Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
1. Brick-and-mortar assets are considered tangible, whereas financial assets are considered intangible.
a. True
b. False
2. The resource-based view sees capabilities as a firm’s tangible and intangible assets that it uses to choose and implement
its strategies.
a. True
b. False
3. Intangible resources and capabilities are assets that are more easily quantified.
a. True
b. False
4. Most goods and services are produced through a chain of vertical activities which add value.
a. True
5. It is easier to imitate intangible resources/capabilities than tangible ones.
a. True
6. Tightly bundled resources/capabilities may be a disadvantage in high velocity environments.
a. True
7. A value chain for Nike would include shoe manufacturing as a primary activity and Nike branded stores as a support
activity.
a. True
b. False
8. Conducting a value chain analysis helps a firm see how it is good at all its primary and support activities.
a. True
9. Outsourcing is possible for both manufacturing and servicing activities.
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
b. False
10. Offshoring and outsourcing interchangeable concepts.
a. True
11. For any given activity, one of the four choices for managers in terms of modes and locations includes
onshoring.
a. True
b. False
12. Intangible assets include the technological resources a company has that no other company can claim.
a. True
b. False
13. A fundamental question in a value chain analysis is whether a firm’s resources and capabilities add value.
a. True
14. The performance of a firm is not altered negatively or positively by non-value-adding assets.
a. True
b. False
15. In markets where a high quality in a product is expected, providing that level of quality provides little advantage, and
at best could be considered competitive parity.
a. True
16. In order for the VRIO framework to provide effective information, the various capabilities of a company such as
LeapFrog Enterprises needs to be evaluated in isolation from other resources and capabilities.
a. True
17. IBM is an example of how capabilities may cease to add value and instead become core rigidities.
a. True
b. False
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
18. In SWOT analysis, the resource view focuses on OT: opportunities and threats.
a. True
19. In SWOT analysis, the industry view focuses on SW: strengths and weaknesses.
a. True
20. A SWOT analysis of the value chain engages managers in ascertaining a firm’s strengths and weaknesses on
an activity-by-activity basis.
a. True
b. False
21. Causal ambiguity refers to the difficulty of identifying the outcomes of causal determinants.
a. True
b. False
22. Valuable, rare, but imitable resources/capabilities may provide temporary competitive advantage.
a. True
23. Imitation is not likely to be a successful strategy over the long term.
a. True
b. False
24. A sustained competitive advantage can last because not all advantages eventually erode.
a. True
b. False
25. The chapter indicates that Burberry is an example of causal ambiguity.
a. True
b. False
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
26. Many multinationals consist of many people scattered in many different countries. As a result, their invisible
relationships do not add value.
a. True
b. False
27. The logic of the resource-based view is relatively static.
a. True
28. The proposition that firm performance is most fundamentally determined by firm-specific resources and capabilities is
at the heart of the industry-based view.
a. True
b. False
29. Resource-based studies of firm performance need to describe the measurement of firm-specific factors such as
organizational learning, knowledge management, and managerial talent.
a. True
b. False
30. A resource-based view is good at explaining what happened in the past, but has difficulty predicting what will happen
in the future.
a. True
b. False
31. Causal ambiguity is the hallmark of many industries with ambiguous industry structure and blurred boundaries.
a. True
b. False
32. One of the most valuable and organizationally complex resources that is difficult for other firms to imitate is tacit
knowledge within a given firm.
a. True
b. False
33. Strategy execution in a high-velocity industry would be characterized as linear rather than iterative in nature.
a. True
b. False
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
34. Companies in developing countries are the most frequent users of offshoring opportunities.
a. True
b. False
35. Critics suggest that the resource-based view should eliminate dynamic capabilities.
a. True
36. Resource-based theorists readily admit that “the source of sustainable competitive advantage is likely to be
found in different places at different points in time in different industries.”
a. True
b. False
37. How a firm performs different value-adding activities relative to rivals determines the scope of a firm.
a. True
38. When making strategic plans, a manager needs to integrate resources and capabilities that are valuable, rare, and
difficult to imitate with those that do not have these attributes.
a. True
b. False
39. A common mistake made when evaluating a firm’s capabilities is failing to assess them relative to the capabilities of
the firm’s rivals.
a. True
40. One of the most important implications for strategic action is that relentless imitation and benchmarking are important
but not likely to be a sustainable successful strategy.
a. True
b. False
41. In the opening case, which of the following attributes describe IBM is part of the strategy Burberry uses?
a. Outsourcing.
b. Imitation of luxury market competitors.
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
42. A firm’s__________ are its tangible and intangible assets a firm uses to choose and implement its strategies.
a. Resources
b. Dynamic capabilities
c. Core competencies
d. Net worth
43. According to the text, which of the following are intangible resources and capabilities?
a. Trade secrets.
b. Organizational.
c. Formal structures.
d. All of the above.
