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Q:
Physical technology-based cost advantages apply only in manufacturing firms.
Q:
One of the least important productive inputs in almost all companies is labor and it is unlikely that differential low cost access to labor can give a firm a cost advantage.
Q:
Productive inputs are any supplies used by a firm in conducting its business activities.
Q:
Differential low-cost access to productive inputs may create cost differences among firms producing similar products in an industry.
Q:
Efforts to move down the learning curve quickly by acquiring market share are likely to obtain a cost advantage over rivals.
Q:
Learning curve-cost advantages are restricted solely to manufacturing and the advantage associated only with the manufacturing business function.
Q:
If a firm gets too large, it will eventually experience both diseconomies of scale and an increase in costs associated with the learning-curve effect as cumulative volume of production grows.
Q:
Economies of scale focus on the relationship between the cumulative volume of production and average unit costs, while the learning curve focuses on the relationship between the volume of production at a given time and average unit costs.
Q:
The link between cumulative volumes of production and cost has been formalized in the concept of the learning curve.
Q:
Large transportation costs can offset cost reductions attributable to the exploitation of economies of scale in manufacturing.
Q:
Increased worker specialization associated with higher levels of production can lead to worker de-motivation and diseconomies of scale.
Q:
As a firm increases in size, it often increases in complexity; however, the ability of managers to control and operate the firm efficiently are virtually unlimited and therefore costs do not substantially increase.
Q:
There are physical limitations to the size of some manufacturing processes and when this size is exceeded, diseconomies of scale are experienced.
Q:
High volumes of production are also associated with high levels of generality in employee tasks and as workers become increasingly generalized in accomplishing a variety of tasks; they can become more effective at these tasks, thereby reducing the firm's costs.
Q:
The link between volume of production and the cost of building manufacturing operations is particularly important in industries characterized by product manufacturing, such as chemical and oil refining.
Q:
When a firm has high levels of production, it is often able to purchase and use specialized manufacturing tools that cannot be kept in operation in small firms.
Q:
As the volume of production in a firm increases, the average cost per unit decreases until some optimal volume of production is reached, after which the average costs per unit of production begin to rise because of diseconomies of scale.
Q:
Economies of scale are said to exist when the increase in firm size (measured in terms of volume of production) are associated with lower costs (measured in terms of average costs per unit of production).
Q:
In general, cost advantages are not possible when competing firms produce similar products.
Q:
Firms that are successful in pursuing a cost-leadership strategy focus solely on keeping costs low and abandoning other business or corporate strategies.
Q:
A firm that chooses a cost-leadership business strategy focuses on gaining advantages by reducing its costs to a level equal to all of its competitors.
Q:
Cost leadership and product differentiation are so widely recognized that they are often called generic business strategies.
Q:
Define the nature of competitive dynamics and identify three reasons why a firm might not respond to another firm's competitive advantage.
Q:
Discuss the questions underlying the VRIO framework and use these questions to differentiate between a simple distinctive competence and a sustained distinctive competence.
Q:
Identify four components of a firm's organization that are relevant to the question of organization and discuss what role they play in building a competitive advantage.
Q:
Identify two forms of imitation and describe four sources of costly imitation.
Q:
Discuss whether a firm must be must be the only one to possess a valuable resource or capability in order for the firm to benefit from the resource or capability's rarity or if other firms may own it as well.
Q:
Define the concept of a value chain.
Q:
Identify the four questions represented in the VRIO framework that one must ask about a resource or capability to determine its competitive potential.
Q:
Identify and describe the two fundamental assumptions about the resources and capabilities that firms may control that the RBV rests on.
Q:
Identify the four broad categories that a firm's resources and capabilities can be classified into.
Q:
Describe the difference between resources and capabilities.
