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Which of the following statements accurately brings out the difference between tangible and intangible resources?


A) Tangible resources contribute to a company's competitive advantage, whereas intangible resources have little effect on competitive advantage.
B) Tangible assets can be bought on the open market by anyone with the necessary cash, whereas intangible assets cannot be easily purchased.
C) Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily.
D) Tangible assets are difficult for competitors to imitate, whereas intangible assets can be easily replicated.

E) A) and B)
F) None of the above

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Briefly describe the VRIO framework.

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The VRIO framework is a theoretical fram...

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Invoro is a market leader in consumer electronics. If Finolo and Ethver, companies that manufacture televisions, develop the same customer knowledge base and create products with the same customer appeal as Invoro, then


A) Finolo and Ethver will have a VRIO resource.
B) Invoro will have a resource that is valuable but no longer rare.
C) Invoro will have a sustainable competitive advantage in the industry.
D) Invoro will have a resource that is rare but no longer valuable.

E) All of the above
F) C) and D)

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Differentiate resource stocks from resource flows with the help of the bathtub metaphor.

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A helpful metaphor to explain the differ...

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According to the value chain analysis, which of the following is a primary activity?


A) research and development
B) human resources management
C) accounting and finance
D) marketing and sales

E) B) and C)
F) None of the above

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Tony's Pizza has been trying to directly copy the strategies of Moonlight Pies. Even though it is evident that the success of Moonlight Pies' success comes from the freshness and variety of ingredients it uses, Tony's Pizza has not been able to introduce the same types of produce into its recipes. This is because Moonlight's network of relationships with local growers, as well as its efficient supply chain, are very difficult to emulate. Which of the following barriers to imitation does this scenario best illustrate?


A) path dependence
B) social complexity
C) resource mobility
D) resource homogeneity

E) B) and C)
F) A) and B)

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A music distributor that decides to launch a proprietary music streaming service to respond to changes in music consumption trends exhibits dynamic capabilities.

A) True
B) False

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In the context of the resource-based model of competitive advantage, which of the following scenarios best exemplifies resource immobility?


A) AP Corp. has earned a good reputation among its shareholders by investing more heavily in equipment than in building up brand equity.
B) Two Triangle Inc. has lost its market share because its resources are rigid, inflexible, and static.
C) Blue Elixir Corp. has been able to gain a competitive advantage because of its ability to efficiently move its resources from one manufacturing unit to another.
D) True 3 Inc. has been able to outperform its competitors because the uniqueness of its employee experience is difficult for competitors to replicate.

E) All of the above
F) A) and B)

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


A) resource immobility is high.
B) perfect competition exists.
C) resource heterogeneity is high.
D) capabilities of a firm are not easily replicable.

E) None of the above
F) All of the above

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Southwest Airlines (SWA) has enjoyed a sustained competitive advantage, allowing it to outperform its competitors over several decades. Continental and Delta attempted to copy SWA with their offerings of Continental Lite and Song, respectively. Neither Continental nor Delta, however, was able to successfully imitate the resource bundles and firm capabilities that make SWA unique. Which of the following is this case an example of?


A) resource immobility
B) resource heterogeneity
C) resource imitation
D) resource substitution

E) B) and C)
F) None of the above

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To help a firm achieve a competitive advantage, each distinct activity performed in the value chain needs to


A) contribute to the firm's strategic position as either low-cost leader or differentiator.
B) reduce the immobility and the heterogeneity of the firm's resources.
C) create a static fit between the company's internal resources and the external environment.
D) reduce the causal ambiguity and the social complexity of the firm's source of success.

E) All of the above
F) B) and C)

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Salubre Pharmaceuticals invested $3.4 billion dollars to develop a new drug for individuals with diabetes. After Salubre receives FDA approval of the drug, its marginal cost to produce the drug for market will be


A) low.
B) high.
C) moderate.
D) unpredictable.

E) B) and C)
F) A) and C)

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Which of the following best exemplifies social complexity as an isolating mechanism?


A) Kristin's Cosmetics attempted to imitate how Monica's Makeup combined its management and product development systems with little success.
B) Kristin's Cosmetics failed to acquire the resources for its eyeliner at a low cost and thereby lost its competitive advantage over Monica's Makeup.
C) Kristin's Cosmetics had difficulty competing with Monica's Makeup because it could not access the many makeup factories in Kentucky as easily as its competitor.
D) Kristin's Cosmetics did not fully understand the reasons for the success of Monica's Makeup and therefore had difficulty competing with the firm.

E) A) and B)
F) None of the above

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How do managers benefit from conducting a SWOT analysis?

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A SWOT analysis allows managers to evalu...

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Threadbare Industries is a new high-end textile company that has raised sufficient capital from multiple sources. It is planning to use its capital to purchase certain assets. Which of the following assets will be the most difficult for Threadbare Industries to acquire using its capital?


A) a new CEO
B) software
C) a lease for a new building
D) brand name

E) B) and C)
F) A) and D)

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Riya has recently started a restaurant in a commercial area that already has many other established restaurants and popular fast-food chains. Riya owns the building in which her restaurant is located, rather than leasing premises as her competitors do. This factor allows her to offer her products at a more competitive price. Riya has also invested a huge amount in designing the restaurant's interior and in equipping the kitchen with the appliances that are most widely used in her industry. In this scenario, which of the following is the most valuable resource for Riya's business?


A) the investments made by Riya on the restaurant's interior
B) the type of kitchen equipment widely used in her industry
C) the restaurant's late entry into the market
D) the building owned by Riya, which reduces cost of operations

E) A) and B)
F) C) and D)

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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?


A) In the resource-based model, resources are freely available and mobile, whereas in the perfectly competitive industry structure, resources are highly immobile.
B) 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.
C) 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.
D) 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.

E) B) and C)
F) A) and D)

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During market testing, Sensation Cosmetics (SC) realized that the cosmetics industry was dominated by multiple, well-established brands. These brands mostly sold their products in exclusive outlets and departmental stores. SC management realized that a new entrant would require a different business model to be successful. Thus, SC started selling its products through direct marketing. In this scenario, Sensation Cosmetics accomplished substitution primarily through


A) path dependence.
B) technology transfer.
C) knowledge diffusion.
D) strategic equivalence.

E) C) and D)
F) B) and D)

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According to an evaluation using the VRIO framework, Crocs Shoes was unable to sustain its competitive advantage primarily because its products were


A) invaluable and common.
B) easy to imitate.
C) extremely rare.
D) non-substitutable.

E) B) and D)
F) B) and C)

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Several senior managers recently left Bass Automobile Inc. and went to work at Unicorn Autos Inc., a rival company. What does this imply?


A) The resource stock of Bass Automobiles Inc. increased.
B) Bass Automobiles Inc. faced resource leakage.
C) The resource flow into Unicorn Autos Inc. was reduced.
D) Bass Automobiles Inc.'s tangible assets decreased.

E) A) and D)
F) All of the above

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