44. Which view of strategy focuses on how individual firms differ from each other in one industry?
a. Industry-based view.
b. Resource-based view.
c. Organizational-based view.
45. To choose and implement its strategies, Whole Foods uses:
a. Tangible and intangible assets.
b. Capabilities.
c. Human resources and reputation.
d. All of the above.
46. Which of the following statements about resources is true?
a. The dynamics capabilities view makes no distinction between resources and capabilities.
b. Scholars agree that the terms resources and capabilities are interchangeable.
c. A firm uses its tangible assets to choose and implement its strategies.
d. Intangible resources include a firm’s technological capabilities.
47. International outsourcing involves:
a. Offshoring.
b. Onshoring.
c. Reshoring.
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
d. Captive sourcing.
48. Managers who are involved in value chain analysis:
a. Benchmark the firm’s overall capabilities.
b. Assess their firm’s resources and capabilities at a micro, activity-based level
c. Look for ways to commoditize a firm’s product lines.
d. None of the above.
49. In conducting a value chain analysis, a manager at a small manufacturing firm looks at a particular department within
the company and sees that its activities are proprietary to the company’s yet common across the industry. In this case, the
manager would:
a. Definitely work toward outsourcing this activity.
b. Definitely work toward keeping this activity in-house.
c. Want to consider outsourcing this activity, sell the unit involved, or lease the unit’s services to other firms.
d. Try to make the activity less proprietary.
50. The terms outsourcing and offshoring are:
a. Identical in meaning.
b. Two completely separate concepts.
c. Closely related but not identical in meaning.
51. Which of the following is considered a benefit of outsourcing activities?
a. Leverages activities of multiple clients for greater economies of scale.
b. Shares activities with relatively generic attributes across industries.
c. Allows a firm to focus on its core activities.
d. All of the above.
52. A small U.S. company located in the West has outsourced its payroll activities to a company in a Midwestern state.
This action is known as:
a. Offshoring.
b. Onshoring.
c. Reshoring.
d. Reshoring.
53. Having valuable, but common resources/capabilities leads to:
a. Competitive parity.
b. Competitive advantage.
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
c. Lack of competition.
d. Competitive disadvantage.
54. The VRIO framework is based on a(n):
a. Captive-sourcing view.
b. Industry-based view.
c. Resource-based view.
d. Institutional-based view.
55. The relationship between valuable resources and capabilities and firm performance is:
a. Only a factor for large manufacturing organizations.
b. Most often a competitive disadvantage.
c. The primary factor is deciding whether to exit an industry.
d. Basis for determining whether activities are value-adding or non-value-adding.
56. In the VRIO framework, the questions of value and rarity are:
a. Determinants of the level of competitive advantage.
b. Mostly unrelated issues.
c. Less important than whether a firm’s activity can be imitated.
d. Essentially the same question.
57. When a company’s product is easily imitate:
a. Valuable and rare resources are not really a source of competitive advantage.
b. The company needs more tangible resources.
c. The company benefits from causal ambiguity.
d. None of the above.
58. A firm with valuable, rare, and hard-to-imitate resources and capabilities will:
a. Always have a sustained competitive advantage.
b. Have difficulty sustaining a competitive advantage if it is not well organized.
c. Outsource all activities except for core activities.
d. Be highly susceptible to commoditization.
59. One of the ways in which a firm makes it more difficult for other firms to imitate its resources and
capabilities is through:
a. Direct duplication.
b. Non-value-adding activities.
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
c. Causal ambiguity.
d. None of the above
60. Traditional resource-based view:
a. Overemphasizes leveraging existing resources/capabilities.
b. Overemphasizes developing new resources/capabilities.
c. Does not include an assessment of a firm’s capabilities.
d. Is primarily focused on a firm’s tangible resources and capabilities.
61. Academic research has found support for ______________effects on firm performance.
a. Resource-based
b. Industry-based
c. Complementary specific collective
62. Which of the following is better performed in-house rather than being outsourced?
a. An activity with a high degree of industry commonality.
b. An activity with a high degree of commoditization.
c. An industry-specific and firm-specific (proprietary) activity.
63. The VRIO framework does not include capabilities and resources that are:
a. Valuable.
b. Rare.
c. Imitable.
d. Organizationally embedded.
64. Examining whether a firm has resources and capabilities to perform a particular activity in a manner
superior to competitors is known as _________ in SWOT analysis.
a. Parity
b. Competition
c. Benchmarking
65. If Company A and Company B both have valuable assets that are identical, the text indicates that in order
for A to gain a competitive advantage over B, A must:
a. Use its assets differently.
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
b. Find some basis for suing B.
c. Get out of its existing business.
d. Increase its quantity of those assets.
66. Which of the following is a leading debate about the resource-based view of strategy?
a. The identification of a clearly defined industry.
b. The necessity of choosing a cost leadership or differentiation strategy.
c. The benefits of strategic groups within an industry.
d. The need to move toward dynamic, rather than static, capabilities.
