BUSI 4940 Exam 2 Study

Which of the following best describes organizational resources?

A) A set of abstract ideas used for innovation.
B) The building blocks of an organization, including machinery, people, culture, processes, and capital.
C) Resources exclusively used for financial management.
D) A network of external stakeholders.

The building blocks of an organization, including machinery, people, culture, processes, and capital.

Why do resources alone not add value to a company?

A) They are too expensive to maintain.
B) Resources are considered raw materials that need proper deployment or usage to create value.
C) Resources only add value when they are financial assets.
D) They are always outsourced and therefore irrelevant to company performance.

Resources are considered raw materials that need proper deployment or usage to create value.

Think to the Caveman example, if you have the supplies to build a fire, but you don’t actually know how to build a fire, can you actually build the fire?

What makes intangible resources difficult for other companies to imitate?

A) They are based on physical assets that can be easily copied.
B) They are rooted deeply in a firm’s history and often tied to its people, making them harder to replicate.
C) Intangible resources are always related to financial performance.
D) They involve standardized processes that every company can adopt.

They are rooted deeply in a firm’s history and often tied to its people, making them harder to replicate.

• Ex: Amazon reputation of being one of the bets places to shop online would be considered an intangible resource

Which of the following best explains why tangible resources might be less valuable in sustaining competitive advantage compared to intangible resources?

A) Tangible resources are more easily transferable between companies.
B) Intangible resources cannot be quantified, so they are less useful in a competitive context.
C) Tangible resources depreciate faster and do not contribute to long-term strategic goals.
D) Intangible resources, such as brand reputation and corporate culture, are harder to imitate and often take longer to develop, offering more sustained competitive advantage.

Intangible resources, such as brand reputation and corporate culture, are harder to imitate and often take longer to develop, offering more sustained competitive advantage.

Which of the following statements best defines a company's capabilities?

A) Capabilities refer to the tangible assets a company owns, such as production equipment and office buildings.
B) Capabilities are the skills and knowledge required to effectively combine and utilize resources to create value for the organization.
C) Capabilities refer to the financial resources used to fund the company’s operations.
D) Capabilities are the intangible assets that a company builds through its brand reputation and corporate culture.

Capabilities are the skills and knowledge required to effectively combine and utilize resources to create value for the organization.

• Think back to Caveman example

Which of the following best describes an incompetency within an organization?

A) A minor weakness that affects productivity but does not threaten the company's survival.
B) An area where the company lacks necessary skills or capabilities, causing rapid harm and posing an immediate threat to the organization's survival.
C) A deficiency in intangible resources that slows down innovation and long-term growth.
D) A temporary problem in resource allocation that can be easily resolved without major consequences.

An area where the company lacks necessary skills or capabilities, causing rapid harm and posing an immediate threat to the organization's survival.

*Debt Holders and BIG lawsuits, big enough that can kill you quickly.

What is the primary consequence of having a deficiency in a particular competency within an organization?

A) Immediate and rapid failure of the organization.
B) Competitive disadvantage, where the company is good at something, but at least one competitor is significantly better, leading to a slower threat to survival.
C) A complete inability to compete in the market due to lack of skills.
D) Loss of all tangible resources, causing the organization to halt operations.

Competitive disadvantage, where the company is good at something, but at least one competitor is significantly better, leading to a slower threat to survival.

Which of the following best describes a deficiency in an organization's competency?

A) The company is good at social media marketing, but a competitor has more advanced strategies, resulting in a gradual loss of market share.
B) The company has the best technology in its industry, consistently outperforming competitors.
C) The company is struggling to maintain basic operational efficiency, leading to immediate threats of bankruptcy.
D) The company excels in customer service, consistently outpacing its competitors in customer satisfaction ratings.

The company is good at social media marketing, but a competitor has more advanced strategies, resulting in a gradual loss of market share.

*Deficiencies is when you’re good at something but at least one competitor is noticeably better at it, this puts at a competitive advantage

Which of the following best defines a core competency in an organization?

A) An area where the company is good, and no competitors are significantly better, resulting in competitive parity.
B) A skill or ability that gives the company a clear and sustained competitive advantage over all others.
C) A temporary capability that helps the company grow but can easily be replicated.
D) An underdeveloped skill that the company struggles with, leading to competitive disadvantage.

An area where the company is good, and no competitors are significantly better, resulting in competitive parity.

Which of the following is an example of a core competency that results in competitive parity?

A) A company’s ability to offer lower prices than any competitor in the industry.
B) Airlines like American Airlines and Delta being good at flying planes safely, but not necessarily better than other airlines at doing so.
C) A technology company having patented innovations that no competitors can replicate.
D) A restaurant chain being the only one in its market with high customer satisfaction

Airlines like American Airlines and Delta being good at flying planes safely, but not necessarily better than other airlines at doing so.

*Reminder: You’re good at something, and no other competitors are any better than you are at it

Which of the following is an example of a distinctive competency?

