Ch.3 Test Questions & Answers Internal Strengths & Advantage

Package Title: Chapter 5, Testbank

Course Title: Dyer, SM 2e

Chapter Number: 5

Question type: Multiple Choice

1) A visual description of the steps required to turn raw materials into finished products and/or services most accurately defines the term __________.

a) virtuous circle

b) culture chain

c) value chain

d) product line

Difficulty: Easy

Section Reference 1: The Value Chain

Learning Objective 1: Identify the steps in the value chain a firm uses to create competitive advantage.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

2) Which of the following statements is true of a value chain?

a) It is a process of analyzing the corporate social responsibilities of a company.

b) It is a process of enhancing value by eliminating quality checks in a company.

c) It is a method of analyzing the feedback a company receives from its clients.

d) It is a method of depicting and evaluating the activities performed by a company.

Difficulty: Medium

Section Reference 1: The Value Chain

Learning Objective 1: Identify the steps in the value chain a firm uses to create competitive advantage.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

3) The employees at Voyage Ink Corp. were asked to draw a chart that explains the elements which go into making one of their products. They were asked to create a diagram showing the different types of materials that help create the whole product. Which of the following are the employees at Voyage Ink Corp. creating in this scenario?

a) A value chain

b) A product line

c) A virtuous circle

d) A growth–share matrix

Difficulty: Hard

Section Reference 1: The Value Chain

Learning Objective 1: Identify the steps in the value chain a firm uses to create competitive advantage.

Bloomcode: Application

Standard 1 : AACSB || Analytic

4) Which of the following is a disadvantage of the value chain process?

a) It does not help analyze a company’s strength compared to its competitors.

b) It does not take into account firm infrastructure or human resource management.

c) It does not help managers to identify areas in which a firm has an absolute strength.

d) It does not span all of a firm’s economic activities.

Difficulty: Medium

Section Reference 1: The Value Chain

Learning Objective 1: Identify the steps in the value chain a firm uses to create competitive advantage.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

5) All assets, capabilities, organizational processes, firm attributes, information, knowledge, and so on, controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness most accurately defines the term __________.

a) priorities

b) capabilities

c) resources

d) functions

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

6) Erik, the CEO of Indigo Inc. wants to improve the efficiency and effectiveness of his company. In order to do this, he lists out the assets of Indigo and the knowledge that the company has acquired over the years. Erik also analyzes the company’s processes and its overall culture. The factor of production that Erik is studying can be best categorized as ________.

a) capabilities

b) resources

c) attributes

d) priorities

Difficulty: Hard

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Application

Standard 1 : AACSB || Analytic

7) Neptune LLC is a company that manufactures electronic products. Its employees are given specific guidelines regarding the resources and capabilities that they should invest their company’s money and time in. The employees are expected to follow these guidelines during Neptune’s lean as well as peak seasons. Which of the following terms best reflects the guidelines that the employees of Neptune LLC are expected to follow?

a) Capabilities

b) Assets

c) Priorities

d) Attributes

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Application

Standard 1 : AACSB || Analytic

8) A firm’s values and rankings of what is most important most accurately defines the term __________.

a) assets

b) priorities

c) resources

d) capabilities

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

9) LittleHut Inc., an international food company, has a number of resources to its credit. Over the years, the company has acquired factories, machinery, in-depth knowledge, and a stable reputation. The elements mentioned in this scenario can be best categorized as LittleHut Inc.’s __________.

a) equipment

b) personnel

c) assets

d) capabilities

Difficulty: Hard

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Application

Standard 1 : AACSB || Analytic

10) Which of the following is true of a tangible resource?

a) It is an economically valuable asset such as brands and patents.

b) It has a physical presence such as land, machinery, and cash.

c) It includes employee and management skills and talents.

d) It includes organizational assets like knowledge and reputation.

