Deck 4: Analyzing the Firm

Question 1

One way to measure the value of a product to customers is by the price that the company charges for the product.

Answer 1

False

Question 2

According to the text, Coca-Cola's performance has suffered in recent years because of ineffective strategic leadership.

Answer 2

True

Question 3

Manufacturing equipment and financial capital are examples of valuable tangible resources that contribute to creating value for customers.

Answer 3

True

Question 4

One of McDonald's capabilities is in employee training.

Question 5

Managers must understand their company's resources and capabilities in order to select an effective strategy.

Question 6

Capabilities that a firm emphasizes and performs especially well while pursuing its vision, are known as competitive advantages.

Question 7

Between 2004 and 2007 McDonald's financial performance was negative.

Question 8

The true value of a firm's resources emerges when they are integrated to form capabilities.

Question 9

It is usually quite easy for managers to identify their company's strengths and weaknesses.

Question 10

Managers hope to identify their company's strengths, weaknesses, opportunities and threats by conducting an internal analysis.

Question 11

When a company purchases an asset or resource, such as land, with the intention of holding onto it and using it for future expansion, the company has purchased an "intangible option."

Question 12

McDonald's uses its core competencies to focus on getting better rather than just getting bigger.

Question 13

The value chain consists of the structure of activities that a firm uses to successfully integrate acquisitions into their resource portfolio.

Question 14

Deficiencies in a company's resources and capabilities that make it hard for the firm to complete important tasks are known as weaknesses.

Question 15

In order for core competencies to become competitive advantages, they must be valuable, rare, difficult to imitate and non-substitutable.

Question 16

A foundation of McDonald's success is its highly centralized global business model.

Question 17

In order to develop and implement the best strategy, managers must understand what results the company's resources and capabilities will make possible.

Question 18

Most competitive advantages can be sustained for a very long period of time, if not forever.

Question 19

Human capital is usually the most valuable tangible resource that companies possess.

Question 20

It is easier to evaluate a firm's tangible resources than its intangible resources.

Question 21

Outsourcing provides a firm with greater strategic flexibility, reduced risk and increased opportunities to make investments in other value chain activities.

Question 22

Companies can use benchmarking to identify better ways to complete value chain activities that create value for customers.

Question 23

Which of the following resources are the most difficult to identify and evaluate?

A) tangible resources
B) physical resources
C) intangible resources
D) financial resources

Question 24

Manufacturing equipment and financial capital are examples of

A) tangible resources that are difficult to see and quantify
B) tangible resources that are easy to see and quantify
C) intangible resources that are difficult to see and quantify
D) intangible resources that are easy to see and quantity

Question 25

When a company has deficiencies in resources or capabilities that make it hard for them to complete important tasks, these deficiencies are known as

A) threats
B) strengths
C) weaknesses
D) intangible resources

Question 26

According to the text, one of the primary reasons for the decline in Coca-Cola's stock price in recent years has been

A) their extensive use of outsourcing
B) their ineffective use of human capital
C) their inability to create a well-known, global brand name
D) their lack of a clear mission statement

Question 27

The full set of resources that a firm holds is known as its

A) resource portfolio
B) resource potential
C) resource mix
D) resource advantage

Question 28

McDonald's has a decor design studio in

A) Grenoble, France
B) Denver, Colorado
C) Florence, Italy
D) Shanghai, China

Question 29

Even though Coca-Cola's brand has iconic status with customers throughout the world, they continue to advertise for

A) reinforcement.
B) awareness.
C) surprise.
D) the tax breaks.

Question 30

Effective management of a company's value chain requires that approximately half of the value chain activities create value for customers, either directly or indirectly.

Question 31

Which of the following companies gives local managers throughout the world a great deal of leeway to make their own decisions?

A) McDonald's
B) General Electric
C) Amgen Pharmaceuticals
D) Sony - computer game division

Question 32

Resources, such as Coca-Cola's brand name or reputation, that accumulate and become more useful over time, but are not physical in nature, are known as

A) tangible resources
B) intangible resources
C) human capital
D) social capital

Question 33

The value chain refers to how efficiently a firm manages its production process

Question 34

Each stage of the value chain's primary activities adds cost.

Question 35

When a firm is unable to complete a value chain activity in an efficient manner, that activity becomes a prime candidate for outsourcing to another firm that can perform the activity more efficiently.

