Deck 3: Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Question 1

The most important source of McDonald's low cost structure is the high quality of its products.

Answer 1

False

Question 2

At the heart of any company's business model is the combination of congruent strategies aimed at creating distinctive competencies that differentiate its products and result in a lower cost structure.

Answer 2

True

Question 3

At Adam's bicycle shop,the primary value chain activity of production occurs each time a customer's bicycle is repaired.

Answer 3

True

Question 4

Employee productivity is a common measure of efficiency.

Question 5

The building blocks of competitive advantage are efficiency,quality,innovation,and profitability.

Question 6

When a company has differentiated products,they have less pricing options.

Question 7

Internal analysis is concerned with identifying a company's strengths and weaknesses.

Question 8

Imitating a company's capabilities tends to be more difficult than imitating its tangible and intangible resources.

Question 9

If a company's profitability is higher than the industry average,it has a competitive advantage.

Question 10

The more utility a company creates for its customers,the more flexibility it has in determining prices.

Question 11

Resources are tangible; there is no such thing as intangible resources.

Question 12

Together with an analysis of the company's external environment,internal analysis gives managers the information they need to choose the business model and strategies that will enable their company to attain a sustained competitive advantage.

Question 13

According to Rose Marie Bravo of Burberry,creative ideas may come from a number of sources,except from the accounting department.

Question 14

Walmart pursues a low cost operator policy.

Question 15

Distinctive competencies are firm-specific strengths that allow a company to differentiate its products and/or achieve substantially lower costs than its rivals.

Question 16

A value chain is a sequence of activities for transforming inputs into outputs that are valued by customers.

Question 17

Toyota's lean production system is the basis of its competitive advantage.

Question 18

The price a company charges for a good or service is typically more than the utility placed on that good or service by the customer.

Question 19

A rapid response time is one of the key factors that enables the fashion house Zara to quickly address changes in the fashion industry.

Question 20

The more a resource is firm-specific and difficult to imitate,the more likely a company holding that resource is said to have a distinctive competency.

Question 21

Brad has developed a new,improved irrigation procedure for use in his apple orchard.Brad is creating a product innovation.

Question 22

The Icarus paradox suggests that those factors that led to a company's success may ultimately lead to their failure.

Question 23

Competitive advantage typically leads to

A)an effective business model.
B)average profitability within an industry.
C)superior profitability.
D)making procedures routine.
E)flexibility in manufacturing.

Question 24

Absorptive capacity refers to the ability of an enterprise to identify,value,assimilate,and use new knowledge.

Question 25

Donna can make a chair for about $100,she charges customers $150 to buy the chair,and customers perceive that the chair is worth $225.Donna's profit margin is

A)$50.
B)$75.
C)$100.
D)$150.
E)$225.

Question 26

IBM's investment in mainframe computers is an example of a prior strategic commitment.

Question 27

Benchmarking is a practice in which a company's performance is compared against that of competitors and the historic performance of the company itself.

Question 28

Which of the following is not true regarding a company's distinctive competencies?

A)They represent the unique strengths of the company.
B)They refer to company strengths that competitors cannot easily match or imitate.
C)They form the bedrock of a company's strategy.
D)They can be based in any of the value creation functions of the company.
E)They are shared by many firms in an industry.

Question 29

Capabilities are defined as a company's

A)physical plant and equipment.
B)technological know-how.
C)skills at coordinating resources and putting them to productive use.
D)reputation.
E)resources.

Question 30

The importance of reliability in building competitive advantage has increased dramatically over the past decade.

Question 31

Patents typically provide the greatest barrier to imitation.

Question 32

Donna can make a chair for about $100,she charges customers $150 to buy the chair,and customers perceive that the chair is worth $225.In this case,the consumer surplus is

A)$50.
B)$75.
C)$100.
D)$150.
E)$225.

Question 33

The intellectual property of an organization is a(n)

A)tangible resource.
B)tangible competence.
C)tangible capability.
D)intangible capability.
E)intangible resource.

Question 34

Factors that help a company to build and sustain competitive advantage include which of the following?

A)Superior efficiency
B)Product quality
C)Innovation
D)Customer responsiveness
E)All of these choices

Question 35

The most successful firms are those that constantly learn and upgrade their distinctive competencies.

Question 36

Competitive advantage is based on

A)distinctive competencies.
B)economic forces external to a company.
C)lack of government regulations controlling a firm's ability to make rapid adjustments in response to its changing environment.
D)all of these choices
E)none of these choices.

Question 37

Capabilities refer to a company's

A)tangible resources.
B)intangible resources.
C)skills at coordinating its resources and putting them to productive use.
D)strategy as expressed in the firm's business model.
E)policies.

