Deck 3: Assessing the Internal Environmentof the Firm

Question 1

In value-chain analysis,value is measured by the market value of the total stock outstanding of the company.

Answer 1

False
Explanation: Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue, a reflection of the price the product of the firm commands and the quantity it can sell.

Question 2

The strengths and capabilities of a firm are enough to enable it to achieve a competitive advantage in the marketplace.

Answer 2

False
Explanation: The strengths and capabilities of a firm, no matter how unique or impressive, may not enable it to achieve a competitive advantage in the marketplace. If a firm builds its strategy on a capability that cannot, by itself, create or sustain competitive advantage, it is essentially a wasted use of resources.

Question 3

Managers should focus their attention on interrelationships among value-chain activities within the firm,NOT on relationships among activities within the firm and other organizations (such as suppliers and customers).

Answer 3

False
Explanation: The importance of relationships among value-chain activities has two levels: (1) interrelationships among activities within the firm and (2) relationships among activities within the firm and with other stakeholders (e.g., customers and suppliers) that are part of the expanded value chain of the firm.

Question 4

Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value-chain analysis.

Question 5

At Sephora.com,a customer service representative taking a phone call from a repeat customer has instant access to what shade of lipstick she likes best.This is an example of a procurement support activity in the value chain.

Question 6

Support activities provide support for primary activities,but not each other.

Question 7

Primary activities contribute to the physical creation of a product or service,its sale and transfer to the buyer,and its service after the sale.

Question 8

One advantage of SWOT analysis is that it helps managers to identify strengths that are almost always sources of competitive advantages that are sustainable.

Question 9

Campbell Soup uses an electronic network to facilitate its continuous-replenishment program with its most progressive retailers.This is known as an operations primary activity in the value chain.

Question 10

Inbound logistics include all activities associated with transforming inputs into the final product form such as machining,packaging,assembly,equipment,testing,printing,and facility operations.

Question 11

In conducting a SWOT analysis,a risk for strategists is that they rely on traditional definitions of their industry and competitive environment and therefore focus too narrowly on current competitors.

Question 12

The SWOT analysis can show managers how to achieve a competitive advantage.

Question 13

The value-chain concept assumes that both primary and support activities are capable of producing value for customers.

Question 14

Toyota paid a heavy price for its excessive emphasis on cost control.By focusing on only one strength exclusively,it suffered severe losses.This is an example of the limitations of a SWOT analysis.

Question 15

Technology development is a much broader concept than research and development.

Question 16

Some leading edge companies are applying the prosumer concept.Here,firms team up with their suppliers and alliance partners to satisfy their customer needs.

Question 17

Value-chain analysis assumes that the basic economic purpose of a firm is to create value and it is a useful framework for analyzing the strengths and weaknesses of the firm.

Question 18

Frito-Lay uses crowdsourcing to make its Super Bowl ads.This is an example of a primary activity in the value chain.

Question 19

In value-chain analysis,finance and accounting are considered part of the general administration of a firm.

Question 20

Value-chain analysis can only be applied to manufacturing operations.

Question 21

In considering the business from the innovation and learning perspective using the balanced scorecard,the ability of the firm to do well is more dependent on its intangible and tangible assets.

Question 22

Amazon Prime is an example of a difficult to imitate capability that gives it competitive advantage over its rivals.

Question 23

Dell lost its competitive advantage by 2009 in part because it placed its efforts on operational excellence to the exclusion of reinvention,according to Inder Sidhu.

Question 24

A primary benefit of the balanced scorecard is that it complements financial indicators with operational measures of customer satisfaction,internal processes,and the innovation and improvement activities of the organization.

Question 25

Historical comparisons are most appropriate during periods of recession or economic boom.

Question 26

Leverage ratios provide measures of the capacity of a firm to meet its long-term financial obligations.

Question 27

The resource-based view of the firm focuses solely on the internal analysis of the operations of the firm.

Question 28

An important implication of the balanced scorecard is that managers need NOT look at their job as primarily balancing stakeholder demands.

Question 29

Financial analysis provides an accurate way to assess the relative strengths of firms and can be used as a complete guide to study companies.

Question 30

When using industry norms as a standard of comparison,managers must be sure that the firms used in the comparisons are representative of all sizes and strategies within the industry.

Question 31

Tangible resources are assets that are relatively easy to identify such as financial and physical assets.

Question 32

Employee exit cost is a factor that can increase employee bargaining power and help him or her appropriate profits of the firm.

Question 33

Intangible resources of a firm refer to its capacity to deploy tangible resources over time and leverage those resources effectively.

Question 34

Path dependency has no impact on the inimitability of resources.

Question 35

Products and services that are difficult to imitate help firms sustain their profitability.

Question 36

For a resource to provide a firm with potential sustainable advantages it must satisfy only two criteria: rareness and difficulty in substitution.

