Chapter 4: Firm Resources: Competitiveness and Growth
TRUE/FALSE
1. The insight that competitors do not share certain resources and capabilities specific to one’s firm is key
foundation of the resource-based view.
2. In global business, the institution-based view deals with internal strengths and weaknesses.
3. Capabilities are the primary resources that firms use to develop their strategies.
4. A firm’s resources and capabilities are tangible assets a firm uses to choose and implement its
strategies.
5. Tangible resources are assets easily observable and can usually be quantified.
6. Intangible resources are hard to observe and difficult to quantify.
7. Physical and financial resources and capabilities are called tangible assets.
8. Technology and reputational resources are intangible assets.
9. The value chain is a chain of horizontal activities used in the production of goods and services that
may or may not add value.
10. The value chain consists of primary and support activities.
11. Benchmarking is an assessment as to whether a firm has resources and capabilities to perform a
particular activity in a manner superior to competitors.
12. Capabilities can exist in specific stages of the value chain, or in specific corporate functions.
13. Outsourcing is the process of turning over an organizational activity to an outside supplier, located in
foreign country, which will perform it on behalf of the local firm.
14. Nearshoring is the term opposite to offshoring, meaning returning production back to the home
company.
15. Offshoring is a special form of outsourcing.
16. In-house offshoring is a form of foreign direct investment.
17. Outsourcing is a special form of offshoring.
18. Setting up subsidiaries abroad so the work can be performed in-house but in the foreign location is also
a form of offshoring.
19. The resource-based view focuses on the value-creation, return on investment, imitability, and
operations.
20. The difficulty of identifying the causal determinants of successful firm performance is well described
in two words: causal ambiguity.
21. Overall, value-creating, rare, but imitable resources and capabilities may give firms some temporary
competitive advantage.
22. Only value-creating, rare, and hard-to-imitate resources and capabilities that are organizationally
embedded and exploited can lead to persistently above average performance.
23. Value-creating but not rare resources that are organizationally embedded and exploited can lead to
competitive parity.
24. Value-creating but not rare resources that are organizationally embedded and exploited can secure
above average firm performance.
25. Social complexity refers to the socially complex ways of organizing typical of many firms.
26. According to a McKinsey study, US firms save 58 cents on every dollar invested in offshoring to
India.
27. Original equipment manufacturers (OEMs) are firms that capture some of the design work of the
original firm.
28. Original design manufacturers are firms that execute the design blueprints provided by Western firms.
29. Original equipment manufacturers cover more value chain activities than original design
manufacturers.
30. Original brand manufacturers such as Asian ODM are ambitious and seek to compete directly with
Western firms.
31. Original brand manufacturers cover more value chain activities than original equipment manufacturers.
32. Relentless imitation and benchmarking, while important, is not likely to be a successful strategy for
establishing industry leadership.
33. Benchmarking requires identification of the relative strength and the importance of competitor
resources and capabilities.
MULTIPLE CHOICE
1. The view in international business which deals with outside opportunity threats is also called:
a.
International-business internal view
c.
International-business external view
b.
Institution-based view
d.
Resource-based view
2. An International Business perspective that deals with internal strengths and weaknesses is also called:
a.
Resource-based view
c.
Institution-based view
b.
International-business external view
d.
International-business internal view
3. Which of the following is NOT a primary resource?
a.
Human resources
c.
Tangible assets
b.
Operational capabilities
d.
Intangible assets
4. The resource-based view concentrates on the ________ to identify and leverage sustainable
competitive advantage.
a.
Primary resources
c.
Value creations
b.
Human Resources
d.
Intangible resources
5. A bank overdraft is an example of:
a.
Technological resources
c.
Intangible resources
b.
Financial resources
d.
Physical resources
6. Observable and easily quantified assets are:
a.
Resources and capabilities
c.
Tangible assets
b.
Core competencies
d.
Intangible assets
7. Assets reported on the balance sheet but hard to observe and difficult to quantify are:
a.
Resources and capabilities
c.
Core competences
b.
Tangible assets
d.
Intangible assets
8. Which of the following is a tangible asset?
a.
Innovation resources
c.
Organizational resources
b.
Human resources
d.
Financial resources
9. Which of the following is an intangible asset?
a.
Financial resources
c.
Human resources
b.
Reputational resources
d.
All of these are intangible assets
10. Managerial talents are examples of:
a.
Physical resources
c.
Tangible resources
b.
Human resources
d.
Financial resources
11. A chain of vertical activities used in the production of goods and services that add value is a(n):
a.
Vertical chain
c.
Activity chain
b.
Value chain
d.
Asset chain
12. The value chain consists of two areas:
a.
Research and final assembly
b.
Infrastructure and logistics
c.
Components and final assembly
d.
Primary activities and support activities
13. A comparison as to whether a firm has resources and capabilities to perform a particular activity better
or less well than competitors is:
a.
Performance test
c.
Benchmarking
b.
Asset appraisal
d.