Q:
The Bates Company has been producing tools for over fifty years. In that time the company has been acknowledged as a producer of high quality tools at a reasonable price. Bates' competitive prices can be attributed to three factors. First, the company recognized early in its development that tools made from specific blends of various types of metal were less costly to produce and had superior performance compared to traditional metals. Accordingly, Bates made investments in developing tools made for specialty metals long before other competitors and has made a series of investments over its operating history that have put it far ahead of its competitors in terms of product development. Industry analysts believe that based on these investments it would be difficult and extremely costly, if it were even possible, for rivals to catch up with Bates. Second, in recognizing the importance of certain metals, Bates was able to sign long-term contracts with suppliers of the metals that have provided Bates with a lasting cost advantage. Finally, Bates maintains its cost advantages by using a thorough budgeting and reporting system that allows it to closely control costs, and these systems are supported by a frugal company culture and financial incentives that reward employees for finding ways to save money throughout the company. It would be costly for competitors to duplicate Bates due toA) path dependence and causal ambiguity.B) causal ambiguity and unique historical conditions.C) path dependence and unique historical conditions.D) causal ambiguity and patents.
Q:
The Bates Company has been producing tools for over fifty years. In that time the company has been acknowledged as a producer of high quality tools at a reasonable price. Bates' competitive prices can be attributed to three factors. First, the company recognized early in its development that tools made from specific blends of various types of metal were less costly to produce and had superior performance compared to traditional metals. Accordingly, Bates made investments in developing tools made for specialty metals long before other competitors and has made a series of investments over its operating history that have put it far ahead of its competitors in terms of product development. Industry analysts believe that based on these investments it would be difficult and extremely costly, if it were even possible, for rivals to catch up with Bates. Second, in recognizing the importance of certain metals, Bates was able to sign long-term contracts with suppliers of the metals that have provided Bates with a lasting cost advantage. Finally, Bates maintains its cost advantages by using a thorough budgeting and reporting system that allows it to closely control costs, and these systems are supported by a frugal company culture and financial incentives that reward employees for finding ways to save money throughout the company. The fact that it would be would be difficult and costly for firms to match Bates' capabilities in the tool industry indicates that these capabilities areA) imperfectly imitable.B) causally ambiguous.C) substitutable.D) perfectly imitable.
Q:
The Bates Company has been producing tools for over fifty years. In that time the company has been acknowledged as a producer of high quality tools at a reasonable price. Bates' competitive prices can be attributed to three factors. First, the company recognized early in its development that tools made from specific blends of various types of metal were less costly to produce and had superior performance compared to traditional metals. Accordingly, Bates made investments in developing tools made for specialty metals long before other competitors and has made a series of investments over its operating history that have put it far ahead of its competitors in terms of product development. Industry analysts believe that based on these investments it would be difficult and extremely costly, if it were even possible, for rivals to catch up with Bates. Second, in recognizing the importance of certain metals, Bates was able to sign long-term contracts with suppliers of the metals that have provided Bates with a lasting cost advantage. Finally, Bates maintains its cost advantages by using a thorough budgeting and reporting system that allows it to closely control costs, and these systems are supported by a frugal company culture and financial incentives that reward employees for finding ways to save money throughout the company. The reward system Bates uses to encourage employees to find ways to reduce costs is an example of a(n)A) sustained distinctive competence.B) informal management control.C) formal reporting structure.D) compensation policy.
Q:
The Bates Company has been producing tools for over fifty years. In that time the company has been acknowledged as a producer of high quality tools at a reasonable price. Bates' competitive prices can be attributed to three factors. First, the company recognized early in its development that tools made from specific blends of various types of metal were less costly to produce and had superior performance compared to traditional metals. Accordingly, Bates made investments in developing tools made for specialty metals long before other competitors and has made a series of investments over its operating history that have put it far ahead of its competitors in terms of product development. Industry analysts believe that based on these investments it would be difficult and extremely costly, if it were even possible, for rivals to catch up with Bates. Second, in recognizing the importance of certain metals, Bates was able to sign long-term contracts with suppliers of the metals that have provided Bates with a lasting cost advantage. Finally, Bates maintains its cost advantages by using a thorough budgeting and reporting system that allows it to closely control costs, and these systems are supported by a frugal company culture and financial incentives that reward employees for finding ways to save money throughout the company. The budgeting and reporting activities that Bates uses are examples ofA) informal management controls.B) formal reporting structures.C) formal management controls.D) primary value chain activities.