Question 38

Resources

A)are the tangible assets available to a company.
B)can be tangible or intangible.
C)are harder for a company to copy than capabilities are.
D)are the products of a company's control systems.
E)refer to an organization's skills.

Question 39

Taken together,factors such as existing strategic commitments and low absorptive capacity limit the ability of established competitors to imitate the competitive advantage of a rival.

Question 40

Quality as excellence and quality as reliability are concepts that applied to goods but not services.

Question 41

Using the value chain model,which of the following primary activities is performed first,as inputs are transformed into outputs?

A)Research and development
B)Marketing and sales
C)Human resources
D)Production
E)After-sales service and support

Question 42

Which of the follow support activities in the value chain refers to the companywide context within which all the other value creation activities take place?

A)Human resources
B)Information systems
C)Company infrastructure
D)Materials management
E)Operations

Question 43

Mike works as a corporate trainer,teaching new employees how to perform manufacturing tasks.Mike works in which value chain activity?

A)Research and development
B)Human resources
C)Materials management
D)Production
E)Company infrastructure

Question 44

When a firm produces products that customers perceive as having higher utility than those of its rivals,this firm's source of competitive advantage is

A)design.
B)low innovation.
C)superior quality.
D)efficiency.
E)customer responsiveness.

Question 45

How profitable a company is ultimately depends on

A)management's evaluation of the utility of a product.
B)product utility created through advertising.
C)the value of the patents the company holds.
D)the image of the company's products in the marketplace.
E)the value customers place on the company's products.

Question 46

A product can be thought of as a(n)

A)package of possibilities.
B)configuration of parts.
C)one-time purchase.
D)package of attributes.
E)series of alternatives.

Question 47

Which of the following factors does not determine the durability of a company's competitive advantage?

A)Barriers to imitation
B)A company's prior strategic commitments
C)Capability of competitors
D)General level of dynamism in the industry
E)The rate of product innovation in an industry

Question 48

Using the value chain model,which of the following primary activities is performed last,as inputs are transformed into outputs?

A)Research and development
B)Marketing and sales
C)After-sales service and support
D)Production
E)Human resources

Question 49

Research and development activities are concerned with

A)product design.
B)production processes.
C)service activities as well as manufacturing activities.
D)intangible as well as physical products.
E)all of these choices.

Question 50

At the most basic level,a business is simply a device for

A)transforming inputs into outputs.
B)transporting products from one location to another.
C)converting outputs into inputs.
D)transferring title to goods from one party to another.
E)conserving outputs.

Question 51

Efficiency is

A)defined as the time it takes to produce a product.
B)defined as the cost of inputs required to produce a given output.
C)pursued only by cost leaders.
D)measured by looking at a product's price.
E)lower when the output is high-quality.

Question 52

The four basic building blocks of competitive advantage are

A)low cost,quality,efficiency,and customer responsiveness.
B)differentiation,quality,innovation,and customer responsiveness.
C)quality,efficiency,differentiation,and customer responsiveness.
D)customer responsiveness,quality,efficiency,and human resources.
E)quality,customer responsiveness,innovation,and efficiency.

Question 53

One of the most widely used measures of financial performance is

A)return on invested capital.
B)net profit margin.
C)share value.
D)net sales.
E)productivity.

Question 54

Which primary activity in the value chain is concerned with the design of products and production processes?

A)Research and development
B)Marketing and sales
C)Materials management
D)Production
E)Company infrastructure

Question 55

Ford Motors developed the Explorer sports utility vehicle,the number 1 selling sports utility vehicle in the United States,based on an extensive study of customer preferences.Which value chain activity of Ford conducted those studies?

A)Research and development
B)Human resources
C)Materials management
D)Marketing and sales
E)Company infrastructure

Question 56

A company's competitive advantage will not endure for long when that competitive advantage can be

A)quickly or easily duplicated by other companies.
B)protected by patents.
C)protected by significant barriers to imitation.
D)shared with other companies in the industry.
E)shielded by copyrights.

Question 57

Which of the following distinctive competencies typically has the lowest barrier to imitation?

A)Efficient scale manufacturing facilities
B)Technological know-how
C)Marketing know-how
D)Organizational capabilities
E)Brand name

Question 58

Strong leadership from top management is

A)a support activity.
B)needed to attain economies of scale.
C)needed to build brand loyalty.
D)part of the human resources value chain activity.
E)a primary activity in the value chain.

Question 59

Cost accountants are responsible for gathering and monitoring data used for controlling the organization's costs.Cost accountants work in which value chain activity?

A)Research and development
B)Human resources
C)Materials management
D)Marketing and sales
E)Company infrastructure

Question 60

The term value chain refers to the idea that a company is

A)one of a series of companies that comprise an industry segment.
B)the producer of a series of products that are linked together.
C)a chain of activities for transforming inputs into outputs that customers value.
D)one of a series of economic functions.
E)all of the above.

