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

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Question 1

True/False

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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.

A) True
B) False

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False

Question 2

Multiple Choice

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Value chain activities

A) are used to identify the industry profit pool that the firm should target.
B) show that there are multiple means that can be used to implement a business strategy.
C) focus on the links between primary activities, because these are the true source of competitive advantage for the firm.
D) can be used in not-for-profit organizations if the analysis focuses on support activities.

E) C) and D)
F) B) and C)

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Question 3

Multiple Choice

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Capabilities that other firms cannot develop easily are classified as

Regardless of the industry, the most valuable links on a firm's value chain will likely be

Value chain support activities include

Value is measured by the variable and fixed costs associated with the production and marketing of a particular product compared with the revenue and profits the product generates.

The owner of a store retailing fine quality fabrics for home-sewers bewails the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics available and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of

How many core competencies should a firm seek to develop?

Valuable capabilities

Analyzing the internal environment enables a firm to determine what it can do by identifying what opportunities exist.

A major reason outsourcing is being used is that

The Strategic Focus on GE in Chapter 3 details actions by the company which resulted in significant increases in the firm's stock value. The resources which played the greatest role in these actions were

All of the following are tangible resources EXCEPT

A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu based solely on organically-raised chicken, beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be

Every core competence is a capability and every capability is a core competence.

Interpersonal relationships, trust, friendships, and a firm's reputation are all examples of complex social phenomena that make capabilities costly to imitate.

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

Some resources, such as financial capital, have inherent value to the firm, while others are not inherently valuable.

Value is created when the firm exploits its core competencies or competitive advantages to meet or exceed the demanding standards of global competition.

Which of the following is NOT an external event that reveals the "dark side" of core capabilities?