Q:
The Bates Company has been producing tools for over fifty years. In that time the company has been acknowledged as a producer of high quality tools at a reasonable price. Bates' competitive prices can be attributed to three factors. First, the company recognized early in its development that tools made from specific blends of various types of metal were less costly to produce and had superior performance compared to traditional metals. Accordingly, Bates made investments in developing tools made for specialty metals long before other competitors and has made a series of investments over its operating history that have put it far ahead of its competitors in terms of product development. Industry analysts believe that based on these investments it would be difficult and extremely costly, if it were even possible, for rivals to catch up with Bates. Second, in recognizing the importance of certain metals, Bates was able to sign long-term contracts with suppliers of the metals that have provided Bates with a lasting cost advantage. Finally, Bates maintains its cost advantages by using a thorough budgeting and reporting system that allows it to closely control costs, and these systems are supported by a frugal company culture and financial incentives that reward employees for finding ways to save money throughout the company. Bates' culture is an example of a(n)A) informal management control.B) formal management control.C) compensation policy.D) formal reporting structure.
Q:
LaserTech is a manufacturer of industrial lasers and has developed a new, patented technology that allows its customers to manufacture their products more precisely with a higher level of consistency and at a lower cost than they could previously. LaserTech's executives believe that no rivals have a similar technology and that it would be very difficult for rivals to copy this technology since the benefits of the new technology can only be realized within LaserTech's system, which includes processes that are protected by trade secrets, making it difficult for rivals to understand the relationship between the company's new technology and its competitive advantage. The inability of rivals to develop or acquire technology similar to that of LaserTech is an illustration ofA) resource immobility.B) resource heterogeneity.C) causal ambiguity.D) path dependence.
Q:
LaserTech is a manufacturer of industrial lasers and has developed a new, patented technology that allows its customers to manufacture their products more precisely with a higher level of consistency and at a lower cost than they could previously. LaserTech's executives believe that no rivals have a similar technology and that it would be very difficult for rivals to copy this technology since the benefits of the new technology can only be realized within LaserTech's system, which includes processes that are protected by trade secrets, making it difficult for rivals to understand the relationship between the company's new technology and its competitive advantage. LaserTech's new technology is an example ofA) financial resources.B) physical resources.C) human resources.D) organizational resources.
Q:
LaserTech is a manufacturer of industrial lasers and has developed a new, patented technology that allows its customers to manufacture their products more precisely with a higher level of consistency and at a lower cost than they could previously. LaserTech's executives believe that no rivals have a similar technology and that it would be very difficult for rivals to copy this technology since the benefits of the new technology can only be realized within LaserTech's system, which includes processes that are protected by trade secrets, making it difficult for rivals to understand the relationship between the company's new technology and its competitive advantage. If LaserTech's new technological development were due to proprietary investments the company made when it was first founded twenty years ago, this would be an example ofA) social complexity.B) tacit collusion.C) path dependence.D) causal ambiguity.
Q:
LaserTech is a manufacturer of industrial lasers and has developed a new, patented technology that allows its customers to manufacture their products more precisely with a higher level of consistency and at a lower cost than they could previously. LaserTech's executives believe that no rivals have a similar technology and that it would be very difficult for rivals to copy this technology since the benefits of the new technology can only be realized within LaserTech's system, which includes processes that are protected by trade secrets, making it difficult for rivals to understand the relationship between the company's new technology and its competitive advantage. If one of LaserTech's rivals were to decide to divest its industrial laser manufacturing business in response to LaserTech's new technology, this would be an example ofA) competitive dynamics.B) tacit collusion.C) a sustainable distinctive competence.D) competitive parity.
Q:
LaserTech is a manufacturer of industrial lasers and has developed a new, patented technology that allows its customers to manufacture their products more precisely with a higher level of consistency and at a lower cost than they could previously. LaserTech's executives believe that no rivals have a similar technology and that it would be very difficult for rivals to copy this technology since the benefits of the new technology can only be realized within LaserTech's system, which includes processes that are protected by trade secrets, making it difficult for rivals to understand the relationship between the company's new technology and its competitive advantage. LaserTech's new technology appears to beA) valuable and rare but not costly to imitate.B) valuable and either rare or costly to imitate.C) valuable but neither rare nor costly to imitate.D) valuable, rare and costly to imitate.
Q:
A process is said to be ________ when events early in the evolution of a process have significant effects on subsequent events.A) causally ambiguousB) path dependentC) socially complexD) path independent
Q:
If there is a conflict between the resources a firm controls and that firm's organization, ________ should be changed.