Question 37

Capabilities that exhibit causal ambiguity are difficult to imitate.

Question 38

The balanced scorecard enables managers to evaluate their business from only two perspectives: customer and financial.

Question 39

A strength of the balanced scorecard is that it is very easy to implement and that there is little need for executive sponsorship.

Question 40

Firms that are successful in creating competitive advantages that are sustainable for a period of time do not have to be concerned about profits being retained by employees or managers.

Question 41

Which of the following is NOT a limitation of SWOT (Strengths,Weaknesses,Opportunities,Threats)analysis?

A) Organizational strengths may not lead to competitive advantage.
B) The SWOT focus on the external environment is too broad and integrative.
C) SWOT gives a one-shot view of a moving target.
D) SWOT overemphasizes a single dimension of strategy.

Question 42

Human resource management consists of activities involved in the recruiting,hiring,training,development,and compensation of all types of personnel.It supports _______________.

A) only individual primary activities
B) both individual primary and support activities and the entire value chain
C) only individual support activities
D) mostly support activities but does have some impact on primary activities

Question 43

Which of the following lists consists of support activities?

A) human resource management, technology development, customer service, and procurement
B) human resource management, customer service, marketing and sales, and operations
C) customer service, information systems, technology development, and procurement
D) human resource management, technology development, procurement, and firm infrastructure

Question 44

___________ is/are associated with collecting,storing,and distributing the product or service to buyers.They consist of warehousing,material handling,delivery operation,order processing,and scheduling.

A) Services
B) Outbound logistics
C) Inbound logistics
D) Operations

Question 45

A marketing department that promises delivery faster than the ability of the production department to produce is an example of a lack of understanding of the _____________.

A) organizational culture and leadership
B) interrelationships among functional areas and firm strategies
C) need to maintain the reputation of the company
D) synergy of the business units

Question 46

In considering the business from the internal business perspective using the balanced scorecard,periodic financial statements are used to indicate the consequences of improved quality,response time,productivity,and innovative products.These consequences include improved sales.

Question 47

In considering the business from the internal business perspective using the balanced scorecard,customer-based measures must be translated into indicators of what the firm must do internally to meet customer expectations.

Question 48

Advertising is a __________ activity.Supply of replacement parts is a __________ activity.

A) support; primary
B) support; secondary
C) primary; support
D) primary; primary

Question 49

For firms such as CarMax,information systems have been a source of competitive advantage.Their proprietary information system captures,analyzes,interprets,and disseminates information about all cars on the CarMax lot.Which of the following can be attributed to this information system?

A) decrease in uncertainties in hard to forecast areas such as inventory management
B) decrease in operational efficiency
C) reduced customer service
D) decrease in sales

Question 50

XYZ Corp.is focusing on the objective of low-cost,high quality,on-time production by minimizing idle productive facilities and workers.The XYZ Corp.is taking advantage of a __________ system.

A) Last In, First Out (LIFO)
B) First In, First Out (FIFO)
C) Just-In-Time (JIT)
D) Highly mechanized

Question 51

According to value-chain analysis,which of the following would be considered part of the general administration in a firm?

A) human resource management
B) technology development
C) information systems
D) procurement

Question 52

Customer service includes ________.

A) product promotion
B) parts supply
C) product distribution
D) procurement of critical supplies

Question 53

Inbound logistics include:

A) machining and packaging.
B) repair and parts supply.
C) warehousing and inventory control.
D) promotion and packaging.

Question 54

Which of the following examples demonstrates how successful organizations manage their primary activities?

A) Motorola has revised its compensation system to reward employees who learn a variety of skills.
B) Hewlett Packard has cut lead time from five days to one by employing JIT inventory management.
C) National Steel improved its efficiency by reducing the number of job classifications.
D) Wal-Mart implemented a sophisticated information system that resulted in reduced inventory carrying costs and shortened customer response times.

Question 55

In value-chain analysis,the activities of an organization are divided into two major categories of value activities: primary and support.Which of the following is a primary activity?

A) purchasing key inputs
B) repairing the product for the consumer
C) recruiting and training employees
D) monitoring the cost of producing the product through a cost accounting system

Question 56

Which of the following is a support activity?

A) inbound logistics
B) technology development
C) operations
D) customer service

Question 57

Which of the following is not an advantage of Just-In-Time inventory systems?

A) reduced raw material storage costs
B) minimized idle production facilities and workers
C) reduced dependence on suppliers
D) reduced work-in-process inventories

Question 58

In assessing its primary activities,an airline would examine ___________.

A) baggage handling
B) employee training programs
C) criteria for lease versus purchase decisions
D) the effectiveness of its lobbying activities

Question 59

In considering the business from the customer perspective using the balanced scorecard,company performance is essential.

