61. Judgment is the capacity for making a successful decision when
a. there are multiple decision criteria.
b. no obviously correct model or rule is available.
c. cognitive biases create barriers to rationality.
d. there are contradictions between the firm‘s vision and its implemented strategy.
62. The most numerous of the following organizational characteristics are
a. resources.
b. capacities.
c. capabilities.
d. core competencies.
63. Capabilities typically come from
a. individual resources.
b. one unique resource.
c. several outstanding resources used independently.
d. combining resources.
64. All of the following are tangible resources EXCEPT
a. production equipment.
b. distribution centers.
c. a firm’s reputation.
d. formal reporting structures.
65. Tangible resources include
a. assets that are people-dependent, such as know-how.
b. assets that can be observed and quantified.
c. organizational culture.
d. a firm’s reputation.
66. Compared to intangible resources, tangible resources are
leverage.
a. less; easier b.
less; harder c.
more; harder
d. more; easier
constrained because they are to
67. Compared to tangible resources, intangible resources are
a. of less strategic value to the firm.
b. less likely to be the focus of strategic analysis.
c. a superior source of capabilities.
d. more likely to be reflected on the firm‘s balance sheet.
68. Compared to tangible resources, intangible resources are and
a. less visible; more difficult to copy.
b. less visible; less difficult to copy.
c. more visible; more difficult to copy.
d. more visible; less difficult to copy.
69. The critical executive skill of the current business age is the ability to
a. manage technological innovation.
b. manage human intellect.
c. initiate change and overcome inertia.
d. coordinate tangible and intangible resources.
70. Which of the following is NOT a reputational resource?
a. customer opinion that the firm’s products are high quality
b. employees’ opinion of the firm as a terrible place to work
c. suppliers‘ opinion that the firm pays its bills in a timely manner
d. customer opinion that using the firm’s products makes them attractive
71. An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has
a highly regarded chef, and many long-term kitchen and wait staff who work together smoothly. It has a reputation
for dishes of consistently high quality and an appealing dining atmosphere. What should the investor consider when
making a decision?
a. The investor will find that the success of this restaurant is so heavily based on human resources that the
business will likely be subject to inertia in the future.
b. The investor will find that the restaurant’s financial statements undervalue the true value of its resources.
c. The investor should be aware that intangible assets are difficult to leverage into additional business.
d. The investor should search for a firm which has competitive advantages based on tangible resources.
72. Which of the following is a true statement about capabilities?
a. Capabilities are often developed in specific functional areas such as manufacturing, R&D, and marketing.
b. Valuable capabilities are based almost entirely on tangible resources.
c. Capabilities based on human capital are more vulnerable to obsolescence than other intangible capabilities
because of the tendency for employee knowledge to become outdated.
d. The link between firm financial performance and capabilities is dependent on whether the capabilities are
based on tangible or intangible resources.
73. When firms lay off employees, they are
a. treating employees as an intangible resource.
b. recognizing the reduced value of labor in the value chain.
c. eroding the organization’s knowledge resources.
d. temporarily sacrificing a tangible asset that is easily replaced.
74. Because firms combine tangible and intangible resources to create capabilities,
a. these capabilities are fragile and subject to sudden loss of value.
b. capabilities are often based on developing, carrying, and exchanging information and knowledge through the
firm’s human capital.
c. capabilities are easily transferred from one firm to another as employees change jobs.
d. these types of capabilities are considered primary activities in the value chain.
75. can be viewed as the capacity to take action.
a. Strategic assets
b. Human capital
c. Core competencies
d. Functional capabilities
76. is an example of a capability that is based in the functional area of distribution.
a. Effective use of logistics management techniques
b. Effective control of inventories through point–of-purchase data collection
c. Effective organizational structure
d. Product and design quality
77. Capabilities
a. tend to be developed through firm-wide interactions and reside in the firm as a whole.
b. tend to be concentrated in the support activities of the value chain.
c. tend to be concentrated in the primary activities of the value chain.
d. are often developed in specific functional areas.
78. Samsung has core competencies in manufacturing its own components and components for other competitors,
which help it to predict future innovations and bring them to market quickly. It is in direct competition with Apple in
the smartphone market. Its competencies allow Samsung to Apple’s innovations.
a. get a first-mover advantage over
b. prevent
c. block
d. imitate
79. Innovation, consumer understanding, brand-building, go–to-market, and scale are activities that P&G performs well
and are examples of the company‘s
a. tangible resources.
b. intangible resources.
c. core competencies.
d. capabilities.
80. To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT
a. be technologically innovative.
b. be hard for competing firms to duplicate.
c. be without good substitutes.
d. be valuable to customers.
81. From a customer’s point of view, for an organization’s capability to be a core competence it must be
a. inimitable and unique.
b. valuable and unique.
c. inimitable and nonsubstitutable.
d. valuable and nonsubstitutable.
82. Valuable capabilities
a. allow the firm to exploit opportunities in its external environment.
b. allow the firm to neutralize threats in its internal environment.
c. allow the firm to exploit opportunities or neutralize threats in its external environment.
d. allow the firm to neutralize opportunities in its internal environment.
83. Capabilities that other firms cannot develop easily are classified as
a. costly to imitate.
b. rare.
c. valuable.
d. nonsubstitutable.
84. A major department store chain has a strict policy of banning photographs or videos of its sales floor or back-room
operations. It also does not allow academics to conduct studies of it for publication in research journals. In fact,
some of its own top managers refer to the management‘s policies on secrecy as “verging on paranoid.” These
policies indicate that the top management of the firm believes the organization’s core competencies are
a. causally ambiguous.
b. unobservable.
c. imitable.
d. common.
85. Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many customers go to the
restaurant just for the appetizer, and it was at the center of a recent highly positive review by a food critic.