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

11) The procedures, processes, or routines for delivering value to customers, employees, suppliers, or investors most accurately define the term __________.

a) competitive parities

b) operating capabilities

c) dynamic capabilities

d) network externalities

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

12) The customers, investors, and employees of Pisces Inc. are invariably satisfied with the services and culture of the company. Pisces Inc. has delivered on all its promises and has continued to create a sense of worth among its varied audiences. Which of the following terms best categorizes the elements of Pisces Inc. described in this scenario explaining?

a) Competitive parities

b) Dynamic capabilities

c) Network externalities

d) Operating capabilities

Difficulty: Hard

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Application

Standard 1 : AACSB || Analytic

13) Procedures, processes, and routines that continuously expand existing resources or improve operating capabilities most accurately define the term __________.

a) network externalities

b) competitive parities

c) dynamic capabilities

d) operating capabilities

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

14) The management at WonderPlanners Inc. wants to improve their production and operating capabilities by adopting a leaner process. As such, the employees of WonderPlanners are asked to eliminate the excess use of efforts and materials. WonderPlanners Inc. finally manages to achieve a competitive advantage after its employees follow these new practices repeatedly over time. From the information given in this scenario, we can infer that WonderPlanners Inc. has developed __________.

a) competitive parity

b) dynamic capabilities

c) service inimitability

d) network externalities

Difficulty: Hard

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Application

Standard 1 : AACSB || Analytic

15) Todd & Tyler Inc. is an organization that has gained reputation in the market primarily because of its values. The managers of this organization have created a list that ranks the most important job of the day and then consecutively lists the other jobs according to a descending order of importance. In this way, the managers of Todd & Tyler Inc. ensure that the organization’s deadlines are handled efficiently. From the information given in this scenario, we can infer that Todd & Tyler Inc. has worked out its __________.

a) parities

b) capabilities

c) attributes

d) priorities

Difficulty: Hard

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Application

Standard 1 : AACSB || Analytic

16) The employees at Williamson Corp. are finding it hard to manage their daily work in an efficient manner. They are consistently not able to meet their daily targets because they have too much of unorganized workload to handle. Frustrated, they seek help from their managers requesting them to create a system wherein they are allotted work according to their level of importance, so that the important work gets done before they take up the work that is categorized as comparatively lesser important. This system is put into practice, and the employees find it easier to handle work in a systematic and sequential manner. From the information given in this scenario, we can infer that Williamson Corp. has worked out its __________.

a) priorities

b) capabilities

c) parities

d) attributes

Difficulty: Hard

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Application

Standard 1 : AACSB || Analytic

17) A survey is conducted among the customers of a supermarket chain. This survey reveals that the majority of these customers prefer to buy Lia, a brand of soap, because they feel that the company Lia Products Inc. has created a product that is of worth to the customers. The reason for the customers’ preference is because the company constantly delivers what it promises. In this scenario, the factor that has made the brand of soap named Lia popular among these customers can be best categorized as __________.

a) value

b) rarity

c) inimitability

d) prestige

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

18) Pinto’s Home Bakes is a 64-year-old company established in the year 1950. The company has been providing freshly baked breads and pastries daily for many years and has created a high reputation for itself. Its customers have always been satisfied with its timely service and delivery. The customers of Pinto’s Home Bakes state that they prefer to go this deli because the products it delivers are never stale and have a unique flavor. Which of the following has Pinto’s Home Bakes created for its customers?

a) Priority

b) Value

c) Parity

d) Prestige

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

19) Value is usually created when ________.

a) the end user enjoys direct pleasure and satisfaction from a company’s product

b) a company survives but has no real competitive advantage over rivals

c) a company eliminates quality control processes as much as possible

d) the steps in the production chain of a company are reduced

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

20) Resources that create ________ can be defined as those that create economic value for a firm.

a) opportunities

b) liabilities

c) costs

d) profits

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

21) UniFront Corp., a telecommunications company, has launched a new limited edition smartphone called zNINE that has advanced technology features and is built using high-grade material. The company has made only 99 of these zNINE cellphones and customers are ready to pay more than what the cellphone is worth because it is so limited in number. This scenario can be best categorized as an example of __________.

