Competing For Advantage 3rd Edition Hoskisson Test Bank 1

Competing for Advantage 3rd Edition Hoskisson
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0538475161-9780538475167/
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Chapter 4 - The Internal Organization: Resources, Capabilities, and Core

Competencies
TRUE/FALSE
1. Firms should seek to obtain a sustainable competitive advantage through implementation of strategies
based on their particular resources, capabilities, and core competencies.
ANS: T PTS: 1 DIF: med REF: p. 107

OBJ: 1 NOT: comprehension
2. Firms can earn above-average returns even if they do not develop or sustain a competitive advantage.
ANS: F PTS: 1 DIF: med REF: p. 107|p. 121

3. The sustainability of a competitive advantage depends upon the imitability of the core competence, the
availability of substitutes for the core competence, and the rate of core competence obsolescence.
ANS: T PTS: 1 DIF: hard REF: p. 107

OBJ: 1 NOT: knowledge
4. Analyzing the internal environment enables a firm to determine what it might be able to do by
identifying what opportunities exist.
ANS: F PTS: 1 DIF: hard REF: p. 107

5. Value of a product is measured by the variable and fixed costs associated with its production.
ANS: F PTS: 1 DIF: med REF: p. 110

6. Before the firm can make strategic decisions, managers must prioritize the decisions that generate
adequate quarterly earning numbers.
7. Individually, resources typically result in a sustainable competitive advantage.

8. A firm’s ability to achieve a competitive advantage is reflected in its financial capital base.
ANS: F PTS: 1 DIF: med REF: p. 114|p. 116

9. A competitive advantage can be created when several resources are bundled together in a unique
fashion.

10. A resource has high strategic value even if it has no effect on the competitive advantage of the firm.

11. Capabilities of an organization emerge over time through complex interactions between and among
tangible and intangible resources.

12. Capabilities can be developed quickly in response to changes in the new competitive landscape.

13. Not all resources and capabilities are core competencies.

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

15. Only capabilities that are valuable, rare, costly to imitate, and non-substitutable are sources of
sustainable competitive advantage.

16. Only capabilities that are valuable, common, costly to imitate, and substitutable can be strategic
capabilities.
17. Capabilities may be costly to imitate if they are causally ambiguous or socially complex.

18. A company can earn above-average returns only when the value it creates is less than the costs
incurred to create that value.

19. For capabilities to be a source of competitive advantage, they must allow a firm to perform value-
creating activities that competitors are also able to complete.
ANS: F PTS: 1 DIF: hard REF: p. 122|p. 123

20. There are correct models and rules that must be followed when conducting a value chain analysis or
the correct answer will not be determined.

21. Outsourcing is a way to add value to the business that converts an external value creating activity into
an internal supplier.

22. Outsourcing is a matter of convenience for most firms because they usually possess the resources and
capabilities required for competitive advantage superiority in all primary and secondary activities.

23. Once a core competence has been identified and perfected, it is a stable source of competitive
advantage.

24. The objectives of various stakeholder groups often differ from one another, sometimes placing
managers in situations in which they must make trade-offs.

OBJ: 9 NOT: application
25. Managers should establish measures that reflect how well the firm responds to needs and desires of
key stakeholders.

26. Sustainable development is strategically important business growth that depletes natural resources.

27. Power is the most critical criterion decision makers use to priortize stakeholder interests.
ANS: T PTS: 1 DIF: easy REF: p. 127

28. Firms have legal obligations to all stakeholder groups.

29. Both shareholders and lenders expect returns commensurate with the degree of risk associated with
their investments.
ANS: T PTS: 1 DIF: easy REF: p. 127

30. Firms can measure success in supplier relationships in terms of the way suppliers serve them and their
eagerness to engage in business.

31. Union interests and demands are typically consistent with employees’ needs.

32. Most organizations such as McDonald’s and Chipotle define their sustainability programs in terms of
what they are doing to advance technology while at the same time protecting the environment and
serving and protecting the communities and societies in which they operate.

