Exam 3: The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Which of the following is NOT required for a firm to achieve strategic competitiveness and earn above-average returns from its core competencies?

Value chain support activities include

By emphasizing core competencies when formulating strategies, companies learn to compete primarily on the basis of

To provide a sustainable competitive advantage, a capability must satisfy all of the following criteria EXCEPT

____ can be viewed as the capacity to take action.

Case Scenario 1: Heartsong LLC. Heartsong LLC is a designer and manufacturer of replacement heart valves based in Peoria, Illinois. While a relatively small company in the medical devices field, it has established a worldwide reputation as the provider of choice high-quality, leading-edge artificial heart valves. Most of its products are sold to large regional hospital systems and research hospitals. Specialty heart centers are another emerging, but fast-growing, market for its valves. While Heartsong would like to grow quickly, its growth is constrained by the need to finance larger production runs and then carry this additional inventory. For products like those of Heartsong, vendors typically do not collect payment until the unit is actually used in surgery. Moreover, heart valves are usually required on short notice which means that they must be either onsite, or inventoried at a nearby location. If nearby, then transport of the unit to a hospital or heart center occurs within a matter of hours, and sometimes minutes. For this reason, accelerated growth would require Heartsong to both finance increased production of its heart valves, along with carrying increased levels of inventory that are in fact sitting on their customers' shelves. In fact, inventory-carrying cost is its single largest cost outside of research and development. While profitable growth is necessary if Heartsong is to continue extending its competitive advantage through increasingly greater investments in basic heart valve R&D, it is not clear that the company can internally support all these increased financial commitments (R&D, manufacturing, and inventory). Doc Watson, the CEO of Heartsong, is considering an outside contractor, EdFex, to handle the inventorying, warehousing, and delivery of its valves. EdFex has secure, high-tech warehouses in most major population centers around the country, and can ensure delivery of a product to these markets from its warehouses in less than one hour. -(Refer to Case Scenario 1) What are the implications of an EdFex outsourcing arrangement for the capabilities underlying Heartsong's competitive advantage?

The capacity to manage human intellect-and to convert it into useful products and services-is fast becoming the critical executive skill of the age.

Compared to tangible resources, intangible resources are

Every core competence is a capability and every capability is a core competence.

Criticism of 3M's reduced spending on research and development represent concerns over what?

Case Scenario 3: B.B. Mangler. B.B. Mangler is a top U.S. business-to-business distributor of maintenance, repair, and service equipment, components, and supplies such as compressors, motors, signs, lighting and welding equipment, and hand and power tools. Customers include contractors, service and maintenance shops, manufacturers, hotels, government, and health care and educational facilities. Mangler's industry is typically referred to as MRO, which is an acronym for maintenance, repair, and supplies. Mangler states its strategy as having the "capacity to quickly offer an unmatched breadth of lowest total cost MRO solutions to business." Mangler's GoMRO sourcing center for indirect spot buys locates products through its unique database of 8,000 suppliers and 5 million products. Mangler also dominates the North American market in terms of its sheer local physical presence. It has 388 physical branches in the U.S. largest cities, including Puerto Rico (90% of sales), 184 in Canada, and five in Mexico. This physical presence also has garnered them a reputation for excellent, dependable service in their target markets, which in turn translates into a vast and loyal clientele. -(Refer to Case Scenario 3) The Internet threatens to displace physical locations as a basis for competitive advantage. If Mangler's vast network of branch offices were an integral part of its core competencies, what might the branches become if the basis for competitive advantage in the MRO industry moves to the Internet?

Value consists of

Judgment is the capacity for making a successful decision when

The core competencies of a firm should be the primary drivers of its strategy.

Which of the following is a true statement about capabilities?

It is increasingly difficult for a firm to develop and sustain a competitive advantage because of the effects of globalization and

In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are all examples of capabilities that are ____ but no longer ____.

Primary activities are

Because capabilities are often client-specific and/or based on the firm's human capital,

A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is