1. A company has higher quality products and a better reputation than its competitors. What can you conclude about this company?

A. This company has a temporary competitive advantage.

B. This company has a competitive advantage.

C. This company has higher profits per unit than competitors.

D. None of the above.

2. If large market-share is thought of as a company resource, it can be valuablebecause it reduces costs through economies of scale and rare because only one company can have the largest market share in the industry. Large market share can help sustain competitive advantage if

A. it is difficult to imitate.

B. employees have the right incentives.

C. it creates higher willingness to pay.

D. it is based on low switching costs.

3. An economic prediction of a competitor is based on the competitor's _______________, while a psychological prediction of a competitor is based on the competitor's ______________.

A. competitive advantage; strategic weakness

B. future payoff; past behavior

C. goals and beliefs; options and choices

D. actions; thoughts

4. A company that only exploits current advantages and does not explore for new advantages may face a ________________.

A. Competitive triangle

B. Competency trap

C. Sustainable disadvantage

D. Creative tension

5. Procter & Gamble (P&G) has a paper towel and baby diaper business that both use paper products. This is an example of value created through transferring its core competency. true or false?