MULTIPLE CHOICE
1. In the global economy, ____ has made it increasingly difficult for a firm to develop and sustain a
competitive advantage.
a. the Internet
b. the increasing homogenization of global culture
c. the increasing hostility to American culture
d. the development of second world economies into true global contenders
ANS: A PTS: 1 DIF: med REF: p. 133
2. Which of the following is NOT a factor affecting sustainability of a competitive advantage?
a. The availability of substitutes for a firm’s core competence
b. The rate at which obsolescence of the core competence occurs
c. The imitability of a core competence
d. The availability of resources to the firm
ANS: D PTS: 1 DIF: med REF: p. 107
3. Internal analysis enables a firm to determine:

a. what the firm can do. c. what the firm should have done.
b. what the firm should do. d. when the firm should act.
4. The proper matching of what a firm can do with what it might do allows the:
a. development of a top management team.
b. development of a successful low-cost strategy.
c. development of strategic intent, strategic mission, and the formulation of strategies.
d. formation of a strategic group.
ANS: C PTS: 1 DIF: hard REF: p. 107
5. According to the discussion in the textbook, Kodak:

a. did not recognize the shift from analog to digital technologies early enough.
b. was not able to overcome the inertia of its analog imaging capabilities so it could develop
capabilities in digital imaging.
c. conducted inadequate internal analysis.
d. in the end, successfully negotiated the change in the competitive environment.
ANS: B PTS: 1 DIF: hard REF: p. 109
6. The three conditions that characterize difficult managerial decisions concerning resources, capabilities,
and core competencies are:
a. complexity, rarity, and capacity.
b. uncertainty, complexity, and intraorganizational conflicts.
c. imitability, complexity, and interorganizational conflicts.
d. uncertainty, value, and availability of resources.
7. The condition of uncertainty in managerial decision-making occurs when:

a. it is difficult to determine which core competency to nurture.
b. a wide range of internal issues must be examined.
c. there are changes in technologies, economic and political trends, and societal values.
d. managers are unable to determine the best course of action to take.
8. Competitive advantage typically comes from:

a. individual resources.
b. one very outstanding resource.
c. several outstanding resources acting independently.
d. the unique bundling of several resources.
9. Tangible resources include:

a. assets that are people dependent such as know-how.
b. assets that can be seen and quantified.
c. organizational culture.
d. a firm’s reputation.
ANS: B PTS: 1 DIF: med REF: p. 112
10. Intangible assets include:

a. the firm’s reputation for its goods and services.
b. a firm’s borrowing capacity.
c. depreciated capital assets.
d. manufacturing facilities.
11. Which of the following is NOT an intangible asset?

a. Trademarks c. Production equipment
b. Organizational culture d. Brand name
ANS: C PTS: 1 DIF: med REF: p. 113
12. The firm’s reputation for quality is:

a. an example of a tangible resource.
b. not an issue of principal concern for a firm.
c. an example of an intangible resource that can provide a competitive advantage.
d. a resource for the firm on which funds can easily be borrowed.
ANS: C PTS: 1 DIF: med REF: p. 113|p. 114
13. Compared to tangible resources, intangible resources are:

a. of less strategic value to the firm.
b. not the focus of strategic analysis.
c. a more potent source of competitive advantage.
d. more likely to be reflected on the firm’s balance sheet.
14. Which of the following statements is in disagreement with the discussion in your textbook about
knowledge?
a. “Knowledge is power” and this is the rationale for individuals in organizations to hoard
information.
b. Sharing knowledge does not diminish its value for any one person.
c. Knowledge is an intangible asset that can be leveraged.
d. Knowledge is not diluted when it is shared.
15. When a firm such as Harley-Davidson has a strong brand name, it is challenged to:
a. develop another source of competitive advantage.
b. exploit the brand name as a competitive advantage.
c. develop new bundles of resources to be used to gain a competitive advantage.
d. identify new core competencies in the firm.
ANS: B PTS: 1 DIF: hard REF: p. 114|p. 115
16. Capabilities can be based on all of the following EXCEPT:

a. information-based resources. c. tangible resources.
b. intangible resources. d. unknown resources.
17. The foundation for a firm’s capabilities is (are) the:

a. ability to increase capacity as demand warrants.
b. amount of capital resources readily available.
c. good reputation a firm has built throughout its customer base.
d. skills and knowledge of its employees.
18. The critical executive skill of the age is fast becoming ____.
a. the ability to manage information systems.
b. the ability to balance and combine tangible and intangible resources.
c. the capacity to manage human intellect.
d. expertise in handling global relationships.
19. Which of the following is a true statement about capabilities?