A) A fast-food chain being as good as others in delivering quick service.
B) A tech company with the best artificial intelligence algorithms, outperforming all competitors in product innovation.
C) A retail company being equally proficient as its competitors in customer service.
D) A manufacturing company using the same technology as its competitors to produce similar goods.

A tech company with the best artificial intelligence algorithms, outperforming all competitors in product innovation.

*They’re good at something, and better than all of their competitors

What is a distinctive competency?

A) An area where a company is good, but its competitors are better, resulting in competitive disadvantage.
B) A skill or capability where a company excels and can perform better than all of its competitors, leading to a competitive advantage.
C) A competency shared by all competitors in an industry, resulting in competitive parity.
D) A temporary strength that offers no long-term advantage.

A skill or capability where a company excels and can perform better than all of its competitors, leading to a competitive advantage.

What does the Value Chain primarily represent?

A) The financial costs associated with producing goods and services.
B) The marketing strategies used to promote finished products.

C) The sequential steps involved in producing goods and services, starting with raw materials and ending with the delivered product.
D) The organizational structure of a company and its impact on productivity.

The sequential steps involved in producing goods and services, starting with raw materials and ending with the delivered product.

Which of the following best describes the role of supporting functions in the Value Chain?

A) They enhance the efficiency and effectiveness of the primary activities in the value chain, such as logistics, human resources, and technology development.
B) They are directly involved in the production of goods and services.
C) They focus solely on the financial management of the organization.
D) They replace the need for primary activities in the value chain.

They enhance the efficiency and effectiveness of the primary activities in the value chain, such as logistics, human resources, and technology development.

What is the primary goal of valuation in the context of financial analysis?

A) To determine the historical performance of a company.
B) To estimate the current or projected worth of an asset or a company.
C) To assess the efficiency of a company's operations.
D) To analyze the competitive landscape of an industry.

To estimate the current or projected worth of an asset or a company.

Which of the following best describes the fundamental focus of economics?

A) The management of financial resources in a business setting.
B) The analysis of government policies on taxation and spending.
C) The study of how entities interact to allocate scarce resources to satisfy their needs and wants.
D) The examination of how money circulates within an economy.

The study of how entities interact to allocate scarce resources to satisfy their needs and wants.

**Economics is NOT about money

What does the concept of utility in economics primarily refer to?

A) The financial value of goods and services in the marketplace.
B) The satisfaction or usefulness of a good or service to meet the needs of a consumer.
C) The total cost of production for a good or service.
D) The efficiency of resource allocation in an economy.

The satisfaction or usefulness of a good or service to meet the needs of a consumer.

Which of the following statements best describes the role of utility in consumer decision-making?

A) Utility influences how consumers prioritize their spending based on the perceived satisfaction of different goods and services.
B) Utility is only concerned with the price of goods and services in the market.
C) Utility is irrelevant when consumers have unlimited resources.
D) Utility solely measures the quantity of goods and services available.

Utility influences how consumers prioritize their spending based on the perceived satisfaction of different goods and services.

How can total utility be generally defined in the context of economics?

A) The total cost of producing a good or service.

B) The total quantity of goods available in the market.

C) The total market value of a good or service.

D) The total satisfaction received from consuming a good or service.

The total satisfaction received from consuming a good or service.

In addition to exploiting core competencies, a comprehensive business-level strategy should also focus on:

A) Reallocating resources away from product innovation to cut costs.

B) Expanding into unrelated industries to diversify risk.

C) Eliminating competitive disadvantages while leveraging distinctive competencies.

D) Prioritizing short-term gains over long-term competitive sustainability.

Eliminating competitive disadvantages while leveraging distinctive competencies.

Production equipment, manufacturing facilities are known as what type of resource?

Tangible resources

**Note that tangible resources are also quantifiable

Which of the following is a key characteristic of firms employing a cost leadership strategy?

A) They offer highly customized products to niche market segments.
B) They focus on producing standardized goods with acceptable features at the lowest cost relative to competitors.
C) They rely exclusively on premium pricing to maximize profitability.
D) They avoid outsourcing and prioritize in-house production to maintain control over the supply chain.

They focus on producing standardized goods with acceptable features at the lowest cost relative to competitors.

How do process innovations contribute to the success of a cost leadership strategy?

A) By enhancing product differentiation and increasing production complexity.
B) By increasing efficiency in production and distribution, allowing the firm to reduce operational costs.
C) By enabling the firm to shift focus away from standardization and toward customization.
D) By improving customer service capabilities and building brand loyalty.

By increasing efficiency in production and distribution, allowing the firm to reduce operational costs.

What is the primary advantage for a firm implementing a focus strategy?

A) The ability to dominate multiple broad market segments simultaneously.
B) The opportunity to gain a deeper understanding of a specific market segment, allowing for tailored products or services that competitors may overlook.
C) The chance to set the lowest price in the market by scaling up production.
D) The flexibility to shift quickly between different customer groups and market segments.

