Crafting and Executing Strategy, 22e (Thompson)
Chapter 4 Evaluating a Company’s Resources, Capabilities, and Competitiveness
1) In evaluating how well a company’s strategy is working, the best place to start is with a
A) SWOT analysis.
B) clear view of what that strategy entails.
C) value chain analysis.
D) competitive strength analysis.
E) financial ratio analysis.
2) When SunPower’s managers engage in the process of developing a list of questions to evaluate
their company’s internal situation, which question does not address the task of evaluating
SunPower’s resources and competitive position?
A) What strategic issues and problems merit front-burner managerial attention at SunPower?
B) How well is SunPower’s present strategy working?
C) Which are SunPower’s least and most profitable geographic market segments?
D) Is SunPower competitively stronger or weaker than key rivals?
E) How do SunPower’s value chain activities impact its cost structure and customer value
proposition?
3) Choose the analytical tool that does not evaluate how well Apple Inc.’s strategy and
competitive approach are currently working.
A) resource and capability analysis
B) benchmarking
C) value chain analysis
D) Porter’s three tests for evaluating diversification outside the core business
E) competitive strength assessment
4) A superior indicator of how sound W.L. Gore’s strategy is and whether or not the strategy
signals strong execution is
A) falling short of its stated financial objectives, that is, its financial performance is well below
the industry average, and its market share gains reflect short-term preferences for capacity
maximization.
B) remaining inattentive to possible improvements in its functional areas, creating stretch
business goals, and providing a product-focused value proposition to customers.
C) foregoing initiatives designed to build market share and to promote corporate responsibility.
D) achieving its stated financial and strategic objectives via improvements in its internal
processes such as defect rate, order fulfillment, delivery times, days of inventory, and employee
productivity.
E) undertaking new initiatives to promote corporate social responsibility.
5) ________ is not a useful financial ratio indicating how well a company’s strategy is working.
A) Return on stockholders’ equity
B) The company’s gross profit margin
C) Quick (or acid test) ratio
D) Market share
E) A long-term debt to equity
6) Key financial ratios that could help analysts measure Whole Foods’ profitability do not
include
A) operating profit margin.
B) return on capital employed.
C) net return on assets.
D) inventory turnover.
E) return on stockholders’ equity.
7) One important indicator of how well a company’s present strategy is working is whether
A) it has more core competencies than close rivals.
B) its strategy is built around at least two of the industry’s key success factors.
C) the company is achieving its financial and strategic objectives and whether it is an above-
average industry performer.
D) it is customarily a first-mover in introducing new or improved products (a good sign) or a
late-mover (a bad sign).
E) it is subject to weaker competitive forces and pressures than close rivals (a good sign) or
stronger competitive forces and pressures (a bad sign).
8) Key functional strategies of a company include all of the following except
A) R&D, technology, and product design strategies.
B) production and information technology and supply chain management strategies.
C) human resource and finance strategies.
D) sales, marketing, and distribution strategies.
E) alliance and partnerships as well as merger and acquisition growth strategies.
9) A company’s resources and capabilities represent
A) the firm’s net working capital and related determinants for measuring operating performance
and capabilities.
B) the firm’s competitive assets that determine its competitiveness and ability to succeed in the
marketplace.
C) whether the firm has the industry’s most efficient value chain.
D) management’s sources and uses of funding for new strategic initiatives.
E) positive trends with relevant cultural factors related to buyers’ choices and product
modifications.
10) If you were asked to use a powerful analytical tool to size up Amazon’s competitive assets
and determine whether they can provide the foundation necessary for its competitive success in
the marketplace, you would choose
A) VRIN tests.
B) SWOT analysis.
C) competitive strength matrix analysis.
D) financial and asset management analysis.
E) value chain analysis.
11) The difference between a resource and a capability is a resource
A) is a productive input or competitive asset, whereas a capability is the capacity of the firm to
perform some internal activity competently.
B) is a reserve supply or back-up supply function, whereas a capability is the ability to manage
the resource function.
C) is a mechanism used for carrying out some responsibility, whereas a capability possesses the
ability to monitor the resource.
D) represents the firm’s fixed assets, whereas a capability defines whether the firm is competent
to perform some function with these assets.
E) represents the firm’s human assets, whereas a capability defines the skills and knowledge of
these human resources.
12) Nestlé’s brand management capabilities for its 2000-plus food, beverage, and pet care brands
are
13) A capability of the firm is not considered to be
A) the capacity of a firm to competently perform some internal activity.
B) referred to as a competence.
C) developed and enabled through the deployment of a company’s resources or some
combination of its resources.
D) a competitively valuable resource.
E) related to the level of resources available.
14) When strategic managers assess the competitive power of company resources, what matters
is
A) whether it helps differentiate a company’s product offering from the product offerings of rival
firms.