A) the resources
B) both
C) nothing
D) the organization
Q:
Which of the following statements regarding competitive parity and competitive advantage is accurate?
A) Some firms develop valuable, rare, and costly-to-imitate resources and capabilities in being efficient second movers, that is, in rapidly imitating and improving on the product and technological innovations of other firms.
B) Firms that benchmark their performance against the performance of successful competitors can expect to develop at least a temporary competitive advantage.
C) Firms must be first movers to gain competitive advantages.
D) Even if all a firm does is create value in the same way as its competitors, the firm can expect to earn at least a temporary competitive advantage.
Q:
Which of the following statements regarding the resource-based view is accurate?
A) Competitively valuable resources and capabilities are controlled only by a firm's general managers.
B) Only lower level employees need to accept the responsibility of creating, nurturing and exploiting resources and capabilities that can generate competitive advantages for a firm.
C) Employees should define their jobs in functional terms instead of in competitive and economic terms.
D) Competitive advantage is too important to remain the sole property of senior management.
Q:
The specific actions a firm takes to implement its strategies are known as
A) competitive advantages.
B) objectives.
C) goals.
D) tactics.
Q:
Tacit cooperation is only a viable strategy when
A) an industry is perfectly competitive.
B) an industry is heterogeneous with respect to the products it sells and their cost structure.
C) there is a strong market share leader in the industry.
D) there are low entry barriers in the industry.
Q:
When tacit cooperation has the effect of reducing supply and increasing prices, it is known as
A) monopolistic competition.
B) explicit collusion.
C) competitive parity.
D) tacit collusion.
Q:
Any actions a firm takes that have the effect of reducing the level of rivalry in an industry that also do not require firms in an industry to directly communicate or negotiate with each other can be thought of as
A) tacit cooperation.
B) tacit collusion.
C) explicit collusion.
D) competitive parity.
Q:
If Delta Airlines were to significantly change its fare structure and flight schedule to enhance its competitive position in response to aggressive price cutting by Southwest Airlines, this would be an example of
A) explicit collusion.
B) tacit collusion.
C) competitive dynamics.
D) a harvest strategy.
Q:
Resources and capabilities that are valuable, rare, and costly to imitate are best described as
A) distinctive competencies.
B) entry barriers.
C) complementary resources and capabilities.
D) sustainable distinctive competencies.
Q:
If a resource or capability is valuable and rare but not costly to imitate, exploiting this resource will generate a(n)
A) sustained competitive advantage.
B) perfectly competitive environment.
C) temporary competitive advantage.
D) environment characterized by competitive parity.
Q:
Resources that generate a temporary competitive advantage are
A) valuable, rare and costly to imitate.
B) valuable but neither rare nor costly to imitate.
C) valuable and either rare or costly to imitate.
D) valuable and rare but not costly to imitate.
Q:
Resources that are valuable but not rare can be categorized as
A) organizational weaknesses.
B) distinctive competencies.
C) organizational strengths.
D) complementary resources and capabilities.
Q:
Southwest Airlines' strong internal culture that helps ensure that employees act in ways consistent with the company's strategy is an example of a(n)
A) informal management control.
B) formal management control.
C) compensation policy.
D) formal reporting structure.
Q:
Which of the following is an example of formal management controls?
A) a firm's culture
B) the willingness of employees to monitor each other
C) budgeting and reporting activities
D) managerial motivation
Q:
The range of formal and informal mechanisms to ensure that managers are behaving in ways consistent with a firm's strategies are referred to as
A) formal reporting structures.
B) organizational charts.
C) compensation policies.
D) management control systems.
Q:
Which of the following statements regarding patents is accurate?
A) Patents always increase the costs of imitation.
B) Patents may decrease, rather than increase, the costs of imitation.
C) Patents always decrease the costs of imitation.
D) Patents have no impact on the costs of imitation.
Q:
According to the research in strategic human resources management,
A) firms that are able to use human resource practices to develop socially complex human and organizational resources are able to gain competitive advantage over firms that do not engage in these practices.
B) firms that are able to use human resource practices to develop socially simplistic human and organizational resources are able to gain competitive advantage over firms that do not engage in these practices.
