Question 1

What are dynamic capabilities?

Accepted Answer

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Question 2

How are the critical assumptions of the resource-based model of a firm fundamentally different from the way in which a firm is viewed in the perfectly competitive industry structure?

Accepted Answer

A)  In the resource-based model, resources are freely available and mobile, whereas in the perfectly competitive industry structure, resources are highly immobile. 
B)  In perfect competition, it is extremely difficult to replicate the resource bundles of a firm, whereas in the resource-based model, it is extremely easy to imitate them. 
C)  In perfect competition, all firms have access to the same capabilities, whereas in the resource-based model, resource differences exist between firms in the same industry. 
D)  In the resource-based model, only physical assets of a firm are considered as resources, whereas in perfect competition, a firm's capabilities and competencies are also considered as resources.

Question 3

_____ describes a situation in which the cause and effect of a phenomenon are not readily apparent.

Accepted Answer

A)  Resource immobility 
B)  Causal ambiguity 
C)  Resource heterogeneity 
D)  Social complexity

Question 4

Organizational and managerial skills that find their expression in a company's structure, routines, and culture are referred to as _____.

Accepted Answer

A)  tangible resources 
B)  reserves 
C)  capital gains 
D)  capabilities

Question 5

Elaborate on social complexity as a barrier to imitation.

Accepted Answer

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Question 6

Differentiate resource stocks from resource flows with the help of the bathtub metaphor.

Accepted Answer

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Question 7

Which of the following management tools will help determine whether a firm's resources, capabilities, and competencies are strengths or weaknesses?

Accepted Answer

A)  Porter's five forces analysis 
B)  PESTEL analysis 
C)  VRIO framework 
D)  Ansoff's matrix

Question 8

According to the _____, competitive advantage is the outflow of a firm's ability to modify and leverage its resource base in a way that enables it to gain and sustain competitive advantage in a constantly changing environment.

Accepted Answer

A)  value chain perspective 
B)  two-factor theory 
C)  expectancy theory 
D)  dynamic capabilities perspective

Question 9

When the knowledge of a valuable and rare resource diffuses throughout an industry, the:

Accepted Answer

A)  firms in the industry will be better positioned to achieve competitive parity. 
B)  ability to sustain a competitive advantage will be restricted to one firm. 
C)  mobility and homogeneity of the resource will decrease. 
D)  structure of the industry will no longer be perfectly competitive.

Question 10

How do managers benefit from conducting a SWOT analysis?

Accepted Answer

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Question 11

When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage.Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year.However, the company failed because most of its competitors had already been in the laptop market for five years.Blue Tech Inc's models were inferior to the ones in the market.In this scenario, Blue Tech Inc.'s failure can be best attributed to:

Accepted Answer

A)  causal ambiguity. 
B)  diseconomies of scope and scale. 
C)  time compression diseconomies. 
D)  social complexity.

Question 12

Due to resource immobility, a critical assumption in the resource-based model of a firm, the:

Accepted Answer

A)  competitive advantage of a firm exists for a short period of time. 
B)  resource bundles of a firm can be easily imitated by competitors. 
C)  resource differences between firms last for a long time. 
D)  competencies and capabilities of all firms in an industry are similar.

Question 13

Differentiate between a firm's resources and capabilities.

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Question 14

To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to:

Accepted Answer

A)  contribute to the firm's strategic position as either low-cost leader or differentiator. 
B)  reduce the immobility and the heterogeneity of the firm's resources. 
C)  create a static fit between the company's internal resources and the external environment. 
D)  reduce the causal ambiguity and the social complexity of the firm's source of success.

Question 15

Define the value chain.

Accepted Answer

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Question 16

When evaluating the sustainability of a firm's competitive advantage, which of the following statements is NOT true?

Accepted Answer

A)  The competitive advantage will not be sustainable if there are substitutes for the firm's core competence. 
B)  If managed effectively, existing core competencies can help sustain the competitive advantage indefinitely. 
C)  Social complexity often leads to a competitive advantage that is sustainable. 
D)  When expectations of future resource value turn out to be accurate and can be repeated, then a sustained competitive advantage is realized.

Question 17

_____ are best described as unique strengths, embedded deep within a firm, that allow a firm to differentiate its products and services from those of its rivals, creating higher value for the customer or offering products and services of comparable value at lower cost.

Accepted Answer

A)  Resource leverages 
B)  Core competencies 
C)  Capital gains 
D)  Equity reserves

Question 18

Although True Ion Inc.and One Electro Inc.operate in the same consumer electronic industry, True Ion Inc.has better sales and brand equity.This is attributed to True Ion Inc.'s commitment to innovation.The company has adequate financial and human capital to invest in research and development, an area where One Electro Inc.lacks.In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated?

Accepted Answer

A)  Resource equality 
B)  Resource heterogeneity 
C)  Resource mobility 
D)  Resource maturity

Question 19

Path dependence rests on the notion that:

Accepted Answer

A)  time cannot be compressed at will. 
B)  strategic decisions are easily reversible. 
C)  rare resources can be built in a short period of time. 
D)  competitive advantage can be sustained indefinitely.

Question 20

To make the SWOT analysis an effective management tool, a strategist must first:

Accepted Answer

A)  distinguish a firm's resources, competencies, and capabilities from each other. 
B)  separate a firm's primary activities from support activities. 
C)  analyze the pros and cons of strategic options. 
D)  scan a firm's internal and external environments.

Exam 4: Internal Analysis: Resources, Capabilities, and Core Competencies