B) whether the resource is really competitively valuable, if it is rare and something competitors
lack, how hard it is to copy or imitate, and how easily it can be trumped by the substitute
resource strengths and competitive capabilities of rivals.
C) whether customers are aware of the resource and view it positively enough to boost the
company’s brand name reputation.
D) whether the resource is something rivals are unable to perform, if it is an important
differentiating product or service feature, how strongly it contributes to the company’s brand
image, and if it is the foundation of a cost-based advantage.
E) whether the resource is technology based or based on superior marketing know-how.
15) Tangible resources do not include
A) physical resources.
B) financial resources.
C) human assets.
D) technological assets.
E) organizational resources.
16) Tangible resources include
A) human assets and intellectual capital, which can include the talent of the work force and the
creativity and innovativeness of certain personnel.
B) reputational assets, which can include the company’s reputation for quality, service, and
reliability as well as its reputation for fair dealings with suppliers.
C) relationships such as alliances that provide access to technologies, specialized know-how, or
geographic markets.
17) Among W.L. Gore’s tangible resources are
A) human assets and intellectual capital.
B) creativity, production technologies, and patents.
C) brand, image, and reputation.
D) relationships.
E) company culture.
18) Starbucks has hired you to make a systematic inventory of its competitive capabilities. To do
so, you would conduct an assessment of Starbucks’
A) resources and functions.
B) competitive set via a strategy matrix.
C) sustainability initiatives and resource bundles.
D) cross-functional systems and collaborative resource methodology.
E) financial statements and managerial depth charts.
19) A company that lacks a stand-alone resource that is competitively powerful may attempt to
develop a competitive advantage through
A) improved employee training programs, new marketing promotions, or technological
enhancements to production processes.
B) the development of a new business strategy that draws upon existing resource strengths.
C) extensive strategic planning and resource identification sessions involving managers at all
levels of the organization.
D) bundled resources that enable superior performance of cross-functional capabilities that can
be leveraged to support its business model and strategy.
E) devising clever approaches to turning resource weaknesses into resource strengths.
20) Organizational capabilities are virtually always
A) knowledge based, residing in people and in the company’s intellectual capital, or in
organizational processes and systems, which embody tacit knowledge.
B) more complex than resources and are exercised only through key personnel.
C) require constant evaluation to ensure cooperative support from management.
D) easier and less challenging to categorize than resources because there are fewer to be
concerned about.
E) reflective of the industry’s driving forces.
21) ________ is/are (a) set(s) of linked and closely integrated competitive assets centered around
one or more cross-functional capabilities.
A) Organizational assets
B) Resource bundles
C) Resource capabilities
D) A functional method compilation
E) An integrated asset advantage
22) A sustainable competitive advantage is gained when a company
A) has durable competitive assets that are central to its strategy and superior to those of rival
firms.
B) has sufficient resources to expedite its strategy.
C) realizes its inherent weaknesses are transformable to advantages.
D) can stand out relative to rivals because of resource utilization.
E) has resources in well-populated geographical locations.
23) The four tests of a resource’s competitive power are often referred to as the
A) SCIR test, which asks if a resource is sustainable, competitive, internalized, and reproducible.
B) competitive advantage sustainable method test.
C) reliability resources simulation.
D) VRIN test, which asks if a resource is valuable, rare, inimitable, and nonsubstitutable.
E) organizational capability metric analysis.
24) The spotlight in analyzing a company’s resources, internal circumstances, and
competitiveness includes such questions/concerns as
A) whether the company is located all over the globe.
B) whether the company’s key success factors are more dominant than the key success factors of
close rivals.
C) whether the company has the industry’s most efficient and effective value chain.
D) what the company’s resource strengths and weaknesses are in relation to the market
opportunities and external threats.
E) what new acquisitions the company would be well advised to make in order to strengthen its
financial performance and overall balance sheet position.
25) Choose the indicator that is not relevant in identifying a company’s present strategy
A) the key functional strategies (R&D, supply chain management, production, sales and
marketing, HR, and finance) a company is employing
B) management’s planned, proactive moves to outcompete rivals (via better product design,
improved quality or service, wider product lines, and so on)
C) the company’s mission, strategic objectives, and financial objectives
D) moves to respond and react to changing conditions in the macro-environment and in industry
and competitive conditions
E) the strategic role of its collaborative partnerships and strategic alliances with others
26) The best quantitative evidence of whether a company’s present strategy is working well is
A) whether the company has more competitive assets than it does competitive liabilities.
B) whether the company is in the industry’s best strategic group.
C) the caliber of results the strategy is producing, specifically whether the company is achieving
its financial and strategic objectives and whether it is an above-average industry performer.
D) whether the company has a shorter value chain than close rivals.