Question 60

Although general administration is often viewed only as overhead expense,it can become a source of competitive advantage.Examples include all of the following EXCEPT:

A) negotiating and maintaining ongoing relations with regulatory bodies
B) marketing expertise increasing the revenues of the firm and enabling it to enter new markets
C) effective information systems contributing significantly to overall cost leadership strategy for the firm
D) top management providing a key role in collaborating with important customers

Question 61

Historical comparisons provide information to managers about changes in the competitive position of a firm.Historical comparisons often are misleading _____________.

A) if the overall strategy of the firm is the same
B) if the firm shows constant growth
C) in periods of recession or economic boom
D) if the firm's stock is publicly traded

Question 62

In the resource-based view of the firm,examples of tangible resources include:

A) financial resources, human resources, and firm competencies
B) financial resources, physical resources, and technological resources
C) financial resources, physical resources, and the capacity to combine intangible resources
D) outstanding customer service, innovativeness of products, and reputation

Question 63

A crash R&D program by one firm cannot replicate a successful technology developed by another firm,when research findings cumulate.This is an example of ____________.

A) social complexity
B) physical uniqueness
C) path dependency
D) causal ambiguity

Question 64

The best measure of a company's ability to meet imminent financial obligations is known as the

A) debt ratio
B) current ratio
C) total asset turnover
D) profit margin

Question 65

A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics:

A) psychographic uniqueness, path dependency, causal ambiguity, and substitutability
B) physical uniqueness, path dependency, causal ambiguity, and social complexity
C) rarity, path dependency, causal ambiguity, and social substitutability
D) geographic uniqueness, cause dependency, social ambiguity, and path complexity

Question 66

The resource-based view (RBV)of the firm combines two perspectives:

A) the primary and support activities of the firm
B) the interrelationships among the primary activities of the firm and corporate management
C) the internal analysis of the firm and the external analysis of the industry and competitive environment
D) the industry and the competitive environment

Question 67

All of the following are examples of socially complex organizational phenomena EXCEPT:

A) a firm's culture
B) complex physical technology
C) interpersonal relations among a firm's managers
D) leadership and trust

Question 68

Which of the following would be most difficult to assess?

A) the liquidity position of a firm
B) market share growth
C) the legitimacy and reputation of a firm
D) the efficiency with which a firm utilizes its assets

Question 69

Amazon Prime is credited for helping to increase the Amazon stock price by nearly 300 percent from 2008 to 2010.This is competitive advantage is known as _________.

A) causal ambiguity
B) product rarity
C) service validity
D) substitutability

Question 70

The three key types of resources that are central to the resource-based view of the firm are:

A) tangible resources, intangible resources, and organizational structure
B) culture, tangible resources, intangible resources
C) tangible resources, intangible resources, and organizational capabilities
D) tangible resources, intangible resources, and top management

Question 71

__________ are the competencies or skills that a firm employs to transform inputs into outputs.

A) Tangible resources
B) Organizational capabilities
C) Reputational resources
D) Intangible resources

Question 72

Which of the following is not a factor that helps to explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate?

A) Employees have high bargaining power.
B) The cost of employee replacement is high.
C) The cost of exit is high for an employee.
D) Managers have low bargaining power.

Question 73

Which of these categories of financial ratios is used to measure the ability of a firm to meet its short-term financial obligations?

A) leverage ratios
B) profitability ratios
C) activity ratios
D) liquidity ratios

Question 74

Typically embedded in unique routines and practices that have evolved and accumulated over time such as effective work teams is which of the following:

A) tangible resources
B) intangible resources
C) reputational resources
D) organizational capabilities

Question 75

In a retail service industry,which of the following is not a primary value-chain activity?

A) purchasing goods
B) operating stores
C) partnering with vendors
D) human resource management

Question 76

A resource is valuable and rare but neither difficult to imitate nor without substitutes.This should enable the firm to attain ____________.

A) no competitive advantage
B) a temporary competitive advantage
C) competitive parity
D) a sustainable competitive advantage

Question 77

A variety of firm resources include interpersonal relations among managers in the firm,its culture,and its reputation with its suppliers and customers.Such competitive advantages are based upon ____.

A) path dependency
B) social complexity
C) physical uniqueness
D) tangible resources

Question 78

Apple combines and packages proven technology in new and innovative ways.This is an example of its use of ____________.

A) tangible resources
B) intangible resources
C) organizational capabilities
D) strong primary activities

Question 79

Employees will be able to obtain a proportionately high level of profits they generate (relative to the firm)if ___________.

A) suppliers are loyal to the firm
B) their expertise is firm-specific
C) the cost to the firm of replacing them is high
D) the firm's resources are path dependent

Question 80

For a resource to provide a firm with the potential for a sustainable competitive advantage,it must have four attributes.Which of the following is not one of these attributes?

A) rare
B) valuable
C) easy for competitors to substitute
D) difficult for competitors to imitate