67. Methods that measure organizational learning, knowledge management, and managerial talents:
a. Look at unobservable firm-specific characteristics.
b. Result in observable consequences of unobservable resources.
c. Are subject to methodological criticisms.
d. All of the above.
68. Which of the following is an excellent example of a firm’s tacit knowledge?
a. The static nature of the firm’s resources.
b. Familiarity with the preferences of the firm’s customers.
c. Hard-to-imitate aspect of the firm’s premier product.
d. The firm’s reputation within the industry.
69. Firm A designs an innovative product. Firm B manufacturers the product based on the designs provided by Firm A.
Firm C markets the product in global markets. In this case, Firm B is considered to be the:
a. Original equipment manufacturer (OEM).
b. Original design manufacturer (ODM).
c. Original brand manufacturer (OBM).
d. None of the above.
70. Tacit knowledge is probably the most _________ resource.
a. Static
b. Organizationally complex resource
c. Hard-to-imitate
71. Recent research suggests that capabilities in very dynamic high-velocity industries (such as IT) are
characterized by all of the following EXCEPT:
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
a. Simple (not complicated).
b. Experiential (not analytic).
c. Linear (not iterative processes).
72. Which of the following is not involved in hypercompetition?
a. A shortened window during which a firm may command competitive advantage.
b. Static yet deliberate maneuvering.
c. Unleashing a series of small, unpredictable, but powerful actions.
73. Recent aspects of outsourcing include all of the following EXCEPT:
a. “Business process outsourcing” (BPO).
b. High-end services to countries such as India.
c. Digitization and commoditization of service work.
d. Definite long-term benefits.
74. All of the following are arguments used by proponents of offshoring EXCEPT:
a. It is not true that some US employees may lose their jobs.
b. Western firms are able to tap into low-cost and high-quality labor.
c. Firms can focus on their core capabilities.
d. It creates enormous value for firms and economies.
75. Critics of offshoring make all of the following arguments except:
a. If even core functions such as engineering, R&D, manufacturing, and marketing can—and often
should—be moved outside the country, what is left of the firm?
b. In some cases, it undermines national security.
c. Offshoring increasingly results in job losses in high-end areas such as design, R&D, and IT/BPO.
d. Many large US firms claim that they are “global companies” but they seem to be bound by “American
values.”
76. Critics of outsourcing agree that firms who outsource aspects of their activities are ineffective at:
a. Exploiting cheap labor.
b. Treating people as “tradable commodities.”
c. Upholding corporate social responsibility.
d. Protecting customer privacy.
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
77. Taking advantage of strengths embodied in resources/capabilities and overcoming weaknesses deals with
which fundamental question?
a. Why do firms differ?
b. What determines the scope of the firm?
c. How do firms behave?
78. When it comes to competing internationally, firms that are successful domestically typically:
a. Are more successful internationally.
b. Are on their way to becoming global cult brands.
c. Find that cross-border capabilities may or may not be the same.
d. Find that factors that lead to success domestically are easily translated to competing internationally.
79. In assessing and choosing a firm’s strategy, a manager will usually find that benchmarking is:
a. Likely to be the most successful strategy.
b. Can be a valuable part of evaluating a firm’s capabilities.
c. Unimportant to any well-thought-out strategy.
80. Firms that have a sustained competitive advantage will find that:
a. Anticipation of future needs is still necessary.
b. The particular advantage will last indefinitely.
c. Sustained competitive advantage is realistic in today’s global competition.
d. They have eliminated all non-value-adding activities.
81. List several resources for a firm of your choice, and describe why each is considered a tangible or intangible
resource. How does the dynamic capabilities view distinguish between resources and capabilities?
82.
What is the relationship of benchmarking to the value chain? What cautions might a firm keep in mind when
benchmarking?
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
83. How has offshoring contributed to complex supply-chain management? What are some examples?
84. Describe captive sourcing and provide an example of how a company might use it.
86. How is it possible for a strength to become a weakness? How does IBM illustrate that possibility?
87. As you read through the text, you may be looking for secrets of success in doing business globally. This chapter gives
Burberry
as an example of a firm that has been very successful. What did it say about the problem of identifying the
reason for Burberry’s success? If the reason for success cannot be determined, should we abandon any attempt
to develop a rational strategy and simply depend on luck?
ANSWER:
Name:
Class:
Date:
Chapter 3 – Leveraging Resources and Capabilities
TEST BANK
88. What do you think about the use of offshoring by MNEs? Is it a threat to jobs in the United States? Has it benefited
MNEs and other countries more than the United States?
89. Based on the dynamic capabilities view, how would you say that industries in slow-moving industries differ
from those in fast-moving, high-velocity industries?
90. If the VRIO framework is meant to help managers make decisions how best to use the firm’s strengths and
weaknesses when developing strategy, what are the three implications the text stresses that managers must keep
in mind?