Question 1

The sustainability of a competitive advantage depends upon the rate of obsolescence of the core competence, the availability of substitutes for the core competence, and the imitability of the core competence.

Accepted Answer

A) True 
 B)False  True

Question 2

A financial management firm has existed for over 70 years. Some of its original clients' grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other's families. This firm has capabilities that would be costly to imitate because of its

Accepted Answer

A)   access to large amounts of financial capital.
B)   possession of causally ambiguous core competencies.
C)   social complexity.
D)   unique historical conditions. C

Question 3

A decision that results in failure

Accepted Answer

A)   is a career-ending event because it is so unusual.
B)   often results from lack of accountability.
C)   fosters organizational inertia.
D)   allows for learning. D

Question 4

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?

Accepted Answer

A)   a core rigidity
B)   a capability
C)   an intangible resource
D)   a tangible resource

Question 5

The Chapter 3 Strategic Focus on P&G illustrates that the company uses its capabilities and core competencies to grow

Accepted Answer

A)   through mergers.
B)   organically.
C)   through cooperative relationships.
D)   through acquisitions.

Question 6

Although an organization's good reputation is a valuable resource that takes years of superior marketplace competence to achieve, it is not a good basis for building a competitive advantage because it can be destroyed almost instantly by bad publicity.

Accepted Answer

A) True 
 B)False

Question 7

Value consists of

Accepted Answer

A)   A product's proprietary characteristics and by its attributes for which customers are willing to pay.
B)   A product's performance characteristics and by its attributes for which customers are willing to pay.
C)   A product's proprietary characteristics and by its attributes for which customers consider paying for.
D)   A product's performance characteristics and by its attributes for which customers consider paying for.

Question 8

As discussed in the Chapter 3 Strategic Focus, CEOs of companies such as Viacom, the Oprah Winfrey Network, the Gap, and Cisco frequently had to make decisions about __________________ and the success of those decisions affected the tenure of those CEOs.

Accepted Answer

A)   how to please customers
B)   how to best rivals
C)   use of the firm's resources
D)   their method of compensation

Question 9

Two concerns about outsourcing are the potential loss of a firm's innovative ability and the loss of jobs within companies that decide to outsource some of their work.

Accepted Answer

A) True 
 B)False

Question 10

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 value-chain activities appear to underlie Heartsong's competitive advantage?

Accepted Answer

The answer of Case Scenario 1: Heartsong LLC.
Heartsong LLC is...

Question 11

According to the Chapter 3 Strategic Focus, P&G typically uses its capabilities and core competencies to grow through mergers, acquisitions, and cooperative relationships.

Accepted Answer

A) True 
 B)False

Question 12

To build social capital whereby resources such as knowledge are transferred across organizations requires _________between the parties.

Accepted Answer

A)   a contract
B)   determination
C)   confidence
D)   trust

Question 13

Outsourcing is the

Accepted Answer

A)   spinning off of a value-creating activity to create a new firm.
B)   selling of a value-creating activity to other firms.
C)   purchase of a value-creating activity from an external supplier.
D)   use of computers to obtain value-creating data from the Internet.

Question 14

The value of tangible assets such as the firm's borrowing capacity and its physical plant are high because they can be easily leveraged to derive additional value.

Accepted Answer

A) True 
 B)False

Question 15

Given enough time, any firm's competitive advantage can be imitated by its competitors.

Accepted Answer

A) True 
 B)False

Question 16

Value chain activities are

Accepted Answer

A)   the activities most likely to be imitated by competitors.
B)   activities or tasks the firm completes in order to produce products and then sell, distribute, and service those products in ways that create value for customers.
C)   the core competencies of the organization.
D)   the activities most crucial to implementing the firm's business strategy.

Question 17

In today's global economy, traditional factors such as labor costs, access to financial resources and raw materials, and protected or regulated markets are less likely to become core competencies and possibily competitive advantages.

Accepted Answer

A) True 
 B)False

Question 18

Gamma, Inc., has struggled for industry dominance with Ardent, Inc., its main competitor, for years. Gamma has gathered and analyzed large amounts of competitive intelligence about Ardent. It has observed as much of the firm's internal functioning and technology as it can legally, yet Gamma cannot understand why Ardent has a competitive advantage over it. The source of Ardent's success is

Accepted Answer

A)   impregnable.
B)   causally ambiguous.
C)   rationally obscure.
D)   elusive.

Question 19

Any core competency has the potential to lose its value creating ability.

Accepted Answer

A) True 
 B)False

Question 20

Creating customer value is the source of the firm's potential to earn above-average returns.

Accepted Answer

A) True 
 B)False

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

The sustainability of a competitive advantage depends upon the rate of obsolescence of the core competence, the availability of substitutes for the core competence, and the imitability of the core competence.

A decision that results in failure

The Chapter 3 Strategic Focus on P&G illustrates that the company uses its capabilities and core competencies to grow

Although an organization's good reputation is a valuable resource that takes years of superior marketplace competence to achieve, it is not a good basis for building a competitive advantage because it can be destroyed almost instantly by bad publicity.

Value consists of

As discussed in the Chapter 3 Strategic Focus, CEOs of companies such as Viacom, the Oprah Winfrey Network, the Gap, and Cisco frequently had to make decisions about __________________ and the success of those decisions affected the tenure of those CEOs.

Two concerns about outsourcing are the potential loss of a firm's innovative ability and the loss of jobs within companies that decide to outsource some of their work.

According to the Chapter 3 Strategic Focus, P&G typically uses its capabilities and core competencies to grow through mergers, acquisitions, and cooperative relationships.

To build social capital whereby resources such as knowledge are transferred across organizations requires _________between the parties.

Outsourcing is the

The value of tangible assets such as the firm's borrowing capacity and its physical plant are high because they can be easily leveraged to derive additional value.

Given enough time, any firm's competitive advantage can be imitated by its competitors.

Value chain activities are

In today's global economy, traditional factors such as labor costs, access to financial resources and raw materials, and protected or regulated markets are less likely to become core competencies and possibily competitive advantages.

Any core competency has the potential to lose its value creating ability.

Creating customer value is the source of the firm's potential to earn above-average returns.