a) parity

b) complexity

c) rarity

d) inimitability

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

22) LuxeDrive Inc. is an automobile company with unmatched competition because it has certain qualifications and assets that set it apart from the rest of the companies selling similar products. These act as qualifications that rival companies find hard to configure and replicate. This scenario regarding LuxeDrive Inc. can be best categorized as an example of __________.

a) serviceability

b) reliability

c) inimitability

d) parity

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

23) Leon Royal Hotel was the first inn in the county of Belvore. It had started out as a small investment with seven rooms, providing bed and breakfast in 1949 to many travelers who came to Belvore. Another inn called Meltown Inn started out a decade after Leon Royal Hotel. After 20 years of giving unique and satisfying service to its customers, Leon Royal Hotels was well established as a large hotel with more than 1,500 rooms. The facilities and services provided by the hotel made it one of the best hotels in the Belvore, while Meltown Inn started losing profits and eventually shut down in 1968 because of providing bad service. Which of the following factors of inimitability is explained in this scenario?

a) Tacit knowledge

b) Path dependence

c) Casual ambiguity

d) Complexity

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

24) A company named Runathon Inc. had opened its store that displayed only shoe brands. The employees at the store were very service-oriented, and attended their customers and solved their queries efficiently. Runathon also had a special team of experts who advised customers on the type of shoe to choose for a particular sport. Few years later, another company called FitRight Corp. opened its store right opposite Runathon. Although FitRight had shoe brands, trekking gear, and sportswear displayed in its store, it was not able to attain the profits that Runathon did because its salespeople were not as experienced and learned as Runathon. Which of the following factors of inimitability did Runathon Inc. have?

a) Complexity

b) Time compression diseconomy

c) Path dependence

d) Virtuous circle

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

25) Weavers Inc., a popular clothing brand, has been providing its customers with the best quality silk products for many years. The employees of Weavers Inc. use pink berry silkworms for their silk products and weave their greased silk threads in such a way that they produce different shades of colors when held at different angles. Weavers Inc. has been providing unmatched service toward millions of customers around the world. Other companies have tried to imitate their products and services, but have not been successful. Few competitors who captured these silkworms did not know the precise temperatures that were essential for their breeding and survival. Which of the following factors of inimitability does this scenario regarding Weavers Inc. best reflect?

a) Positive network externalities

b) Tacit knowledge

c) Time compression diseconomies

d) Causal ambiguity

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

26) The CEO of Saturn Interiors Corp., an interior designing company, stated in an interview that he credits the company’s success to the scenic environment that the company is located in. The employees of Saturn Interiors are inspired by the beauty of nature and that helps them create perfectly aesthetic homes for their customers. A similar company named Virgo Designs LLC had also started up in the same location and around the same time as Saturn Interiors. However, this company was unable to provide the same services to its customers even though the management hoped to do what Saturn Interiors did. It was later found that the employees of Saturn Interiors were trained in a specific way, and the culture of the company was very different from the way Virgo Designs functioned. Which of the following factors of inimitability does Saturn Interiors Corp. have?

a) Tacit knowledge

b) Complexity

c) Causal ambiguity

d) Path dependence

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

27) Speed Express, a courier company, proves to be a definite challenge to its competitors. The technology, personnel, services, and organizational structure of the company are intricately bound together to create a system that is widely appreciated by its customers. Speed Express has state-of-the-art facilities for its transportation, delivery, or packaging operations. Speed Express also has a range of travelling bags and brand of wrist watches. The company’s success rests on the complex interplay between all of its functions, products, and operations. Customers remain loyal to the company and prefer it over other brands and services. Which of the following factors of inimitability does Speed Express have?

