Ch. 4 Internal Analysis: Resources, Capabilities, and core competencies

Organizational and managerial skills that find their expression in a company’s structure, routines, and culture are referred to as

capabilities.

Capabilities are the ________and managerial skills necessary to orchestrate a diverse set of resources to deploy them strategically.

organizational

According to the resource-based view, a firm’s competitive advantage often stems from its

intangible resources.

As the manager of a relatively new company assessing what could give your business a competitive advantage, you are analyzing company resources to identify core competencies. Which of the following resources is most likely to generate a competitive advantage?

enthusiastic company culture

One of the reasons that Circuit City filed for bankruptcy was due to its inability to reinvest, hone, and upgrade its once-impressive resource base. Ultimately, Circuit City’s core competences became

core rigidities.

Although eHook and eFury operate in the same consumer electronic industry, eHook has better sales and brand equity. This is attributed to eHook’s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which eFury lags behind. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated?

resource heterogeneity

The competitive advantage that one firm has will be short-lived in an industry in which

perfect competition exists.

How does causal ambiguity act as an isolating mechanism for organizations?

It makes it difficult for the competitors to understand why a company has been so successful.

TalkaLot is a cell phone manufacturing company. Its latest range of smartphones are visually similar to the Y-series range of smartphones from Talkie Gen, in terms of shape, look, and feel. Which of the following strategies has TalkaLot used to replicate the valuable and rare resource of Talkie Gen?

direct imitation

LightningDrive is a leading automobile company. The company has been able to sustain its competitive advantage primarily due to its high-quality and efficient electric motors. Most of its competitors have failed to develop similar electric motors at a reasonable price. Which of the following resource attributes listed in the VRIO framework has helped LightningDrive sustain its competitive advantage?

high costs involved in imitation

Assume a firm’s resources and capabilities are costly to imitate. This is because rival companies do not clearly understand the relationship between the resources and capabilities controlled by the firm. In this case, the firm’s competitive advantage is protected against imitation by

causal ambiguity.

EcoWheels, an electric scooter company, anticipated that the global price of lithium for batteries would surge within the next few years due to rising demand. To prepare, EcoWheels secured a long-term contract with an emerging supplier in Chile at favorable rates. When lithium prices later spiked dramatically, EcoWheels maintained cost advantages that competitors lacked. Which of the following isolating mechanisms does this scenario best illustrate?

better expectations of future resource value

________ describes a process in which the options one faces in a current situation are limited by decisions made in the past.

Path dependence

Dynamic capabilities are especially important for surviving and competing in markets that

shift quickly and constantly.

Luminex Design Studio is known for its award-winning creative work, driven by a small team of veteran designers who have perfected unique design processes over many years. Recently, however, the firm has taken on fewer projects in experimental design, focusing mostly on routine client requests. According to the bathtub metaphor in the dynamic capabilities perspective, what is the best way for Luminex to protect against resource leakage?

Maintain active involvement in experimental projects to keep design skills sharp.

Business managers are often concerned that just one of their company’s activities will make or break their company’s competitive advantage. However, you know that

their company’s success depends on an array of many key activities, not just one activity.

Online retailer eBuy had been drastically losing market share to its competitors, so management hired a consulting firm to help figure out the reasons why sales were dipping. The consultants found that the company primarily lost its competitive advantage because of its poor customer service, which included slow response times to customer inquiries and unclear return policies. These ineffective policies and procedures led to many disgruntled customers and a steady migration to more customer-friendly retailers. eBuy can best solve its problem by working on its

support activities.

FreshBite Organics, a mid-sized grocery chain, has seen declining margins as large retailers have entered the organic food market and driven prices down. You’ve been asked to strengthen the company’s profitability. Which of the following approaches makes the most sense within the context of strategic activity systems?

Redesign supply chain partnerships and in-store operations to reduce costs and improve freshness.

When conducting a ________it’s best to examine both PESTEL and Porter’s five forces analyses because these tools focus on the external environment.

SWOT analysis

Which of the following best illustrates the Weaknesses–Threats (WT) quadrant of the SWOT matrix?

A regional grocery chain invests in staff training to better compete against new national discount retailers.