C) firms that are able to use human resource practices to develop socially complex human and organizational resources gain little advantage over firms that do not engage in these practices.
D) firms that are able to use human resource practices to develop socially complex human and organizational resources are at a competitive disadvantage when compared to firms that do not engage in these practices.
Q:
Resources and capabilities, such as interpersonal relations among managers and a firm's culture, that may be costly to imitate because they are beyond the ability of firms to systematically manage and influence are referred to as
A) socially complex.
B) causally ambiguous.
C) path dependent.
D) the result of unique historical conditions.
Q:
If a firm's resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm's competitive advantage, this competitive advantage is said to be protected from imitation by
A) path dependence.
B) causal ambiguity.
C) unique historical conditions.
D) social complexity.
Q:
Firms that possess and exploit costly-to-imitate, rare and valuable resources in choosing and implementing their strategies may enjoy a period of
A) temporary competitive advantage.
B) competitive disadvantage.
C) competitive parity.
D) sustained competitive advantage.
Q:
If firms that do not possess valuable and rare resources or capabilities face a cost disadvantage in obtaining these resources or capabilities compared to the firms that already possess them, these resources and capabilities are termed
A) rare.
B) valuable.
C) imperfectly imitable.
D) perfectly imitable.
Q:
In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered ________ and a potential source of competitive advantage.
A) valuable
B) rare
C) inimitable
D) un-substitutable
Q:
Which of the following is not one of the six distinct activities in McKinsey and Company's value chain model?
A) technology development
B) product design
C) manufacturing
D) inbound logistics
Q:
Most firms have a resource base that is composed primarily of resources and capabilities that are
A) valuable but not rare.
B) neither valuable nor rare.
C) valuable and rare.
D) rare but not valuable.
Q:
ESPN's development of an extensive offering of X-Games coverage that is unmatched by any other sports outlet is an example of which element of the VRIO framework?
A) organization
B) imitability
C) competitive parity
D) rarity
Q:
If in the process of maximizing its performance, a firm engages in activities that pollute the environment, the impact of that pollution is a(n)
A) capability.
B) externality.
C) competitive advantage.
D) weakness.
Q:
The set of business activities in which a firm engages to develop, produce, and market its products or services is known as its
A) value chain.
B) physical resources.
C) organizational resources.
D) human resources.
Q:
To the extent that a firm's resources and capabilities enhance a firm's competitive position by enabling a firm to exploit its opportunities or neutralize its threats, these resources and capabilities are valuable and are known as
A) temporary competitive advantages.
B) sustainable competitive advantages.
C) core competencies.
D) strengths.
Q:
Inputs whose quantity of supply is fixed and does not respond to price increases are said to be
A) elastic in supply.
B) inelastic in supply.
C) elastic in demand.
D) perfectly competitive.
Q:
The theoretical roots of the resource-based view can be traced to research done by
A) David Ricardo.
B) Adam Smith.
C) Oliver Williamson.
D) Joseph Schumpeter.
Q:
________ implies that for a given business activity, some firms may be more skilled in accomplishing this activity than other firms.
A) Resource mobility
B) Resource homogeneity
C) Resource immobility
D) Resource heterogeneity
Q:
The VRIO assumption that some of the 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 is known as
A) resource mobility.
B) resource homogeneity.
C) resource immobility.
D) resource heterogeneity.
Q:
A firm's formal reporting structure, its formal and informal planning and its controlling and coordinating systems are examples of which type of resources?
A) financial resources
B) physical resources
C) human resources
D) organizational resources
Q:
Computer hardware and software technology, robots used in manufacturing and automated warehouses are examples of which type of resources?
A) financial resources
B) physical resources
C) human resources
D) organizational resources
Q:
The training, experience, judgment, intelligence, relationships and insight of individual managers and workers in a firm are examples of
A) physical resources.
B) human resources.
C) organizational resources.
D) financial resources.
Q:
A firm's marketing skills and teamwork as well as its cooperation among managers are examples of
A) financial resources.
B) human resources.
C) physical resources.
D) capabilities.
Q:
________ are a subset of a firm's resources and are defined as tangible and intangible assets that enable a firm to take full advantage of other resources it controls.
A) Retained earnings
B) Capabilities
C) Human resources
D) Financial resources