Deck 3: Assessing the Internal Environment of the Firm

Question 1

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

Answer 1

False
Explanation:The financial position of a firm should not be analyzed in isolation. Important reference points are needed. Some issues that must be taken into account to make financial analysis more meaningful include historical comparisons, comparisons with industry norms, and comparisons with key competitors.

Question 2

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.

Answer 2

True
Explanation:The five primary activities in the Porter value chain model (inbound logistics, operations, outbound logistics, marketing and sales, and service) contribute to the physical creation of the product or service, its sale and transfer to the buyer, and its service after the sale.

Question 3

Financial resources such as cash and cash equivalents are intangible resources.

Answer 3

False
Explanation:Intangible resources are organizational assets that are difficult to identify and to account for and are typically embedded in unique routines and practices, including human resources, innovation resources, and reputation resources. Tangible resources are assets that are relatively easy to identify. They include the physical and the financial assets that an organization uses to create value for its customers.

Question 4

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

Question 5

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).

Question 6

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

Question 7

Campbell Soup uses electronic networks to improve the efficiency of outbound logistics.This is an example of relationships among activities within the firm and with other stakeholders that are part of the company expanded value chain.

Question 8

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 9

Capabilities that exhibit causal ambiguity are difficult to imitate.

Question 10

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

Question 11

Information technology (IT)can also play a key role in enhancing the value that a company can provide its customers and,in turn,increasing its own revenues and profits.IT is an activity within the support activities of general administration.

Question 12

Some firms find great value by not incorporating their customers into the value creation process.

Question 13

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

Question 14

The value-chain concept assumes that both primary and support activities can produce value for customers.

Question 15

Path dependency has no impact on the inimitability of resources.

Question 16

Human resources and reputation resources are examples of intangible resources.

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

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 19

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

Question 20

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

Question 21

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 general administration

Question 22

________ 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) Inbound logistics
C) Outbound logistics
D) Operations

Question 23

The Germany truck and trailer manufacturer,Schmitz Cargobull,mainly serves customers who are operators of truck or trailer fleets.What sets the company apart is its expertise in telematics (the integrated application of telecommunications data)to monitor the current state of any Schmitz Cargobull-produced trailer.What type of a value-chain support activity is this?

A) service
B) technology development
C) human resource management
D) general administration

Question 24

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

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

Question 25

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

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

Question 26

Campbell Soup uses electronic networks to improve the efficiency of outbound logistics.These networks also helped Campbell Soup manage the ordering of raw materials more efficiently,improve its production scheduling,and help its customers better manage their inbound logistics operations.This is an example of ________

A) interrelationships among activities within the firm
B) relationships among activities within the firm and with other stakeholders that are part of the expanded value chain of the firm.
C) relationships among activities outside of the firm
D) interrelationships among activities outside of the firm.

Question 27

In a telephone operating company,negotiating and maintaining ongoing relations with regulatory bodies can be among the most important activities for competitive advantage.What type of value-chain support activity is this?

A) service
B) technology development
C) human resource management
D) general administration

Question 28

Mercedes-Benz aggressively pushed for product placement in Hollywood movies.This is an example of which value chain primary or support activity?

A) support activity: general administration
B) primary activity: service
C) support activity: procurement
D) primary activity: marketing and sales

Question 29

When Nordstrom,the Seattle-based department store chain,aids customers with after-sales support,it exemplifies which primary value-chain activity?

A) operations
B) outbound logistics
C) inbound logistics
D) service

Question 30

Coca-Cola has developed data analytic technologies to produce orange juice that meets the taste demands of a global customer base.This is an example of using which value chain support activity?

A) marketing and sales
B) technology development
C) human resource management
D) procurement

Question 31

In assessing its primary activities,an airline would examine

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

Question 32

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

Question 33

According to Michael Porter in his book,Competitive Advantage,a key concept used in analyzing the competitive position of a firm is creating value for

A) buyers that exceeds the costs of production (i.e., margin).
B) suppliers that exceeds the costs of production (i.e., margin).
C) government that exceeds the costs of production (i.e., margin).
D) employees that exceeds the costs of production (i.e., margin).

