Question 1
The perfectly competitive industry structure differs from the resource-based model in its view that:
all firms have access to the same resources.
accessibility to bundles of resources differ across firms.
resources tend to be "sticky."
competencies differ across firms working in the same industry.
Question 2
Brown Foods Inc., a leading chocolate producer, anticipated that the prices of cocoa beans would double in less than three years. This would disrupt the availability of cocoa in the industry. Thus, Brown Foods Inc. decided to purchase cocoa plantations in Ghana. As predicted, the prices of cocoa increased twofold. Because of the company-owned cocoa plantations, Brown Foods Inc. was able to sustain its competitive advantage in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate?
Social complexity
Causal ambiguity
Time compression diseconomies
Better expectations of future resource value
Question 3
_____ describes a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources over time in its quest for competitive advantage.
Dynamic capability
Resource immobility
Resource heterogeneity
Time compressed diseconomy
Question 4
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:
causal ambiguity.
diseconomies of scope and scale.
time compression diseconomies.
social complexity.
Question 5
Microsoft's eventual industry dominance is largely credited to the:
initial breaks that Bill Gates got when starting Microsoft, which were leveraged for several decades through an effective strategy.
firm's strong financial resources and market position during the initial stages of the industry.
firm's effective organizational structure and coordinating systems that helped the company capture value.
ability of Microsoft to pursue an unrelated diversification strategy in different industries.
Question 6
When the knowledge of a valuable and rare resource diffuses throughout an industry, the:
firms in the industry will be better positioned to achieve competitive parity.
ability to sustain a competitive advantage will be restricted to one firm.
mobility and homogeneity of the resource will decrease.
structure of the industry will no longer be perfectly competitive.
Question 7
In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength?
Increase in a firm's customer loyalty
Growth in the size of the market in which a firm operates
Rise in the income of the demographic segment to which a firm caters
Loss of a competitor's reputation
Question 8
Which of the following statements accurately brings out the difference between tangible and intangible resources?
Tangible resources contribute to a company's competitive advantage, whereas intangible resources fail to do the same.
Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased.
Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily.
Tangible assets are difficult to imitate, whereas intangible assets can be easily replicated.
Question 9
_____ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.
Embargoes
Cartel arrangements
Isolating mechanisms
Market niches
Question 10
Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn Autos Inc., a rival company. What does this imply?
The resource stock of Bass Automobiles Inc. increased.
Bass Automobiles Inc. faced resource leakage.
The resource flow into Unicorn Autos Inc. reduced.
Bass Automobiles Inc.'s tangible assets decreased.
Question 11
BioTree Inc. has used $350,000, from its total annual earnings of $1,250,000, to invest in the research and development of a multi-purpose vaccine. Its account receivable from customers is estimated to be $150,000 and accounts payable $80,000. In monetary terms, what would BioTree Inc.'s resource flows be?
$1,250,000
$150,000
$80,000
$350,000
Question 12
Which of the following statements accurately describes a firm's resource flow?
It is the firm's level of investments to maintain or build a resource.
It is the firm's current level of intangible resources.
It is the firm's current level of tangible resources that are common to other firms.
It is the firm's level of expertise to efficiently deploy a valuable resource.
Question 13
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?
In the resource-based model, resources are freely available and mobile, whereas in the perfectly competitive industry structure, resources are highly immobile.
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.
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.
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 14
Mova Electronics, a leading pager manufacturer, recently declared itself bankrupt. This was attributed to a decision the company made in the past. While most of Mova's competitors were shifting their research focus toward cell phones, Mova invested most of its retained earnings on improvising its pagers. Once the pager market drastically declined, Mova Electronics was unable to capitalize on the new technology. Which of the following does this scenario best illustrate?
Causal ambiguity
Knowledge diffusion
Social complexity
Path dependence
Question 15
_____ allows managers to synthesize insights obtained from an internal analysis of a company's strengths and weaknesses with those from an analysis of external opportunities and threats.
The VRIO framework
The SWOT analysis
The break-even analysis
Ansoff's matrix
Question 16
If a resource is rare or unique to a particular firm, then:
the industry in which the firm operates will experience perfect competition.
the mobility of the resource will be high.
the firm will be able to maintain a competitive advantage for a long period.
it will be less costly for rivals to imitate the resource.
Question 17
Which of the following resources is a firm's resource stock?
Cash at bank
Reputation for quality
Land and building
Plant and machinery
Question 18
True Sync Inc. is a software company, which has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of True Sync Inc. will best enable it to gain and sustain a competitive advantage?
The resources of the company that are mobile
The capital raised by the company from its shareholders
The expertise acquired by the employees in the company
The headquarters owned by the company
Question 19
Which of the following statements fails to bring out the essence of the dynamic capabilities perspective?
A firm's competitive advantage is derived from static resource or market advantages.
A firm must be able to change its resource base as the external environment changes in order to sustain its competitive advantage.
A firm should modify its core competencies to effectively compete in dynamic markets.
A firm's external environment is rarely stable, and in many industries, change is fast and ferocious.
Question 20
Which of the following is an example of a firm's intangible resources?
The firm's cash at bank
The firm's finished goods inventory
The firm's organizational culture
The firm's land and building
Question 21
The resource-based view of a firm assumes that the:
resources of firms are highly scarce and hence the government interferes to ensure equal distribution.
resources of firms are highly exhaustible and hence they cannot contribute to their competitive advantage.
resource bundles of firms competing in the same industry are unique to some extent and thus differ from one another.
resource bundles of firms competing in the same industry tend to be highly mobile, moving easily from firm to firm.
Question 22
To make the SWOT analysis an effective management tool, a strategist must first:
distinguish a firm's resources, competencies, and capabilities from each other.
separate a firm's primary activities from support activities.
analyze the pros and cons of strategic options.
scan a firm's internal and external environments.
Question 23
Amazon.com's ability to provide the largest selection of items online, combined with superior IT systems and customer service, can be referred to as its _____.
equity reserve
economic equity
core competency
capital gain
Question 24
Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable resources, capabilities, or competencies. This is primarily because the source for the company's success has been unclear. The competitors are uncertain if Gene Electronics Inc.'s success is due to its strong leadership, the skills of its research and development team, or the timing of the company' s product introductions. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of _____.
time compression diseconomies
resource homogeneity
causal ambiguity
path dependence
Question 25
How did McDonald's leverage internal strengths in brand name and consistency to minimize the external threat of easy-to-prepare grocery items?
By developing an offensive strategic option to launch new restaurants in China and Mexico
By launching a chain of premium restaurants that offered customers a healthy food menu
By launching a McDonald's line of frozen foods in grocery stores
By developing a defensive strategic option and shutting down all its drive-thru outlets