a. Capabilities derive from the firm’s capacity to deploy resources that have been integrated
to achieve a desired end state.
b. Capabilities emerge quickly when resources interact.
c. Human capital cannot be a firm’s capability.
d. Capabilities become weaker and less valuable through repetition and practice.
ANS: A PTS: 1 DIF: hard REF: p. 115
20. The knowledge possessed by a firm’s human capital is:

a. easily reproduced by competitor firms which allows them to obtain a competitive
advantage.
b. a significant organizational capability and may be the root of all competitive advantage.
c. not a primary source of competitive advantage.
d. centered in a firm’s top management team.
21. Global business leaders increasingly believe ____ may be the root of all competitive advantages.
a. knowledge c. capital resources
b. workforce skills d. business relationships
22. Because knowledge acquisition and development has become so important in large companies, many
firms have created a management position with the title of:
a. Vice President of Training and Development.
b. Senior Vice President of Training and Recruiting.
c. Chief Learning Officer.
d. Senior Information Executive.
23. What is the job of a Chief Learning Officer?

a. Implementing employee training and development programs
b. Educating customers about the firm’s products
c. Developing an environment in which knowledge is widespread among employees
d. Establishing programs to promote education in the community
24. A firm’s resources and capabilities:

a. are always core competencies.
b. may be a source of incompetence.
c. are all a firm needs to focus on.
d. are inherited, not created.
25. Resources and capabilities are core competencies only when their use:
a. leads to a competitive advantage for the firm.
b. permits diffusion of threats in the external environment.
c. provides opportunities to defeat competitors.
d. encourages quick responses to changes in the global economy.
26. McKinsey and Company recommends that firms identify ____ competencies around which their
strategic actions can be framed.
a. 1 or 2 c. 6 or 7
b. 3 or 4 d. 10
27. ____ is an example of a capability that is based in the functional area of distribution.
a. Effective use of logistics management techniques
b. Effective control of inventories through point-of-purchase data collection
c. Effective organizational structure
d. Product and design quality
ANS: A PTS: 1 DIF: med REF: p. 117 (Table 4.3)
28. To be a strategic capability, a capability must satisfy all of the following criteria EXCEPT:
a. be technologically innovative.
b. be hard for competing firms to duplicate.
c. be without good substitutes.
d. be valuable to customers.
29. From the customer’s point of view, a capability can be a core competence if it is:
a. easily accessible to workers.
b. supported by the top management team.
c. valuable and nonsubstitutable.
d. a stable feature of the firm’s environment.
30. When a resource or capability is valuable, rare, costly to imitate, and nonsubstitutable, firms may
obtain:
a. a temporary competitive advantage.
b. a complex competitive advantage.
c. competitive parity.
d. a sustainable competitive advantage.
ANS: D PTS: 1 DIF: hard REF: p. 118 (Table 4.4)
31. Capabilities that other firms cannot develop easily are classified as:
a. costly to imitate. c. valuable.
b. rare. d. nonsubstitutable.
32. Organizational culture is:

a. usually quick to form.
b. a potential source of competitive advantage.
c. so difficult to analyze that most firms should choose to ignore it.
d. rarely unique to a single firm.
33. McKinsey & Co.’s corporate culture is an example of a ____ capability.