Question 34

In terms of value-chain analysis,a telephone operating company would find that negotiating and maintaining ongoing relations with regulatory bodies are important activities for achieving

A) inbound logistics.
B) customer awareness.
C) competitive advantage.
D) better employees.

Question 35

Which of the following is a support activity?

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

Question 36

Facebook,Intuit,AB InBev,and others empower their recruiters to make offers on the spot when they interview college students,without knowing what specific position they will fill.These firms search for candidates with attributes such as being a self-starter and a problem-solver,and make quick offers to preempt the market.This is an example of which value chain support activity?

A) operations
B) technology development
C) human resource management
D) procurement

Question 37

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) interrelationships among value-creating activities within a firm.
B) organizational culture and leadership.
C) need to maintain the reputation of the company.
D) synergy of the business units.

Question 38

Inbound logistics include which of the following?

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

Question 39

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) Wal-Mart implemented a sophisticated information system that resulted in reduced inventory carrying costs and shortened customer response times.
C) National Steel improved its efficiency by reducing the number of job classifications.
D) JIT inventory systems are vital to Toyota committing to fulfill new car orders within five days.

Question 40

General administration is sometimes viewed as only ________,but it can be a powerful source of competitive advantage.

A) income
B) value
C) overhead
D) unimportant

Question 41

The resource-based view (RBV)of the firm combines the following 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 42

German truck and trailer manufacturer,Schmitz Cargobull,mainly serves customers that are operators of truck or trailer fleets.What sets the company apart is its expertise in telematics (the integrated application of telecommunications data)to monitor the current state of any Schmitz Cargobull-produced trailer.This is an example of using ________ to enhance customer value and increase ________ position.

A) sales; competitive
B) operations; marketing
C) information technology; competitive
D) human resources; marketing

Question 43

Regarding the value-chain concept,the most important interrelationship is between the organization and its

A) board of directors.
B) employees.
C) customers.
D) management.

Question 44

Many firms are finding that high-tech,computerized training has dual benefits.It develops employees who are more effective and reduces costs at the same time.Employees at FedEx take computer-based job competency tests every 6 to 12 months.This is an example of a(n)________ ________ tangible resource.

A) financial
B) organizational
C) physical
D) technological

Question 45

A travel agent adds value by creating an itinerary that includes transportation,accommodations,and activities that are customized to your budget and travel dates.In terms of the value-chain analysis,this is an example of a ________ organization.

A) retail
B) service
C) manufacturing
D) travel

Question 46

In using crowdsourcing as a means to integrate the customer into the value chain,there are some perils to consider.Which of the following is not related to crowdsourcing perils?

A) giving customers the opportunity to tarnish the company brand
B) asking for consumer input when demand is highly uncertain
C) eroding a low-cost competitive advantage of the firm
D) repeatedly getting feedback from the same customer

Question 47

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 48

Which of the following is not an example of organizational capabilities?

A) outstanding customer service
B) reputation with customers for quality and reliability
C) innovativeness of products and services
D) ability to hire, motivate, and retain human capital

Question 49

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 50

For an engineering services firm,________ provides inputs,the transformation process is the engineering itself,and innovative designs and practical solutions are the outputs.

A) experimentation
B) customer support
C) research and development
D) human resource management

Question 51

Harley-Davidson markets motorcycles,clothes,toys,and restaurants.It uses its strong ________,which is ________.

A) financial position; an intangible resource
B) brand image; an intangible resource
C) brand image; a tangible resource
D) technological resources; an intangible resource

Question 52

Accounting is a sort of transformation process that converts daily records of individual transactions into monthly financial reports.The ________ are the inputs,accounting is the operation that adds value,and ________ are the outputs.

A) transaction records; financial statements
B) financial statements; transaction records
C) employee records; transaction records
D) health records; transaction statements

Question 53

For a firm such as Nordstrom that has no manufacturing operations,value is added by developing expertise in the procurement of finished goods and by displaying them in its stores in a way that enhances sales.In the value chain,procurement activities become the primary activity.This begins with ________ and ends with ________.