a) Time compression diseconomy

b) Path dependence

c) Complexity

d) Tacit knowledge

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

28) Michelle, the CEO of Nariko Jets, an airlines company, stated that she owes the credit of her professional success to the time spent as a volunteer at a homeless shelter and her passion for artwork. She said that she learned to never stop dreaming from her work as a volunteer. Nariko Jets, according to Michelle, was the result of her combined efforts at life lessons that she learnt at the homeless shelter and her paintings which provided her the inspiration to help create passenger and jet airlines that would make travel easier and comfortable. Her competitors have always envied her success. Which of the following factors of inimitability is best reflected in this scenario?

a) First-mover advantage

b) Positive network externalities

c) Causal ambiguity

d) Tacit knowledge

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

29) If a project requires a $20 million investment a year for the next two years, time compression diseconomies mean that you can’t get the same results by spending $40 million in one year. MediCure Corp. is a pharmaceutical company that invested $30 million during the last financial year on research. The CEO of its rival company, PolyMed Inc., decides to spend $60 million on the research during the next year in order to exceed the findings of MediCure. However, PolyMed fails to get the same results. Which of the following best reflects the factor that acted as a barrier to imitation for PolyMed Inc.?

a) Tacit knowledge

b) Path dependence

c) Complexity

d) Time compression diseconomy

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

30) Annabey Inc., a small candy manufacturing company established in 1937, now has several large units that sell unique flavors of candies and assorted chocolates. When the company started out in 1937, it initially experienced slow growth as it was selling brand new products in the market, but later on, their sales picked up at a drastic speed when customers decided to try their products. The CEO of Annabey credits its growth to all the customers who love their candies and chocolates. Which of the following factors of inimitability is best reflected in this scenario?

a) Positive network externality

b) Time compression diseconomy

c) Virtuous circle

d) Complexity

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

31) ZipTag Inc. is an online company that allows venders of varied products to display their products to prospective buyers. This company has been providing service to both customers and sellers and has established itself in the market as a credible company to conduct business with. This has caused more dealers to display their products in ZipTag as they trust that the company will provide the necessary advertising to pull in prospective customers. This is an example of a __________.

a) time compression diseconomy

b) virtuous circle

c) tacit knowledge

d) path dependence

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

32) Kleo wants to start his own textile business. He believes that the best way to pull customers into buying his product is to be the first to create lightweight woolen jackets that would keep an individual warm and would also look good on the person. He decides to set up his store in the small town of Marida, which has a rough wintery season almost throughout the year. Kleo believes that he will be able to achieve plenty of profits with this idea with a commodity that is a needed all throughout the year. Which of the following statements strengthen Kleo’s idea?

a) Kleo requires a colder place than the town of Marida in order to make profits using these woolen jackets.

b) The people of Marida are not ready to welcome any type of commercialism in their town.

c) Kleo feels his customers will not be willing to try out a lightweight jacket as they believe it will not be able to keep them warm.

d) Kleo has access to all the clothing materials that will be needed to create these jackets.

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Analyze

Standard 1 : AACSB || Reflective Thinking

33) The exclusive sofa company, Seaterz Inc., has the best resources in terms of equipment, employees, infrastructure, and technology. Yet, it is not able to keep pace with its competitor SoftSofa Corp. After extensive analyses, the CEO of Seaterz stated the reason for their limitation. He stated that their company did not have a definite administrative system to audit and retain the profits created by the employees. Which of the following statements can be inferred about Seaterz Inc. from this scenario?

a) It was not organized to exploit.

b) It was not organized to perform.

c) It does not have competitive parity.

d) It has a successful virtuous circle.

