END-OF-CHAPTER GUIDE
*Review Questions and Answers
*Critical Discussion Questions and Answers
*Global Action
*Closing Case
REVIEW QUESTIONS AND ANSWERS
1. Describe at least three types of tangible and intangible resources and capabilities.
Tangible resources and capability include the following four types:
oFinancial resources and capabilities.
oPhysical resources and capabilities: plants, offices, and equipment, their
geographic locations, and access to raw materials and distribution channels.
Intangible resources and capabilities (assets that are hard to observe and difficult to
quantify) include the following three:
oHuman resources and capabilities: the knowledge, trust, and talents
oInnovation resources and capabilities: a firm’s assets and skills to (1)
oReputational resources and capabilities: a firm’s abilities to develop and
2.In the text, are human resources used as an example of tangible or intangible resources?
Do you agree with that classification? Why or why not?
They are listed as intangible. Some define intangible as something that does not have
physical existence. That does not apply to humans but the text defines intangible as
3. What is meant by “commoditization”?
Commoditization is a process of market competition through which unique products that
4. When analyzing a value chain with a VRIO framework, what is the most important
question to begin with and why?
Do firm resources and capabilities add value? Only value-adding resources can lead to
5. Show how the rarity of capabilities is an advantage for both a firm and a job seeker.
Only valuable and rare resources and capabilities have the potential to provide some
6. What is the difference between outsourcing and captive sourcing?
7. How can SWOT analysis be used in value chain analysis? Use an example to support
your answer.
Value chain analysis engages managers to ascertain a firm’s strengths and weaknesses
8. Which is more difficult: imitating a rival’s tangible resources or its intangible resources?
9. How do complementary assets and social complexity influence a firm’s organization?
Complementary assets are the combination of resources and assets that enable a firm to
10. If a firm is successful domestically, is it likely to be successful internationally? Why or
why not?
This debate is an extension of the larger debate on whether international business (IB) is
11. After reviewing the arguments for and against offshoring, state your opinion on this issue.
The important thing is not so much the answer as the extent to which the student
12. ON CULTURE: How can differences in values and traditions affect the success of
offshoring?
Since we are dealing with cultural differences in different countries, there are many ways
13. Identify a developed country on PengAtlas Map 1.1, and explain why it may be the
location of offshoring from a firm in an emerging economy.
Students may select various possibilities. The reasons for a firm in an emerging economy
14. What is one common mistake that managers often make when evaluating their firm’s
capabilities?
15. What is the likely result of relentless imitation or benchmarking?
Imitators have a tendency to mimic the most visible, the most obvious, and consequently,
16. Why is it a good idea for the VRIO framework to focus on future competition?
17. Check Peng Map 1.1, and imagine that your firm is headquartered in a developed
country. Pick an emerging economy that your firm may enter. Explain what resources and
capabilities your firm has that may enable it to succeed in this new market.
CRITICAL DISCUSSION QUESTIONS AND ANSWERS
1. Pick any pair of rivals (such as Samsung/Apple, Boeing/ Airbus, and LEGO/Hasbro), and
explain why one outperforms another.
This is a question in which the answer is not as important as the thought process and the
2. Rank your business school relative to the top three rival schools in terms of the following
six dimensions. If you were the dean with a limited budget, from a VRIO standpoint,
where would you invest precious financial resources to make your school number one
among rivals? Why?
This is a question in which the answer is not as important as the thought process and the
3. ON ETHICS: Since firms read information posted on competitors’ websites, is it ethical
to provide false information on resources and capabilities on corporate websites? Do the
benefits outweigh the costs?
This is a question in which the answer is not as important as the thought process and the
GLOBAL ACTION
1. Currently, your firm has manufacturing and logistics units in the Russian
cities of Moscow and Saint Petersburg, which provide access to Russia’s vast
country-wide market. However, recent business regulations have discouraged
growth in specific portions of the country. As such, you have been asked to
reconfigure your firm’s strategy in Russia. Identify the location(s) where you
should move operations. Provide detailed and compelling rationale to support
your decision.
Exercise 1 Answers
Several resources are available. Enter the search term “Russia business regulations” at the
globalEDGE™ Resource Desk search box located at
2. The technology company that you work for wants to enter a foreign market for
the first time. The objective is for the firm to make a sustainable international
investment that can create long-term competitive advantages and allow it to be
recognized as important in the industry. Evaluate the opportunities available
to your company by assessing the national conditions among leading emerging
economies.
Exercise 2 Answers
One resource which can be used is “Columbia Center on Sustainable Investment.” This
website can be found by entering the search term(s) “emerging market global player” at
the globalEDGE™ Resource Desk search box located at
CLOSING CASE DISCUSSION GUIDE AND ANSWERS
Emerging Markets: Natura Makes Brazil Look Beautiful
1. In most countries around the world, the beauty products industry is dominated by a small
set of multinational giants named in the case. Why in Brazil none of them has emerged as
a market leader?
2. From a VRIO standpoint, what is behind Natura’s enviable performance?
This is a question in which the answer is not as important as the thought process and the
3. Beyond Latin America, which foreign markets should Natura first enter? Will it be
successful there?