a. valuable c. costly-to-imitate
b. substitutable d. rare
34. LVMH’s ability to design a wide range of luxury products is an example of a(n) ____ capability.
a. valuable c. imitable
b. rare d. nonsubstitutable
35. Which of the following is NOT a reason that costly-to-imitate capabilities can emerge?
a. Environmental opportunity c. Historical conditions
b. Social complexity d. Causal ambiguity
36. Causally ambiguous means that:

a. the connection between cause and effect of capital is unclear in the firm.
b. rivals find it difficult to understand how the firm uses its capabilities to gain competitive
advantage.
c. the connection between industry and firm performance is unclear.
d. the effect of a firm’s resources are unclear to the firm itself.
37. A firm’s inability to understand how a competitor uses its capabilities to gain competitive advantage is
an example of:
a. social complexity.
b. causal ambiguity.
c. the rarity of a capability.
d. the nonsubstitutability of a capability.
38. Capabilities are nonsubstitutable when:

a. there are no direct substitutes in the five forces model.
b. the firm’s products cannot be a substitute for others’ products.
c. the switching costs in the industry are very high.
d. they do not have strategic equivalents.
39. According to the textbook, UPS has built its success on the competitive fundamental strength of a
unique:
a. value proposition c. organizational culture.
b. organizational strategy d. strategic intent
40. Southwest Airlines uses causal ambiguity to make its value-creating strategy difficult to imitate, and
this is possible because of the firm’s focus on:
a. globalization.
b. culture, technology, and human capital.
c. its unique branding of products.
d. cutting-edge advertising campaigns.
41. Value chain analysis is a tool used to:

a. analyze a firm’s external environment.
b. concentrate on a firm’s internal environment without exercising a concern about the
actions of those companies with which the firm competes.
c. understand the parts of the firm’s organization that create value and those that do not.
d. determine how long an opportunity in a firm’s external environment can be expected to
last.
42. Which of the following is NOT true about value chain analysis?
a. The value chain is a template the firm can use to understand its cost position.
b. This analysis helps to identify the single most important means that will facilitate strategy
implementation.
c. Both value chain activities and support functions should be analyzed.
d. It can be used to guide the implementation of business-level strategies.
ANS: B PTS: 1 DIF: hard REF: p. 121|p. 122
43. Value chain activities are:

a. involved with the support of the organization.
b. involved in a product’s physical creation, its distribution, and its service after the sale.
c. the most important activities and tasks in the firm.
d. the activities and tasks that the top management team most values.
44. In a globally competitive economy, the most valuable links on the value chain relate(s) to:
a. knowledge about customers. c. the firm’s value chain activities.
b. corporate analysts. d. the firm’s support functions.
45. FedEx based its success on the reconfiguration of a value chain activity and a support function. Which
activities and tasks did they reconfigure?
a. operations and technological development
b. marketing / sales and procurement
c. service and firm infrastructure
d. outbound logistics and human resources
ANS: D PTS: 1 DIF: hard REF: p. 123
46. In what way did Federal Express reconfigure the value chain that has resulted in changing the nature of
the delivery business?
a. Decreased its technological development activity
b. Changed from an informal to a formal firm infrastructure
c. Reconfigured its outbound logistics and human resource management
d. Changed its procurement policies and procedures
47. Value chain activities which create value for the customer include:
a. training human resources in ways that produce core competencies.
b. identifying and utilizing sophisticated technologies.
c. selecting appropriate distribution channels.
d. acquiring and managing financial resources.
ANS: C PTS: 1 DIF: hard REF: p. 122 (Figure 4.5)|p. 124
48. Examples of support functions include all of the following EXCEPT:

a. human resources. c. service after the sale.
b. finance. d. management information systems.
ANS: C PTS: 1 DIF: med REF: p. 122|p. 124 (Figure 4.7)
49. Value chain activities include all of the following EXCEPT:

a. technology development. c. marketing.
b. operations. d. follow-up service.
ANS: A PTS: 1 DIF: med REF: p. 122 (Figure 4.5)
50. Value chain support functions include:

a. converting inputs into product.
b. developing advertising and promotional campaigns.
c. distributing the product to customers.
d. recruiting, hiring, and training personnel.
ANS: D PTS: 1 DIF: hard
REF: p. 122 (Figure 4.5)|p. 124 (Figure 4.7) OBJ: 6
NOT: comprehension
51. Outsourcing is the:

a. selling of a value-creating activity to other firms in an industry.
b. selling of a value-creating activity to other firms, whether or not they are in your industry.
c. purchase of a value-creating activity from an external supplier.
d. use of computers to obtain data from the Internet.
52. A major reason outsourcing is being used is that:

a. it allows top managers to focus on operational details.
b. few firms possess superior capability in all primary and support activities.
c. it permits unlimited access to capital resources.
d. competitors do not have access to the same external sources.
53. Four skills are essential for managers involved in outsourcing programs. Which of the following is
NOT one of these skills?
a. strategic thinking c. partnership governance
b. deal making d. marketing expertise
54. When selecting activities to outsource, firms should select activities that:
a. capture and create value. c. are critical to their success.
b. neutralize external threats. d. are nonstrategic capabilities.
ANS: D PTS: 1 DIF: hard REF: p. 125
55. Which statement is TRUE about outsourcing?

a. In general, activities requiring low skilled labor should be outsourced to countries with
low labor costs.
b. In general, activities that cannot be codified should be outsourced to companies skilled in
administration.
c. In general, activities requiring strong organizational culture should be outsourced to
consultants skilled in relationship-building.
d. In general, support activities should be outsourced.
56. What causes core capabilities to become core rigidities?

a. Changes in the external and internal environment
b. Inertia and competition
c. Strategic myopia and managerial inflexibility
d. Lack of knowledge and poor use of assets
57. Events occurring in the external environment create conditions through which core competencies do
all of the following EXCEPT:
a. become core rigidities.
b. produce inertia.
c. stifle innovation.
d. sustain the firm’s competitive advantage.
58. Which of the following is NOT an external event that reveals the “dark side” of core capabilities?
a. A new competitor figures out a better way to serve the firm’s customers.
b. New technologies emerge and replace those used by the firm.
c. A firm changes its focus to a new core competence.
d. Political or social events shift the foundation of current core capabilities.
59. The level of stakeholder influence can come from all of the following EXCEPT:
a. economic power. c. formal power.
b. political power. d. social power.
60. A socially responsible firm does all of the following EXCEPT:

a. treats employees and managers well.
b. pays list price to suppliers.
c. provides stable returns to shareholders.
d. adds positively to its community.
ANS: B PTS: 1 DIF: med REF: p. 130|p. 131 (Table 4.7)
61. Which of the following statements is NOT true with regard to firm performance?
a. Stakeholders continue supporting a firm c. Various stakeholdes’ objectives differ
when its performance meets or exceeds from one another, sometimes requiring
expectations. managers to make trade-offs.
b. Various types of firm performance have d. Firms have legal obligations to
an equivalent influence on the three shareholders, and they are legally obliged
primary stakeholder groups. to satisfy government regulations.
ANS: B PTS: 1 DIF: med REF: p. 126|p. 128
62. Which of the following is a measure of profitability?

a. Total shareholder return c. Growth in revenues
b. Return on equity d. Asset turnover
63. Which of the following is NOT a measure of a firm’s internal efficiency?