Resources and capabilities test
14. Benchmarking is concerned with which of the following tasks:
a.
Identifying resources relevant to attaining competitive advantage
b.
Assessing the relative strength of resources
c.
Assessing the importance of resources
d.
All of these choices
15. Turning over an organizational activity to an outside supplier that will perform it on behalf of the local
firm is called:
a.
Inshoring
c.
Captive offshoring
b.
Offshoring
d.
Outsourcing
16. Moving an organizational activity to a location abroad is also called:
a.
Offshoring
c.
Captive offshoring
b.
Inshoring
d.
Outsourcing
17. Turning over an organizational activity to another domestic firm is also called:
a.
Outsourcing
c.
Domestic offshoring
b.
Domestic in-house
d.
Nearshoring
18. Setting up subsidiaries abroad when the work is done in-house only at the foreign location is also
called:
a.
Captive offshoring
c.
Inshoring
b.
Offshoring
d.
Outsourcing
19. Which of the following terms describes an activity at a company’s headquarter location?
a.
Captive offshoring
c.
Offshoring
b.
Domestic in-house
d.
Nearshoring
20. Which of the following activities is not part of benchmarking analysis?
a.
Analyzing one’s own resources
b.
Analyzing the importance of resources in an industry
c.
Analyzing the relative strength of competitors’ resources
d.
Measuring domestic outsourcing
21. Which of the following are the four focal points of the resource-based view?
a.
Validity, return on investment, imitability, organizational aspects of resources and
capabilities
b.
Value-creation, return on investment, imitability, organizational aspects of resources and
capabilities
c.
Value-creation, rarity, imitability, organizational aspects of resources and capabilities
d.
Value-creation, rarity, imitability, operation
22. Overall, value-creating, rare, but imitable resources and capabilities that are exploited by the
organization may give firms some:
a.
Temporary competitive advantage
c.
Competitive disadvantage
b.
Sustained competitive advantage
d.
Competitive parity
23. A firm with valuable, rare, but imitable resources and capabilities will have a(n):
a.
Sustained competitive advantage
c.
Competitive parity
b.
Temporary competitive advantage
d.
Competitive disadvantage
24. Overall, valuable, rare, inimitable resources and capabilities that are exploited by the organization may
give firms:
a.
Competitive parity
c.
Temporary competitive advantage
b.
Sustained competitive advantage
d.
Competitive disadvantage
25. The difficulty of systematically identifying the determinants of successful firm performance is also
called:
a.
Causal ambiguity
c.
Ambiguity
b.
Performance indicator
d.
Causal identification
26. The ability of an organization to realize financial gains from the value added created by a firm is
known as:
a.
Profit maximization
c.
Social complexity
b.
Appropriability
d.
Causal ambiguity
27. The way an MNE organizes its cultural differences as one corporate entity is known as:
a.
Social complexity
c.
Social typicality
b.
Organized typicality
d.
Complex organization
28. Which of the following describes the concept of dynamic capabilities
a.
Capabilities of dynamic managers leading a firm
b.
Higher level capabilities enabling firms to continually reinvent itself competitively
c.
Capabilities enabling firms to handle dynamic employees
d.
Lower level capabilities supporting traditional business models
29. When US firms offshore to India, how much do they save on each dollar invested?
a.
10%
c.
58%
b.
45%
d.
80%
30. Firms that execute the design blueprints provided by Western firms are also known as:
a.
Original Equipment Manufacturers
c.
Executive Designers
b.
Blueprint Designing Firms
d.
None of these answers
31. Firms that capture some of the design work of the original firm are called:
a.
Original Design Manufacturers
c.
Design Capturing Firms
b.
Original Equipment Manufacturers
d.
None of these answers
32. Firms that combine low-cost and high-quality manufacturing to completely bypass the work of
Western OEMs are also called:
a.
Original Brand Manufacturers
c.
Original Product Manufacturers
b.
Original Design Manufacturers
d.
None of these answers
33. Which of the following value chain activities is not covered by the original design manufacturers?
a.
Final assembly
c.
Research and development
b.
Components
d.
Marketing
34. Which of the following is the implication for action based on the information in this chapter?
a.
Managers need to build up resources and capabilities for future competition
b.
Relentless imitation or benchmarking, while important, is not likely to be a successful
strategy
c.
Managers need to build firm strengths based on the VRIO framework
d.
All of these answers
ESSAY
1. Identify three categories of primary resources, and provide an example of a company for each
category.
2. Identify two examples of intangible assets.
3. If a firm is a bundle of resources and capabilities, how do they come together to add value?
4. What is your definition of outsourcing? Provide an example.
5. Do a firm’s resources and capabilities always add value? Explain with an example.
6. Using the VRIO framework discuss, using an example, the types of questions that should be asked
about a firm’s resources and capabilities.
7. How does the resource-based view answer the big question in global business: What determines the
success and failure of firms around the globe?
8. Is offshoring beneficial for firms?
9. How do you conduct a benchmarking analysis?