A) purchasing goods; operating stores
B) managing and distributing inventory; marketing and selling
C) partnering with vendors; marketing and selling
D) partnering with vendors; operating stores

Question 54

To be considered strategic resources that contribute competitive advantage,they must have several characteristics.Which of the following is not one of these?

A) rare
B) valuable
C) inexpensive to imitate
D) costly to substitute

Question 55

In contrast to ________ interactions,which allow the firm to gain insights on the needs of a particular customer,________ offers the opportunity to leverage the wisdom of a larger crowd.

A) consumer; sourcing
B) prosumer; outsourcing
C) prosumer; crowdsourcing
D) marketing; crowdsourcing

Question 56

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 57

The ability to hire,motivate,and retain human capital is an example of ________ capabilities in the resource-based view of the firm.

A) tangible
B) organizational
C) management
D) design

Question 58

________ are typically embedded in unique routines and practices that have evolved and accumulated over time such as effective work teams.

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

Question 59

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

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

Question 60

An executive states that HR must be a true partner of the business,with a deep and up-to-date understanding of business realities and objectives,and must ensure HR initiatives fully support them at all points of the value chain.This is an example of

A) relationships among activities within the firm and with other stakeholders.
B) relationships between firms.
C) interrelationships among activities within the firm.
D) interrelationships among firms.

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

Raymond Ozzie,the software designer who was critical in the development of Lotus Notes,was able to dictate the terms under which IBM acquired Lotus.This illustrates that he had ________ bargaining power based on the ________ cost required by the firm to replace him.

A) low; low
B) low; high
C) high; low
D) high; high

Question 63

The culture of a firm also may be a resource that provides competitive advantage.Which of these companies might be a good example of this intangible resource?

A) Google
B) Kmart
C) Wells Fargo
D) Walmart

Question 64

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 65

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 66

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 67

XYZ printing is building a dominant position as the low-cost leader in the 3D printer market.Three resources the firm can draw on to build a sustainable advantage are(1)an efficient supply chains and manufacturing system,(2)internal control systems to minimize cost,and (3)competencies in the R&D of electronic products.This set of competencies will make it harder for later movers to imitate.This is an example of using ________ conditions to build protection in the 3D printing market.

A) social complex
B) physical uniqueness
C) path dependent
D) causal ambiguity

Question 68

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

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

Question 69

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

Question 70

All of the following are examples of socially complex organizational phenomena except

A) the culture of a firm.
B) complex physical technology.
C) interpersonal relations among managers of a firm.
D) leadership and trust.

Question 71

Intangible resources are typically embedded in ________ routines and practices that have evolved and accumulated over time.

A) common
B) standard
C) unique
D) obvious

Question 72

Groupon offers online coupons for bargains at local shops and restaurants.Which of the following is a reason that rivals are limiting its growth?

A) Its core capability is not easily imitated.
B) Its core capability is easily imitated.
C) Not many firms possess the same capability.
D) There are few equivalent capabilities.

Question 73

Four factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate.Which is not one of these factors?

A) employee bargaining power
B) employee replacement cost
C) employee exit costs
D) competitor bargaining power

Question 74

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 75

The root of the 3M innovation process is complex,hard to understand,and difficult to imitate.This is a competitive advantage based on

A) path dependency.
B) social complexity.
C) casual ambiguity.
D) availability.

Question 76

A wide variety of firm resources that are costly to imitate due to the social engineering that is required being beyond the capability of competitors 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 77

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 78

Which of the following groups generally is charged with creating value through the process of organizing,coordinating,and leveraging employees as well as other forms of capital such as plant,equipment,and financial capital?

A) unions
B) boards of directors
C) managers
D) stakeholders

Question 79

Which of the following is not a tangible resource?

A) technical and scientific skills
B) trade secrets, patents, copyrights
C) state-of-the art machinery
D) company borrowing capacity

Question 80

Ashley Furniture controls all steps of its distribution systems,developing specific competencies that are difficult to match.They are using ________ to build sustainable advantage.

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