Question 36

According to the textbook, US Steel used which of the following methods to strengthen its resource portfolio and compete in other non-steel businesses?

A) acquisitions
B) joint ventures
C) strategic alliances
D) options in different industries

Question 37

What is the primary reason why managers conduct an internal analysis of their company's resources and capabilities?

A) To make sure that the company's resources and capabilities are sufficient to implement the chosen business level strategy.
B) To make sure that managers are not being compensated too much for the value chain activities that they perform on a daily basis.
C) To identify the opportunities and threats that are present in the internal environment, especially those things that are beyond the managers' control.
D) To make sure that the firm is charging customers enough for the value that is being provided in the company's goods and services.

Question 38

Most firms outsource value chain activities with the primary motive of reducing costs.

Question 39

In the textbook, "value" is defined as

A) "the lowest price."
B) "the ability to differentiate one product from another."
C) "the satisfaction a product creates for customers."
D) "the highest price."

Question 40

McDonald's organizational structure can best be viewed as

A) centralized consistency.
B) freedom within a framework.
C) bureaucracy for burger excellence.
D) consistency within chaos.

Question 41

When "no resources or capabilities exist that can complete the tasks and provide the same value to customers,"a competency is said to be

A) valuable
B) nonsubstitutable
C) rare
D) difficult to imitate

Question 42

The probability of achieving outsourcing's benefits increases significantly when the reasons for using outsourcing are

A) strategic in nature.
B) tactical in nature.
C) market-based.
D) innovation-driven.

Question 43

Which of the following does LG Electronics NOT consider to be a core competency?

A) manufacturing leadership
B) product leadership
C) people leadership
D) market leadership

Question 44

In order to be successful, a company must create value that

A) exceeds the costs incurred to produce, distribute and service products for customers.
B) is unique and inexpensive.
C) is hard to imitate and more expensive than what is offered by other firms.
D) surpasses benchmarking targets.

Question 45

Which of the following statements concerning the cell phone industry is correct?

A) larger market share means higher profits
B) larger market share does not necessarily translate into higher profits
C) lower market share means lower profits
D) None of these

Question 46

Human resource management, as well as research and development are typically used to create indirect value for customers, consequently they are known as

A) support activities
B) tangible activities
C) primary activities
D) intangible activities

Question 47

What is the primary reason that a firm should decide to outsource a value chain activity?

A) If the outside firm can perform the activity more efficiently than the firm could perform the activity internally.
B) If the firm identifies serious inefficiencies in how it completes one or more activities, it should consider outsourcing.
C) If outsourcing creates more value for the customer than continuing to complete the activity internally.
D) None of these.

Question 48

According to the text, which of the following value chain activities would not be a good candidate for outsourcing?

A) Customer service
B) Equipment installation
C) Providing software and design services
D) All of these activities could be good candidates for outsourcing

Question 49

Why is it important for companies to achieve competitive advantage?

A) Competitive advantage guarantees a firm's long-term success.
B) Competitive advantages are impossible to overcome or imitate.
C) Competitive advantages help to improve financial returns.
D) Competitive advantages are inexpensive ways to build market power.

Question 50

The text mentions that FedEx studied the activities and best practices of transportation companies in order to develop its over-night delivery business. In this example, FedEx used

A) benchmarking
B) outsourcing
C) diversification
D) an acquisition

Question 51

Dell Computer uses inbound logistics, operations, sales and distribution to directly create value for its customers, consequently these activities are all examples of

A) intangible activities
B) support activities
C) primary activities
D) tangible activities

Question 52

Which of the following IS NOT a characteristic a core competency must satisfy in order to be a competitive advantage?

A) valuable
B) rare
C) costly
D) non-substitutable

Question 53

Which of the following support activities is responsible for recruiting the human capital that is needed to complete all of the other primary and support activities?

