Chapter 3: Organizational Resources and Competitive Advantage
Chapter 3
Organizational Resources and Competitive Advantage
TRUE/FALSE QUESTIONS
1. Capabilities and resources have the potential to lead to competitive advantage if they
are valuable and unique.
2. If an organization possesses a valuable and unique resource, it is always a source of
competitive advantage.
3. A firm with weak knowledge and learning resources is at risk that its financial
resources will also become weak.
4. Effective training programs can be a source of competitive advantage.
5. An organization’s human resources, physical resources, financial resources,
knowledge and learning resources, and general organizational resources are highly
interconnected.
6. Board members can play important strategic roles in organizations such as providing
advice to managers with regard to strategies and strategic direction.
7. Organizations that cluster near each other typically are at a competitive disadvantage
relative to organizations that are not in clusters.
8. Tacit knowledge can be communicated with precision through written means.
9. Human resource management is a basic activity in the value chain.
10. Stakeholder-based performance measures reflect more of the total value a firm
creates.
Chapter 3: Organizational Resources and Competitive Advantage
MULTIPLE CHOICE QUESTIONS
11. A realized competitive advantage becomes sustainable when:
A. It is unique, valuable, and based on strong financial resources
B. It involves all of the functional areas of the organization
C. It is based on physical assets rather than knowledge
D. It is based on a resource or capability that is difficult to imitate by competitors
and there is no readily available substitute
E. It is based on the quality of the organization’s products and services
12. If an organizational capability or resource is valuable and unique, but it is easy to
imitate:
A. It cannot be a source of competitive advantage
B. It is likely to lead to a sustainable competitive advantage
C. It is a core competency or capability
D. It can be a source of competitive advantage for a period of time
E. None of these is correct
13. A resource or capability that has led to sustainable competitive advantage for a firm
has the following characteristic(s):
A. It is hard to imitate
B. Managers are aware of and taking advantage of the potential of the resource or
capability
C. It is unique
D. It is valuable
E. All of the above
14. What are the probable implications of a firm neglecting its knowledge and learning
resources?
A. It will become weaker financially
B. Its general organizational resources will become weaker
C. Its physical resources will become weaker
D. Its human resources will become weaker
E. All of the above
15. Which of the following is most likely to be a source of sustainable competitive
advantage?
A. A state-of-the art machine that a firm purchases from a supplier
Chapter 3: Organizational Resources and Competitive Advantage
B. A new product
C. A research and development process
D. A plant design
E. A new service
16. Which of the following is least likely to be a source of sustainable competitive
advantage?
A. A unique and valuable relationship with an important stakeholder
B. A computer program
C. An organization’s culture
D. An organization’s reputation
E. A well-known and respected brand
17. All of the following resources and capabilities fall within the category of general
organizational resources except:
A. A strong balance sheet
B. Organizational structure
C. Organizational culture
D. Unique stakeholder relationships
E. A brand name
18. Which ratio measures a firm’s liquidity?
A. Debt-to-equity
B. Current
C. Return-on-assets
D. Asset turnover
E. None of these
19. Which ratio measures a firm’s leverage?
A. Debt-to-equity
B. Current
C. Return-on-assets
D. Asset turnover
E. None of these
20. Which group of stakeholders plays an important role in governing the behavior of top
managers?
A. Managers
Chapter 3: Organizational Resources and Competitive Advantage
B. Employees
C. Board of directors
D. Unions
E. Customers
21. Organizational learning involves:
A. Knowledge retention
B. Knowledge utilization
C. Knowledge sharing
D. Knowledge creation
E. All of the above
22. General organizational resources include such things as:
A. Brands, culture, and an organization’s reputation
B. Financial assets
C. Plants and equipment
D. Knowledge and learning systems
E. None of the above
23. Basic activities of the value chain include:
A. Product/service R&D
B. Information technology
C. Marketing management
D. Human resources/compensation systems
E. Financial management
24. Basic activities of the value chain include all of the following except:
A. Supply chain management
B. Strategic planning processes
C. Marketing management
D. Management of post-transaction contacts
E. Internal operations management
25. Support activities of the value chain include:
A. Internal operations management
B. Transportation
C. Direct sales
D. Installation
Chapter 3: Organizational Resources and Competitive Advantage
E. Information technology
26. Support activities of the value chain include:
A. Human resources/compensation systems
B. Physical location management
C. Distribution management
D. Marketing management
E. Management of post-transaction contacts
27. With regards to the value chain, an organization can develop a competitive
advantage:
A. In any of the basic or support activities
B. In the way basic and support activities are combined
C. In the way internal activities are linked to the external environment
D. Through activities that create value for the customer
E. All of these are ways to develop a competitive advantage
28. Firm performance has traditionally been measured in purely financial terms such as
shareholder returns. What are some of the weaknesses associated with this approach?
A. They are hard to calculate
B. They encourage executives to focus on short-term profits
C. They reflect only current performance, with no expectations about the future
D. There is no link between the measures and the capital provided to the firm
E. None of these
ESSAY QUESTIONS
29. What are the essential characteristics of a resource or capability that leads to a
sustainable competitive advantage? Please explain.
30. What are the basic categories of organizational resources and capabilities and how are
they interconnected? What is likely to happen if a firm neglects one of the resource areas?
31. What is the difference between a tangible and an intangible resource? Give an
example of each? Which of these types of resources is most likely to lead to competitive
advantage? Why?
32. What does organizational learning involve? If a firm is involved in multiple countries,
how is organizational learning affected?
33. Please describe value chain analysis and how it can be used to help firms develop
competitive advantages.