a. Return on assets c. Worker productivity
b. Current ratio d. Inventory turnover
ESSAY
1. Describe the importance of internal analysis to the strategic success of the firm.
ANS:
In global competition today, what has been thought of as traditional sources of competitive advantage
(labor costs, capital costs, raw materials) are much less effective. Rather, a firm today should see itself
as a bundle of heterogeneous resources, capabilities, and core competencies that can be used to create
an exclusive market position. Therefore, a firm must understand not only its own capabilities and how
they lead to core competencies, but also those of its competitors. This understanding is generated
through an internal analysis.
PTS: 1 REF: p. 106|p. 110 OBJ: 1
2. Describe the various types of resources.
ANS:
Resources are either tangible or intangible. Tangible resources are those assets that can be seen and
quantified. There are four types: financial resources (borrowing capacity, ability to generate internal
funds); physical resources (plant and equipment, access to raw materials); technological resources
(patents, trademarks, and copyrights), and organizational resources (formal reporting structure,
planning, controlling and coordinating systems). Intangible resources are those assets in the firm that
are less visible. There are three types of such resources: human resources (knowledge, trust,
management capabilities, organizational routines), resources for innovation (ideas, scientific
capability, capacity for innovation), and reputation (brand name, perceptions of product quality,
supplier and customer relations, and relationships).
PTS: 1 REF: p. 112|p. 115 OBJ: 3
3. Define capabilities and how they affect the firm’s strategic success.
ANS:
Capabilities represent a firm’s capacity to deploy integrated resources to achieve a desired end state.
Capabilities are based on developing, carrying, and exchanging information and knowledge through
the firm’s human resources. The value of human capital in developing and using capabilities and core
competencies cannot be overstated.
PTS: 1 REF: p. 115|p. 116 OBJ: 4
4. Describe the four specific criteria that managers can use to decide which of their firm’s capabilities have
the potential to create a sustainable competitive advantage.
ANS:
Capabilities that are valuable, rare, costly to imitate, and nonsubstitutable are strategic capabilities and
a source of sustainable competitive advantage. For a capability to be valuable means that it helps the
firm to exploit opportunities and/or to neutralize threats in the external environment. Rare means that
few if any competitors possess the particular capability. Costly to imitate means a capability cannot be
easily developed by other firms. Finally, nonsubstitutable capabilities do not have strategic
equivalents.
PTS: 1 REF: p. 118|p. 121 OBJ: 5
5. Describe a value chain analysis.
ANS:
The value chain analysis allows a firm to understand the activities that create value for the firm and
those that do not. There are two central types of activities in a value chain. The first type is called
value chain activities. These are activities and tasks that are involved in a product’s physical creation,
its sale and distribution to buyers, and its service after the sale. The support functions are those
activities and tasks necessary for the value chain activities to take place. To conduct a value chain
analysis, people should study and identify all activities of the firm and evaluate their impact on the
effort to create value for the customer. This analysis should be conducted with an attempt to assess the
competitor’s capabilities in these same areas.
PTS: 1 REF: p. 121|p. 124 OBJ: 6
6. Why is it important to prevent core competencies from becoming core rigidities?
ANS:
All core competencies have the potential to become core rigidities and to generate failure. Each
competence is a weakness because if it is emphasized when it is no longer competitively relevant it can
generate organizational inertia.
PTS: 1 REF: p. 126 OBJ: 8

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Competing for Advantage 3rd Edition Hoskisson

Test bank: https://testbankpack.com/p/test-bank-for-competing-for-

Solution Manual: https://testbankpack.com/p/solution-manual-

Chapter 4 - The Internal Organization: Resources, Capabilities, and Core

ANS: T PTS: 1 DIF: med REF: p. 107

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ANS: T PTS: 1 DIF: hard REF: p. 107

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7. Individually, resources typically result in a sustainable competitive advantage.

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13. Not all resources and capabilities are core competencies.

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28. Firms have legal obligations to all stakeholder groups.

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3. Internal analysis enables a firm to determine:

5. According to the discussion in the textbook, Kodak:

7. The condition of uncertainty in managerial decision-making occurs when:

8. Competitive advantage typically comes from:

9. Tangible resources include:

10. Intangible assets include:

11. Which of the following is NOT an intangible asset?

12. The firm’s reputation for quality is:

13. Compared to tangible resources, intangible resources are:

16. Capabilities can be based on all of the following EXCEPT:

17. The foundation for a firm’s capabilities is (are) the:

19. Which of the following is a true statement about capabilities?

20. The knowledge possessed by a firm’s human capital is:

23. What is the job of a Chief Learning Officer?

24. A firm’s resources and capabilities:

32. Organizational culture is:

33. McKinsey & Co.’s corporate culture is an example of a ____ capability.

36. Causally ambiguous means that:

38. Capabilities are nonsubstitutable when:

41. Value chain analysis is a tool used to: