Q1. Evaluating a company’s resources and capabilities and
competitive strength relative to its rivals using VRIN Tests does not include
developing answers to which one of the following questions?
A) Is the resource or capability rare?
B) How good is the company’s value chain?
C) Is the resource or capability competitively valuable?
D) Is the resource or capability inimitable or hard to copy?
E) Is the resource or capability non-substitutable, or is it
vulnerable to the threat of substitution from different types of resources and
capabilities?
Q2. Which one of the following is not a good indicator of
how well a company’s present strategy is working?
A) Whether it is achieving its stated financial and
strategic objectives.
B) Whether it is an above-average industry performer.
C) Whether the firm’s sales and earnings are increasing or
decreasing.
D) Whether the company’s resource strengths and competitive
capabilities outnumber its resource weaknesses and competitive vulnerabilities.
E) The rate at which new customers are acquired and whether
the company’s overall financial strength is improving or on the decline.
Q3. Which one of the following groups of characteristics is
least likely to represent valuable company resources or competitive
capabilities?
A) Physical resources — state-of-the-art manufacturing
plants and equipment, efficient distribution facilities, attractive real estate
locations, or ownership of valuable natural resource deposits.
B) Larger workforce, longer time in business, lower profit
margins, and smaller capital investment spend than rivals.
C) Intangible resources such as a well-known brand name.
D) Organizational resources — information and communication
systems (servers, workstations, etc.), proven quality control systems, and
strong network of distributors or retail dealers.
E) Company culture — the norms of behavior, business
principles, and ingrained beliefs within the company.
Q4. Which of the following statements is false?
A) A dynamic capability is the ability to modify, deepen, or
reconfigure the company’s existing resources and capabilities in response to
changes in the environment or market.
B) A company’s internal strengths should always serve as the
basis for its strategy.
C) Managers must look toward correcting competitive
weaknesses that make the company vulnerable, dampen profitability, or
disqualify it from pursuing an attractive opportunity.
D) Managers need to keep close track of how cost effectively
the company can deliver value to customers relative to its competitors.
E) None of the above.
Q5. Which of the following statements about market
opportunity is correct?
A) Market opportunity is a big factor in shaping a company’s
strategy.
B) Depending on the prevailing circumstances, a company’s
opportunities can be plentiful or scarce and can range from wildly attractive
to unsuitable.
C) In evaluating the attractiveness of a company’s market
opportunities, managers have to guard against viewing every industry
opportunity as a suitable opportunity.
D) Answers A and B.
E) All of these.
Q6. A company that is at a disadvantage in the marketplace
because it lacks competitively valuable resources possessed by rivals
_______________
A) should adopt a new competitive strategy that might better
match the circumstances of the marketplace.
B) should abandon strategy elements that have caused its
weakness in the marketplace.
C) should undertake efforts to develop a distinctive
competence.
D) is virtually blockaded from using offensive strategies
and must rely on defensive strategies.
E) nearly always is relegated to a trailing position in the
industry.
Q7. A core competence _______________
A) is a more durable company resource than a
“distinctive competence.”
B) usually resides in a company’s technology and physical
assets (state-of-the-art plants and equipment, attractive real estate
locations, modern distribution facilities, and so on) whereas a company
competence usually resides in a company’s human assets.
C) is a capability that passes the “competitively
valuable” test.
D) is usually tied closely to the caliber of a company’s
manufacturing capability and/or its proprietary technology and know-how.
E) is better suited to helping a company defend against
external threats than in pursuing external market opportunities.
Q8. A distinctive
competence _______________
A) is a more important competitive asset than a core
competence.
B) is a competitively valuable capability that is performed
with a very high level of proficiency.
C) resides in people and in a company’s intellectual capital
and not in its assets on the balance sheet.
D) is knowledge-based.
E) All of the above.
Q9. SWOT analysis
_______________
A) is a simple but powerful tool for sizing up a company’s
internal strengths and competitive deficiencies, its market opportunities, and
the external threats to its future well-being.
B) is a tool for benchmarking whether a firm’s strategy is
closely matched to industry key success factors.
C) reveals whether a company is competitively stronger than
its closest rivals.
D) examines the company’s cost position activity by
activity.
E) is a competitive intelligence tool that discloses rivals’
key weaknesses.
Q10. The industry or market opportunities that are most
relevant to a company and those that its strategy should aim at capturing
include _______________
A) opportunities that are well-matched to the company’s
competitive capabilities and resource strengths.
B) opportunities that the company has the financial
resources to pursue.
C) opportunities that offer important avenues for growth.
D) opportunities where the company has the greatest
potential for competitive advantage.
E) All of the above.
Q11. Which of the following is not an example of an external
threat to a company’s future business prospects (see Table 4.2)?
A) Mounting intensity of competition among industry rivals
and costly new regulatory requirements.
B) Having a weaker brand image than rivals and a smaller
network of retailer dealers than rivals.
C) Shifts in buyer needs and preferences away from using the
industry’s product.
D) Vulnerability to unfavorable industry driving forces and
adverse demographic changes that are likely to curtail demand for the
industry’s product.
E) Growing bargaining power on the part of customers and/or
suppliers.
Q12. Which of the following analytical tools are
particularly useful for determining whether a company’s prices and costs are
competitive?
A) SWOT analysis, strategy assessment, activity-based
costing analysis, and key success factor analysis.
B) SWOT analysis, competitive strength assessment, best
practices analysis, and value chain analysis.
C) Value chain analysis and benchmarking.
D) Competitive position assessment, competitive strength
assessment, strategic group mapping, SWOT analysis, and value chain analysis.
E) SWOT analysis, best practices analysis, activity-based
costing analysis, and competitive strength assessment.
Q13. A company’s value chain consists of _______________
A) the activities a company performs in converting its
resource weaknesses into resource strengths.
B) the collection of activities it performs in the course of
designing, producing, marketing, delivering, and supporting its product or
service.
C) those activities a company performs that represent
“best practices.”
D) the activities that a company performs in developing a
distinctive competence.
E) the activities that represent a company’s competencies,
core competencies, distinctive competencies, and competitive capabilities.
Q14. Benchmarking
_______________
A) is inherently unethical if it involves companies that are
direct competitors because it involves gathering competitively sensitive
information about the operations and costs of rivals.
B) is not a valid tool for measuring the cost-effectiveness
of an activity unless it is restricted to companies in the same industry.
C) entails comparing how different companies perform various
value chain activities and then making cross-company comparisons of the costs
of these activities.
D) loses much of its managerial usefulness if it is done
with the aid of third-party organizations.
E) entails calculating the costs of performing each of the
primary and related support activities in a company’s value chain.
Q15. A company’s cost competitiveness is largely a function
of _______________
A) whether it does a good enough job of benchmarking its
value chain activities against the value chains of competitors so that it knows
exactly how low to drive its costs to be cost-competitive.
B) how efficiently it manages its internally performed value
chain activities and the costs in the value chains of its suppliers and forward
channel allies.
C) whether it does a better job of building its resource
strengths more cost effectively than rivals.
D) whether it possesses more core competencies and
competitive capabilities than rivals.
E) how closely its internally performed activities are
linked to the activities performed by suppliers and to the activities performed
by forward channel allies.
Q16. Strategic actions to reduce the costs of internally
performed value chain activities and improve a company’s cost competitiveness
_______________
A) can aim at lowering costs (1) in the suppliers’ part of
the industry value chain, (2) in a company’s own internally performed
activities, and/or (3) in the forward channel portion of the value chain.
B) work best when they aim at lowering the costs of
performing those tasks and activities where the company has core competencies
and distinctive competencies.
C) work best when aimed at increasing the amount of the
company’s low-cost competitive assets and decreasing the amount of its
high-cost competitive assets.
D) are likely to be most effective when they are aimed at
lowering the costs of the value chain activities that a company performs
internally.
E) are most likely to be successful when they involve
efforts to concentrate more company resources and talents on those value chain
activities where the company already has the lowest costs.
Q17. Strategic actions to eliminate an internal cost
disadvantage include _______________
A) implementing the use of best practices.
B) trying to eliminate some cost-producing activities by
revamping the value chain.
C) outsourcing high-cost activities to vendors capable of
performing the activity more cheaply.
D) investing in productivity-enhancing, cost-saving
technology.
E) All of these.
Q18. The options for attacking the high costs of items
purchased from suppliers does not include which one of the following?
A) Pressuring suppliers for more favorable prices.
B) Integrating backward into the business of high-cost
suppliers and making the item in-house so as to better control the cost.
C) Switching to lower priced substitute inputs.
D) Raising prices to customers (so as to cover the high
costs).
E) Collaborating closely with suppliers to identify mutual
cost-saving opportunities.
Q19. Which one of the following is not something that can be
learned from doing a competitive strength assessment?
A) Identifying the competitive factors where a company is
strongest and weakest vis-à-vis key rivals and the kinds of offensive/defensive
actions the company can use to exploit its competitive strengths and reduce its
competitive vulnerabilities.
B) The extent to which a company’s customer value
proposition is superior to its rivals.
C) Which of the rated companies is competitively strongest
and what size competitive advantage it enjoys.
D) Whether a company has a net competitive advantage or a
net competitive disadvantage relative to key rivals (as indicated by the
differences among the companies’ competitive strength scores).
E) Which rival company is competitively weakest and the
areas where it is most vulnerable to competitive attack.
Q20. Identifying the strategic issues that company managers
need to address _______________
A) involves using the
results of both industry and competitive analysis and evaluations of the
company’s internal situation using the VRIN tests.
B) is facilitated by analysis of the company’s cost
structure and customer value proposition relative to its rivals.
C) sets the agenda for deciding what actions to take next to
improve the company’s performance and business outlook.
D) entails locking in on what challenges the company has to
overcome in order to be financially and competitively successful in the years
ahead.
E) All of the above.