E) whether the company is in the Fortune 500.
27) ________ cannot determine how effective a company’s current strategy is working.
A) Whether the company’s sales are growing faster, slower, or about the same pace as the
industry as a whole, thus resulting in a rising, falling, or stable market share
B) Whether it has a larger number of competitive assets than competitive liabilities and whether
it has a superior quality product
C) The firm’s image and reputation with its customers
D) Whether its profit margins are rising or falling and how large its margins are relative to those
of its rivals
E) Evidence of improvement in internal processes such as defect rate, order fulfillment, delivery
times, days of inventory, and employee productivity
28) A resource of a firm is considered to be
A) a market opportunity.
B) an environmental threat.
C) the capacity of a firm to competently perform some internal activity.
D) a competitive deficiency.
E) deployed to develop and enable a firm’s capabilities.
29) How are a company’s organizational capabilities developed and enabled?
A) by strengthening the traditions that company executives are committed to maintaining
B) through deployment of a company’s resources or some combination of its resources
C) by talking openly about the problems of the present company and determining how new
behaviors will improve performance
D) by shifting from decentralized to centralized decision-making
E) by urging company personnel to search outside the company for work practices and operating
approaches that may be an improvement over what the company is presently doing
30) The best example of a company resource is
A) having higher earnings per share and a higher return on shareholders’ equity investment than
key rivals.
B) being totally self-sufficient such that the company does not have to rely in any way on key
suppliers, partnerships with outsiders, or strategic alliances.
C) having proven technological expertise and an ability to churn out new and improved products
on a regular basis.
D) having a larger number of competitive assets than competitive liabilities.
E) having more built-in key success factors than rivals.
31) A good example of a company’s resources does not include
A) more intellectual capital and better e-commerce capabilities than rivals
B) fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product
quality and performance
C) having higher earnings per share and a higher stock price than key rivals
D) a well-known brand name and enjoying the confidence of customers
E) a lower-cost value chain than rivals
32) If a company does not possess standalone resource strengths capable of contributing to
competitive advantage,
A) all potential for competitive advantage is lost.
B) it is unlikely to survive in the marketplace and should exit the industry.
C) it may have a bundle of resources that can be leveraged to develop a distinctive competence.
D) it is virtually blocked from using offensive strategies and must rely on defensive strategies.
E) its best strategic option is to revamp its value chain in hopes of creating stronger competitive
capabilities.
33) Resource and capability analysis is designed to
A) ascertain the internal marketplace of non-distinct divisions of the company.
B) ascertain which of a company’s resources and capabilities are competitively valuable.
C) stimulate demand for a product.
D) ascertain to what extent a competitor can sustain a competitive advantage.
E) stimulate economic growth for companies within the industry.
34) Resource and capability analysis is achieved by
A) probing the caliber of a firm’s competitive assets relative to those of rival firms.
B) attaining price stability.
C) analyzing only internal strengths and weaknesses through a matrix comparison model.
D) cost-benefit analysis of the company’s core product sales.
E) performing resource-specific activities within the organization to allocate available capital.
35) When a company has become proficient in modifying, upgrading, or deepening the
company’s resources and capabilities in response to its changing environment and market
opportunities, it is called the company’s
A) dynamic capability.
B) core competence.
C) distinct competence.
D) strategic assessment.
E) benchmarking exercise.
36) A company that has competitive assets that are central to its company strategy and superior
to those of rival firms creates a
A) long-term derivative strategy.
B) cash flow feasibility analysis.
C) competitive advantage over other companies.
D) resource deployment strategic plan.
E) cost underestimation and benefit overestimation.
37) The competitive power of a company resource strength or competitive capability hinges on
all of the following except
A) how hard it is for competitors to copy.
B) whether it is rare and something rivals lack.
C) whether it is really competitively valuable and has the potential to contribute to a competitive
advantage.
D) whether it is nonsubstitutable.
E) whether it is readily available for rivals to adopt.
38) Which two factors inhibit the ability of rivals to imitate a firm’s most valuable resources and
capabilities?
A) social ambiguity and causal uncertainty
B) social simplicity and causal complexity
C) collective complexity and causal ambiguity
D) social complexity and causal ambiguity
E) social simplicity and causal uncertainty
39) A competitively valuable resource or capability is a company’s
A) enabling foundation of its business model.
B) equally valuable substitute resource providing a competitive advantage.
C) assessment of the availability of superior substitutes.
D) unsurpassed worker productivity and product quality.
E) unique piecework incentive system, providing a competitive advantage.
40) Imitation by rivals is most challenging when
A) resources are unique.
B) resources must be built over time.
C) capabilities reflect a high level of social complexity and causal ambiguity.
D) resources and capabilities require a high level of capital investment.
E) resources are primarily intangible.