The opportunity to gain a deeper understanding of a specific market segment, allowing for tailored products or services that competitors may overlook.

How does IKEA's focused cost leadership strategy differ from a general cost leadership strategy?

A) By targeting a broad range of customer segments in various markets.
B) By focusing on specific regions and eliminating third-party production to maintain quality while reducing costs.
C) By limiting its product offerings to high-end furniture designed for luxury markets.
D) By exclusively using external manufacturers to reduce costs across all markets.

By focusing on specific regions and eliminating third-party production to maintain quality while reducing costs.

In the context of valuation, which of the following statements is most accurate regarding the concept of "value"?

A) An asset’s value is entirely dependent on its current market price.

B) Value is only realized when a willing buyer and seller agree on a transaction price.

C) The intrinsic value of an asset can be accurately determined without a transaction.

D) Value is inherent in the asset itself, regardless of market demand.

Value is only realized when a willing buyer and seller agree on a transaction price.
While various methods estimate an asset's worth, value only becomes concrete when an actual transaction takes place between a buyer and seller. This reflects the principle that market demand and willingness to transact ultimately determine value, think back to the in-class Zillow valuation example.

The in-class example where Dr. Cory offers the class a snickers bar, is sold for $5 and then offered $2 for the 5th bar was an example that showed the Law of ______

Diminishing Marginal Utility: he law of diminishing marginal utility states that all else equal, as consumption of a good or service increases (usually within a limited period of time), the marginal utility derived from each additional unit declines

Which of the following best illustrates the law of diminishing marginal utility?

A) The more hours an employee works, the more productive they become each additional hour.

B) As a person consumes more slices of pizza in one sitting, the satisfaction gained from each additional slice decreases.

C) A customer gets a higher level of satisfaction from buying more expensive products than cheaper ones.

D) The utility from each unit of a product remains constant regardless of how much of it is consumed.

As a person consumes more slices of pizza in one sitting, the satisfaction gained from each additional slice decreases.

The premise of a Free Market system necessarily involves four conditions (VPCL) : ?

1 ) Voluntary Transactions

2) Private Property

3 ) Competition (monopolies are illegal, regulatory monopolies minimiEd)

4 ) Laws against fraud and theft

______nothing more than the cumulative aggregation of all the individual, voluntary transactions of private property in a competitive market with the laws necessary to reduce monopolies, fraud, and theft actively being enforced

Capitalism

The following Primary activities are most appropriate for what type of Level- Industry or Company Level:

• Inbound logistics

• Operations

• Outbound Logistics

• Marketing & Sales

• Customer Service

Company Level

The following Primary Steps are most appropriate for what type of Level- Industry or Company Level:

• Mining or Harvesting

• Gathering and Processing

• Transport for Further Processing

• Manufacture Final Version

• Sell and Deliver

Value Chain

Industry Level

What are the two instances where a Free Market ceases to function?

Natural Monopoly and Public Good

Name the four major types of competencies and their explanation

Incompetency: You’re not very good at something, and thus your org is being harmed quickly (Results in Rapid Failure)

Deficiency: You’re good at something, but at least one competitor is noticeably better at it (Competitive Disadvantage)

Core Competency: You’re good at something, and no other competitors are any better than you at it (Competitive Parity)

Distinctive Competency: You’re good at something, and you do it better than all your competitors. (Competitive Advantage )

A company successfully implements a Cost Leadership strategy by reducing manufacturing costs significantly below that of its competitors. Which of the following would likely be a primary advantage of this strategy?

A) The ability to set lower prices than competitors while maintaining a higher profit margin.
B) The ability to offer premium products with superior quality in niche markets.
C) Immediate market dominance due to luxury branding and higher perceived value.
D) Minimizing competitive pressure through differentiation and innovation.

The ability to set lower prices than competitors while maintaining a higher profit margin

-By having a lower cost structure, the company can afford to price its products competitively without sacrificing profitability, unlike competitors who may have higher production costs.

A company adopting a Differentiation strategy focuses on offering unique, high-quality products and services. Which of the following is the most likely result of this strategy?

A) Increased price sensitivity from customers, leading to lower profit margins.
B) Higher customer loyalty due to perceived product uniqueness and superior service.
C) Greater vulnerability to cost-cutting competitors who offer similar products at lower prices.
D) Immediate market dominance by reducing operational costs across all business units.

Higher customer loyalty due to perceived product uniqueness and superior service.

____ the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context

Global mindset

___ is the most likely or expected outcome. It’s the normal course of events where things go as expected

Base Case

___is the best-case outcome, where everything goes better than expected. 

Upside Case

___ is the worst-case scenario, where things go worse than expected.This might be lower sales, unexpected challenges et

Downside case

Walmart is an example of what type of the 5 generic business-level strategies.

Walmart attempts to provide lowest cost products in their markets to attract very broadly defined set of customers

Cost leadership

What is the result of an incompetency in an organization?

It results in Rapid failure and is an immediate threat to survival.

Ex: Debt Holders and lawsuits