Preparation involves common ingredients and average culinary skills but requires a very high oven temperature,
which significantly increases utility costs. Several competing restaurants have since added their own version of the
appetizer to their menu. Which criterion for assessing capabilities/core competencies is met?
a. The restaurant has the capability to develop something that is valuable.
b. The restaurant has the capability to develop something that is rare.
c. The restaurant has the capability to develop something that is costly to imitate.
d. All of these criteria are met.
86. In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are
but no longer
a. rare; valuable.
b. valuable; rare.
c. socially complex; rare.
d. valuable; causally ambiguous.
87. The capabilities used to create the sustainability/green initiatives at Walmart and Target are
to be
a. rare; valuable.
b. valuable; rare.
c. socially complex; rare.
d. valuable; causally ambiguous.
but less likely
88. Costly-to-imitate capabilities can emerge for all of the following reasons EXCEPT
a. lack of scientific transference.
b. social complexity.
c. unique historical conditions.
d. causal ambiguity.
89. A financial management firm has existed for more than 70 years. Some of its original clients’ grandchildren are now
clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the
firm. Many have even married into each other’s families. This firm has capabilities that would be costly to imitate
because of its
a. access to large amounts of financial capital.
b. causally ambiguous core competencies.
c. social complexity.
d. unique historical conditions.
90. Southwest Airlines has a complex interrelationship between its culture and staff that adds value in ways that other
airlines cannot, such as jokes on flights or the cooperation between gate personnel and pilots. These examples
illustrate which of the following criteria for sustainable competitive advantage?
a. valuable
b. rare
c. costly to imitate
d. nonsubstitutable
91. McDonald’s culture, with an emphasis on cleanliness, consistency, service, and the training that reinforces the value
of these characteristics, illustrates which of the following criteria for sustainable competitive advantage?
a. valuable
b. rare
c. costly to imitate
d. nonsubstitutable
92. Organizational culture is
a. amorphous and changeable.
b. not easily imitable.
c. so difficult to analyze that most firms should choose to ignore it.
d. typically fragile in the face of changes in the external environment.
93. Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years. Gamma has
gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the
firm’s internal functioning and technology as it can legally, yet Gamma cannot understand why Ardent has a
competitive advantage over it. The source of Ardent’s success is
a. impregnable.
b. causally ambiguous.
c. rationally obscure.
d. elusive.
94. If a firm offers a service that is valuable, rare, and costly to imitate, but a substitute exists for the service, the firm
will
a. achieve competitive parity.
b. have a competitive disadvantage.
c. have a temporary competitive advantage.
d. gain a sustainable competitive advantage.
95. ACME Corp. is a leading provider of radios to the commercial market. Its products all rely on printed circuit-board
technology. ACME has protected its market leadership with continued advancements in this technology, which it
patents. A competitor has developed a radio for this market with equal performance but uses a software-based
technology instead of circuit boards. ACME’s technology leadership fails which capability test?
a. the value test
b. the rareness test
c. the substitutability test
d. the costly-to-imitateIt fails all three of these tests
96. Firms that achieve competitive parity can expect to
a. earn below-average returns.
b. earn average returns.
c. earn above-average returns.
d. initially earn above-average returns, declining to average returns.
97. A veterinary practice has added a pet boarding and grooming facility. Most of the practice‘s competitors also
provide these services. The veterinary practice is gaining competitive
a. advantage.
b. parity.
c. disadvantage.
d. neutrality.
98. A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu, based solely on
organically raised chicken and beef, and organic seasonal produce. It has opened new locations in other cities, and
these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage
will be
a. permanent.
b. sustainable.
c. temporary.
d. defensible.
99. Value chain activities are
a. the activities most likely to be imitated by competitors.
b. activities or tasks the firm completes in order to produce products and then sell, distribute, and service those
products in ways that create value for customers.
c. the core competencies of the organization.
d. the activities most crucial to implementing the firm’s business strategy.
100. Value chain activities include all of the following EXCEPT
a. supply–chain management.
b. operations.
c. management information systems.
d. distribution.
101. Examples of support activities include all of the following EXCEPT
a. finance.
b. human resources.
c. follow-up service.
d. management information systems.
102. Value chain analysis is a tool used to
a. analyze a firm’s external environment for value-creating opportunities.
b. analyze a firm’s value chain activities and support functions in isolation from its competitors’ value chain.
c. understand the parts of the firm’s operation that create value and those that do not.
d. identify the firm’s core competencies in each of the primary activities of the firm.
103. Firms that have strong positive relationships with suppliers and customers are said to have
ingredient to creating value.
a. customer value
b. social capital
c. effective marketing
d. an attractive industry
, an essential
104. Knowledge transfer and access to resources within the value chain are enhanced by
a. guidelines for sharing knowledge and resources.
b. social capital.
c. penalties for not sharing knowledge and resources.
d. training employees on how to cooperate.
105. To build social capital whereby resources such as knowledge are transferred across organizations requires
between the parties.
a. a contract
b. determination
c. confidence
d. trust
106. Outsourcing is the
a. spinning off of a value-creating activity to create a new firm.
b. selling of a value-creating activity to other firms.
c. purchase of a value-creating activity from an external supplier.
d. use of computers to obtain value-creating data from the Internet.
107. A major reason outsourcing is effective is that
a. it increases the innovative potential of the firm.
b. few firms possess superior capability in all primary and support activities.
c. it permits unlimited access to capital resources.
d. competitors do not have access to the same external sources.
108. Which of the following is TRUE about outsourcing?
a. Outsourcing allows firms to be more flexible and requires minimal coordination.
b. Outsourcing allows firms to concentrate on those areas in which they can create value.
c. Outsourcing strengthens the creative and innovative functions within the firm.
d. Outsourcing is effective only when it includes all support activities.