A) Research and Development
B) Marketing
C) Human Resource Management
D) Operations Management

Question 54

When few, if any, competitors can perform a value chain activity with the same level of quality, then that competence is said to be

A) nonsubstitutable
B) valuable
C) rare
D) a competitive advantage

Question 55

Resources that are "acquired or developed to be used at a future time" are known as

A) opportunity costs
B) possibilities
C) options
D) intangible resources

Question 56

The "value" of a tangible or intangible resource is determined by

A) the resource's ability to create value for customers
B) the price paid to acquire or make the resource
C) the reputation that the company has in the eyes of customers
D) the price that customers pay for products or services that are made from the resource

Question 57

In order to build a competitive advantage, a firm must

A) integrate its resources to form capabilities
B) develop competencies that are distinctive and rare
C) create value for its customers
D) all of these are required for a competitive advantage

Question 58

Which of the following IS NOT a reason firms outsource the performance of an activity to an external supplier?

A) This may create more value for customers.
B) They can concentrate their own resources on their own core competencies.
C) They will have the flexibility to more rapidly alter how activities are being used to implement its strategies.
D) They will necessarily develop relationships with more firms thereby increasing their human capital.

Question 59

The "structure of activities" that a firm uses to implement its business level strategy is known as

A) the cost of goods sole
B) the resource portfolio
C) the benchmarking plan
D) the value chain

Question 60

When a company acquires a capability from an external supplier and uses that capability to create value for customers, the firm has engaged in

A) benchmarking
B) outsourcing
C) diversification
D) international expansion

Question 61

According to the text, which of the following companies is well-known for its innovation capability?

A) Wal-Mart
B) Apple Computer
C) Proctor & Gamble
D) Coca-Cola

Question 62

Which of the following value chain activities WOULD NOT be considered a primary value chain activity?

A) Operations
B) Inbound logistics
C) Accounting
D) After sales service to individuals

Question 63

Which of the following IS NOT a component of internal analysis?

A) Identifying a company's resources and capabilities
B) Determining which of the firm's capabilities qualify as core competencies
C) Evaluating whether or not a firm's core competencies meet the criteria for competitive advantage
D) Identifying the opportunities and threats that have caused performance problems for the firm

Question 64

Discuss the relationships among resources, capabilities, core competencies, competitive advantage and firm performance.

Question 65

Which of the following value chain activities IS NOT considered to be a support activity?

A) Accounting
B) Inbound logistics
C) Human resource management
D) Research and development

Question 66

Royal Dutch Shell outsources IT activities to all of the following EXCEPT

A) Level 3.
B) Electronic Data Systems.
C) AT&T
D) T-Systems

Question 67

When a company's core competencies are different from those held by competitors, those competencies are referred to as

A) distinctive competencies
B) competitive advantages
C) intangible competencies
D) nonsubstitutable competencies

Question 68

When few, if any, competitors have the competencies to complete a task it is

A) rare
B) valuable
C) non-substitutable
D) costly to imitate

Question 69

Describe the value chain and explain how a company might use value chain analysis to support decisions about outsourcing.

Question 70

When a local firm acquires a capability from an external supplier that contributes to the local firm's ability to create value for customers it is

A) outsourcing.
B) losing competitive advantage.
C) insourcing.
D) showing weakness.

Question 71

Imagine that a US-based firm wants to begin selling its products in Mexico. Which of the following resources or capabilities are necessary for the firm to succeed in entering the Mexican market?

A) Manufacturing capacity to produce sufficient quantity of its products
B) Financial capital to support distribution in Mexico
C) Capability to market and sell its products in a country outside the US
D) All of these

Question 72

Assets that contribute to creating value for customers but are not physically identifiable are known as

A) tangible resources
B) intangible resources
C) real options
D) property, plant and equipment

Question 73

Which of the following IS NOT one of the potential benefits of outsourcing?

A) lower cost of production
B) higher quality due to specialization
C) increased flexibility
D) better customer service

Question 74

Which of the following is the BEST example of a firm's investment in a "real option?"

A) Amazon purchases a vacant building and uses it for a new distribution warehouse.
B) Coca-Cola continuously invests in marketing in order to strengthen its global brand image
C) A pharmaceutical company develops a variety of drugs in the hope that one of them might become a "blockbuster" that cures a life-threatening illness
D) All of these are good examples of real options

Question 75

Which of the following companies is the largest restaurant company in the world?

A) Good Eats
B) McDonald's
C) Applebees
D) Smedley's PLC

Question 76

In order for a core competence to be considered a competitive advantage it must meet all of the following criteria EXCEPT

A) it must be rare
B) it must be valuable
C) it must be difficult to imitate
D) it must be easily substitutable