downtown between a successful law firm and a courthouse. Company A's comparative success can be best attributed to which RBV guideline?
A. Resource are more valuable when they are scarce
B. Resources are more valuable when they are durable
C. Resources are more valuable when they are scarce
D. Resources are more valuable when they are critical to being able to meet a customer's need better than other alternatives
Q:
In order for corporate diversification to be economically viable there must either be some valuable economy of scope among the multiple businesses in which a firm is operating or it must be less costly for managers in a firm to realize these economies of scope than for an outside equity holder on his or her own.
Q:
(p. 166) Which of the following is NOT one of the RBV guidelines?
A. Resources are more valuable when they are critical to being able to meet a customer's need better than other alternatives
B. Resources are more valuable when they are non-durable
C. Resources are most valuable when they are scarce
D. Resources are most valuable when they drive a key portion of overall profits
Q:
(p. 164) Company reputation is an example of a
A. Intangible asset
B. Tangible asset
C. Organizational capability
D. Organizational function
Q:
Economies of scope exist in a firm when the value of the products or services it sells increase as a function of the number of businesses in which the firm operates.
Q:
When less than 90 percent of a firm's revenues are generated in a single product market and when a firm's business share few, if any, common attributes, then that firm is pursuing a strategy of unrelated corporate diversification.
Q:
(p. 164) Which of the following is NOT an example of an intangible asset?
A. Financial resources
B. Brand names
C. Company reputation
D. Organizational morale
Q:
(p. 164) Patents and trademarks are examples of
A. Tangible assets
B. Intangible assets
C. Capabilities
D. Competencies
Q:
If the different businesses that a single firm pursues are linked on only a couple of dimensions, or if different sets of businesses are linked along very different dimensions, that corporate diversification strategy is called related-linked diversification.
Q:
(p. 164) The most easily identified assets, often found on a firm's balance sheet, are called:
A. Intangible assets
B. Tangible assets
C. Capabilities
D. Competencies
Q:
If all the businesses in which a firm operates share a significant number of inputs, production technologies, distribution channels, similar customers, and so forth, this corporate diversification strategy is called related-constrained diversification.
Q:
A dominant-business firm is pursuing a related diversification strategy and has between 70 and 95 percent of firm revenues from a single business.
Q:
(p. 164) _______ become the basis for a lasting competitive advantage.
A. Intangible opportunities
B. Distinctive competencies
C. All capabilities
D. All competencies
Q:
The analysis of limited corporate diversification is logically equivalent to the analysis of business-level strategies.
Q:
(p. 164) Core competencies that differ from those found in competing firms would be considered
A. Intangible assets
B. Distinctive competencies
C. Capabilities
D. Competencies
Q:
A firm has implemented a strategy of limited corporate diversification when all or most of its business activities fall within a single industry and geographic market.
Q:
(p. 164) A capability or skill that a firm emphasizes and excels in doing while in pursuit of its overall mission is called a
A. Intangible asset
B. core competence
C. Capability
D. Distinctive Competence
Q:
When a firm operates in multiple geographic markets simultaneously it is said to be implementing a product diversification strategy.