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

34) Lynx Inc., a startup firm, has been trying to sell its product to customers. However, the customers do not perceive any value in the product and neither do they find it unique in any way. Lynx Inc. also does not have proper systems and processes that can help in auditing and retaining the profits created by their employees. The company has drained its funds in the process, but it has not been able to successfully establish itself in the market. As a result, the firm has not been able to successful to its stakeholders. Ultimately, the board of directors at Lynx Inc. decides to shut it down completely. This scenario best exemplifies __________.

a) competitive advantage

b) competitive parity

c) competitive success

d) competitive failure

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

35) TumbleDry Inc., a washing machine company, has been able to make minimal profits in the market. However, TumbleDry has not been able to come up with any product innovations that are unique and hard to imitate. This scenario best exemplifies __________.

a) competitive success

b) competitive failure

c) competitive parity

d) competitive advantage

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

36) Rize Inc. has been running efficiently as a real estate organization for 25 years. It has consistently provided customer satisfaction by maintaining a customer-friendly culture in the organization. Their competitors have not been able to replicate Rize’s services. This has helped then generate and hold on to profits accrued by its vast and rare resource pool. This is an example of __________.

a) inconsistent competitive advantage

b) sustained competitive advantage

c) competitive parity

d) competitive failure

Difficulty: Hard

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Application

Standard 1 : AACSB || Analytic

37) Kevin, the General Manager at KlockWorks Inc., wants to assess the true worth of his company. Kevin wants to know the amount of profits accrued by the company, its strengths and weaknesses, and how far ahead is the company compared to its rivals. In order to conduct the research, he does an online search, studies the annual reports, the audits, and pays a visit to a local library. Which of the following types of data gathering techniques for company diamond analysis is being illustrated in the scenario?

a) Observation

b) Interviews

c) Archival data

d) Focus groups

Difficulty: Hard

Section Reference 1: The Company Diamond: A Tool for Assessing Competitive Advantage

Learning Objective 1: Analyze a company and identify its strengths or weaknesses, resources, capabilities, and priorities using the company diamond tool.

Bloomcode: Application

Standard 1 : AACSB || Analytic

38) A media house wanted to report on the continued success of the software company, AlphaDigiPro Inc. The reporters decided to assess the company in two ways. They spoke to the top management employees and handed out questionnaires to other employees. The results of these data collection techniques helped the media house construct a good article. This scenario illustrates the use of __________.

a) focus groups

b) archival data

c) interviews

d) observation

Difficulty: Hard

Section Reference 1: The Company Diamond: A Tool for Assessing Competitive Advantage

Learning Objective 1: Analyze a company and identify its strengths or weaknesses, resources, capabilities, and priorities using the company diamond tool.

Bloomcode: Application

Standard 1 : AACSB || Analytic

39) Bertha, a business analyst, wants to analyze Shop Wise Inc., a software company. She wants to know how the company, supplying its products and services for over a decade, still maintains competitive advantage over other companies. She does the analysis simply by walking around the company and taking notes. She even tries out one of the company’s software programs and finds it useful. This scenario illustrates the use of __________.

a) interviews

b) focus groups

c) archival data

d) observation

Difficulty: Hard

Section Reference 1: The Company Diamond: A Tool for Assessing Competitive Advantage

Learning Objective 1: Analyze a company and identify its strengths or weaknesses, resources, capabilities, and priorities using the company diamond tool.

Bloomcode: Application

Standard 1 : AACSB || Analytic

40) Walter Evans, the founder of IronRod Shipping Industry, in order to manage his company more efficiently, suggested using the company diamond model to help counter the fierce competition in the market. Walter believes that this is a successful model and that it would open new doors into the line of systematic and efficient work processes. He believes the model to be an all-purpose solution whether it is in terms of managing resources, prioritizing work, or acknowledging capabilities. Which of the following would strengthen Walter’s suggestion to adopt the company diamond method?

a) Since the model relies exclusively on data provided by the company, Walter thinks that it will work in favor of the company.

b) Since the model avoids taking into account the company’s weaknesses, it is more likely to be successful.

c) The model will only be fully successful if all employees comply to follow through.

d) The model will allow Walter to fully become aware of the limitations and assets of his company.

Difficulty: Hard

Section Reference 1: The Company Diamond: A Tool for Assessing Competitive Advantage

Learning Objective 1: Analyze a company and identify its strengths or weaknesses, resources, capabilities, and priorities using the company diamond tool.