Question 61

____ can help an organization overcome inertia.

A)Power struggles
B)Capabilities
C)Prior strategic commitments
D)A crisis
E)The Icarus paradox

Question 62

Dale's horseshoeing methods save time and money for his employer,but when Dale suggests that everyone use his method,his boss says,"No.That's not the way we've always done it around here." Dale's employer is suffering from

A)organizational inertia.
B)prior strategic commitments.
C)barriers to mobility.
D)lack of distinctive competencies.
E)the Icarus paradox.

Question 63

A company may fail for which of the following reasons?

A)The company loses its competitive advantage.
B)The company's profitability declines.
C)The company neglects to change strategies and structures.
D)All of these choices
E)None of these choices

Question 64

Explain how tangible and intangible resources and capabilities can lead to distinctive competencies.Give specific examples.

Question 65

Cost of goods sold is determined by examining which of the following?

A)The balance sheet
B)Sources and uses of the financial statement
C)The cash budget
D)The income statement
E)The overhead and administrative expense statement

Question 66

Customer responsiveness includes which of the following?

A)Identifying and satisfying customer needs
B)Improving the quality of a company's products
C)The willingness to customize products for customers
D)Superior product design
E)All of these choices

Question 67

Industry dynamism refers to

A)the gradual erosion of a company's customer base over time.
B)shifts in product profitability.
C)a rapidly changing industry environment.
D)increasing per-unit costs.
E)none of these choices.

Question 68

Companies in the same industry may have

A)different competitive competencies.
B)similar distinctive competencies.
C)easily imitated distinctive competencies.
D)hard-to-imitate distinctive competencies.
E)all of these choices

Question 69

Kim's T-shirt factory was expert at providing unique,high-quality,but costly to make shirts.Even though the designs were very nice and the amount of detail increased over time,the high price meant that few customers bought shirts from her and her factory went bankrupt.Kim's factory failed due to

A)inertia.
B)prior strategic commitments.
C)the Icarus paradox.
D)lack of distinctive competencies.
E)lack of capabilities.

Question 70

Innovation refers to the act of

A)seeking patent protection for new products.
B)creating new products and processes.
C)repackaging current products to make them more appealing to consumers.
D)all of the above.
E)none of the above.

Question 71

When companies find it hard to change their strategies and structures to adapt to changing competitive conditions,they suffer from

A)inertia.
B)prior strategic commitments.
C)barriers to mobility.
D)lack of resources.
E)lack of capabilities.

Question 72

____ is a way to avoid failure.

A)Benchmarking
B)Gaining access to resources
C)Ignoring prior strategic commitments
D)Avoiding organizational commitments
E)The Icarus paradox

Question 73

The Icarus paradox can be overcome if a company

A)achieves superior innovation.
B)balances its pursuit of distinctive competencies.
C)develops its marketing expertise.
D)pursues a growth strategy.
E)achieves superior quality at a low cost.

Question 74

The concept of quality applies to

A)all products.
B)the products consumers believe to be high-quality products.
C)products with a high per-unit cost.
D)custom-made products only.
E)only those products that have been redesigned.

Question 75

A company's strategic commitments

A)allow it to imitate a competitor's advantage rapidly.
B)are a way to avoid failure.
C)occur when an organization is profitable.
D)reduce inertia.
E)allow it to develop a particular set of resources and capabilities.

Question 76

A company's competitive advantage is more durable when

A)barriers to imitation are low and there are few capable competitors.
B)barriers to imitation are high and there are many capable competitors.
C)barriers to imitation are high.
D)the industry is stable and there are many capable competitors.
E)the industry is stable and barriers to imitation are low.

Question 77

According to a number of scholars,what role does luck play in determining competitive success and failure?

A)No role at all
B)A very small role
C)It produces sustained excellence.
D)A critical role
E)None of these choices

Question 78

When Rollie's car wash began to lose business to rivals,Rollie read publications for car wash owners to learn the best practices in the industry.Then she implemented the best practices.Rollie is using ____ to improve her car wash.

A)specialized assets
B)benchmarking
C)strategic commitments
D)inertia
E)the Icarus paradox

Question 79

The Icarus paradox suggests that

A)companies should stick to a narrowly defined line of products.
B)better-than-average profitability is an elusive goal.
C)companies may become so dazzled by their early success that they believe more of the same kind of effort will assure future success.
D)companies often pursue too many strategies at once.
E)companies should change strategies before strategies need changing.

Question 80

Which of the following is not a way that companies can avoid failure?

A)Benchmarking
B)Continuous learning
C)Developing distinctive competencies
D)Exploiting luck
E)Investing in specialized assets