Bloomcode: Analyze

Standard 1 : AACSB || Reflective Thinking

41) Which of the following is an advantage of the value chain?

a) It helps to identify which activities represent a firm’s competitive strength.

b) It provides guidance about a firm’s strength relative to its competitors.

c) It can be used to know what a firm is better at than relevant competitors.

d) It provides customers with an insight into a company’s production processes.

Difficulty: Medium

Section Reference 1: The Value Chain

Learning Objective 1: Identify the steps in the value chain a firm uses to create competitive advantage.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

42) Which of the following statements best describes a firm’s resources?

a) They explain why firms allocate critical resources to achieve key objectives.

b) They represent how firms do things and which processes they use.

c) They refer to what a firm employs to create value and competitive advantage.

d) They depict the production processes a firm uses.

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

43) Which of the following statements best describes a firm’s capabilities?

a) They represent how firms do things.

b) They depict a firm’s strength relative to its competitors.

c) They explain why firms allocate critical resources to achieve key objectives.

d) They refer to what a firm employs to create value and competitive advantage.

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

44) Which of the following statements best describes a firm’s priorities?

a) They represent how firms do things.

b) They depict the production processes a firm uses.

c) They refer to what a firm employs to create value and competitive advantage.

d) They explain why firms allocate critical resources to achieve key objectives.

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

45) Which of the following statements is true about resources?

a) Intangible resources include land and factories.

b) Examples of tangible resources are brands and patents.

c) Intangible resources are those with a physical presence.

d) Accountants classify resources as tangible or intangible assets.

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

46) Identify an intangible resource from the following choices.

a) Land

b) Brand

c) Cash

d) Machinery

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

47) Identify a true statement about dynamic capabilities.

a) They depict a firm’s strength relative to its competitors.

b) Companies that have developed strong coordination processes are likely to lose their competitive advantage.

c) They can help firms modify and evolve processes to keep pace with environmental changes.

d) Companies with strong dynamic capabilities have a less secure foundation for competitive advantage than those without them.

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

48) Which of the following accurately defines a firm’s values?

a) They refer to procedures, processes, and routines that continuously expand existing resources or improve operating capabilities.

b) They refer to a firm’s ranking of what is most important.

c) They refer to its leaders’ beliefs about what is right and wrong, good and bad, desirable and undesirable.

d) They refer to factors of production that create economic value for the firm when employed.

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

49) Which of the following best describes rarity?

a) It refers to the characteristics that make a resource or capability difficult to imitate.

b) It is an attribute of a resource that describes its worth or utility.

c) It is an attribute of a resource which means to be uncommon, or not available to other competitors.

d) It refers to an organization’s ability to exploit profit returns generated by its unique and valuable resources.

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

50) Explicit knowledge ________.

a) refers to knowledge that is easy to codify and learn

b) is easy to teach but difficult to learn

c) refers to skills that are difficult to learn and teach

d) is mobile and easily imitated by competitors

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

51) Identify a true statement about tacit knowledge.

a) It is easy to teach but difficult to learn.

b) It is mobile and easily imitated by competitors.

c) It is easy to codify and learn.

d) It is difficult to learn, teach, or coach.

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

52) Which of the following is true of tacit knowledge?

a) It refers to easy-to-codify-and-learn knowledge.

b) It creates competitive advantage through scarcity.

c) It refers to the notion that one thing causes another.

d) It is difficult to imitate by competitors.

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

53) Time compression diseconomies happen when __________.

a) more sellers attract more buyers, who in turn attract more sellers

b) an action increases cost and efficiency

c) the value of a product increases with the number of users

d) firms establish long-term contracts with customers

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

54) Which of the following best describes competitive parity?

a) When a company survives but has no real competitive advantage over rivals

b) When firms that can’t create value for their stakeholders don’t survive

c) When firms combine the legal, administrative, and cultural elements to produce an inimitable product

d) When firms introduce valuable products that are also unique and rare

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

55) Which of the following statements is true of the company diamond tool?

a) It can be counted and quantified on a firm’s balance sheet as assets.

b) It helps identify which activities of a firm represent its competitive strengths and weaknesses.

c) It allows one to identify and catalog a firm’s potential for sustained competitive advantage.

d) It provides a framework to describe the activities a company performs.

Difficulty: Medium

Section Reference 1: The Company Diamond: A Tool for Assessing Competitive Advantage

Learning Objective 1: Analyze a company and identify its strengths or weaknesses, resources, capabilities, and priorities using the company diamond tool.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Question type: Text Entry

56) A firm’s advantage becomes stronger if it develops ___, processes that are designed to continuously expand existing resources or to improve or modify operating capabilities.

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

57) A resource creates ___ if its contributions allow a company to produce a product or service that is of worth to end users.

Difficulty: Easy

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

58) The characteristics that make a resource or capability difficult to imitate is known as ___.

Difficulty: Easy

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Question type: Essay

59) Define resources.

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: Resources are what a firm employs to create value and competitive advantage.

60) What is an intangible resource?

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: It is an economically valuable asset that does not have a physical presence.

61) Define capabilities and briefly describe the two types of capabilities.

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: Capabilities are the procedures, processes, and routines firms employ in their activities. Capabilities represent how firms do things that is, the processes they use. Operating capabilities refer to procedures, processes, or routines for delivering value to customers, employees, suppliers, or investors. Competitive advantage relies on a strong set of operating capabilities. A firm’s advantage becomes stronger if it develops dynamic capabilities. These are processes that are designed to continuously expand existing resources or to improve or modify operating capabilities. Dynamic capabilities are practiced and refined over time and through repetition.

62) What is an asset and how does it create an economic value to an organization?

Difficulty: Easy

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: Assets are tangible or intangible resources or factors of production that create economic value for the firm when employed. Most resources are, or could be, counted and quantified on a firm’s balance sheet as assets. Accountants classify resources as tangible or intangible assets. It enables the firm to conceive of and implement strategies that improve its efficiency and effectiveness.

63) Differentiate between explicit knowledge and tacit knowledge.

Difficulty: Easy

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Knowledge

Standard 1 : AACSB || Analytic

Solution: The actions needed to imitate a sequence can be codified, or written down, and easily learned by others. Such easy-to-codify-and-learn knowledge is referred to as explicit knowledge. Tacit knowledge is just the opposite. The skills that are difficult, maybe even impossible, to learn, teach, or coach, are based on tacit knowledge. Tacit knowledge is sticky, or immobile, and difficult to imitate by competitors.

64) State the difference between operating capabilities and dynamic capabilities.

Difficulty: Medium

Section Reference 1: The Resource-Based View

Learning Objective 1: Distinguish among the core concepts of strengths, weaknesses, resources, capabilities, and priorities.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Solution: Capabilities are processes that the firm has developed to coordinate human activity in order to achieve specific goals. Operating capabilities are procedures, processes, or routines for delivering value to customers, employees, suppliers, or investors. Dynamic capabilities are procedures, processes, and routines that continuously expand existing resources or improve operating capabilities.

65) Define rarity and explain how it creates competitive advantage.

Difficulty: Medium

Section Reference 1: Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability

Learning Objective 1: Evaluate the strength and sustainability of internally generated competitive advantages using the VRIO model.

Bloomcode: Comprehension

Standard 1 : AACSB || Analytic

Solution: Something that is rare, is to be uncommon, or not available to other competitors. Competitive advantages arise when resources or capabilities possess two attributes: value and rarity. Unique is often used as a synonym for rare. Rare or unique resources create competitive advantage through a basic principle of economics—scarcity. When products or services are scarce, users are often willing to pay a higher price for them than they would be if the same products or services were more commonly available, leading to higher company profits.