Question 1

The perfectly competitive industry structure differs from the resource-based model in its view that:

all firms have access to the same resources.

accessibility to bundles of resources differ across firms.

resources tend to be "sticky."

competencies differ across firms working in the same industry.

Question 2

Brown Foods Inc., a leading chocolate producer, anticipated that the prices of cocoa beans would double in less than three years. This would disrupt the availability of cocoa in the industry. Thus, Brown Foods Inc. decided to purchase cocoa plantations in Ghana. As predicted, the prices of cocoa increased twofold. Because of the company-owned cocoa plantations, Brown Foods Inc. was able to sustain its competitive advantage in turbulent times. Which of the following isolating mechanisms does this scenario best illustrate?

Social complexity

Causal ambiguity

Time compression diseconomies

Better expectations of future resource value

Question 3

_____ describes a firm's ability to create, deploy, modify, reconfigure, upgrade, or leverage its resources over time in its quest for competitive advantage.

Dynamic capability

Resource immobility

Resource heterogeneity

Time compressed diseconomy

Question 4

When the laptop market overtook the desktop market, Blue Tech Inc., a leader in desktop technology, was left at a competitive disadvantage. Later, Blue Tech Inc.'s management channeled all of the company's efforts and revenue to develop an efficient laptop from scratch in less than a year. However, the company failed because most of its competitors had already been in the laptop market for five years. Blue Tech Inc's models were inferior to the ones in the market. In this scenario, Blue Tech Inc.'s failure can be best attributed to:

causal ambiguity.

diseconomies of scope and scale.

time compression diseconomies.

social complexity.

Question 5

Microsoft's eventual industry dominance is largely credited to the:

initial breaks that Bill Gates got when starting Microsoft, which were leveraged for several decades through an effective strategy.

firm's strong financial resources and market position during the initial stages of the industry.

firm's effective organizational structure and coordinating systems that helped the company capture value.

ability of Microsoft to pursue an unrelated diversification strategy in different industries.

Question 6

When the knowledge of a valuable and rare resource diffuses throughout an industry, the:

firms in the industry will be better positioned to achieve competitive parity.

ability to sustain a competitive advantage will be restricted to one firm.

mobility and homogeneity of the resource will decrease.

structure of the industry will no longer be perfectly competitive.

Question 7

In the context of the SWOT matrix, which of the following best exemplifies a firm's internal strength?

Increase in a firm's customer loyalty

Growth in the size of the market in which a firm operates

Rise in the income of the demographic segment to which a firm caters

Loss of a competitor's reputation

Question 8

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

Tangible resources contribute to a company's competitive advantage, whereas intangible resources fail to do the same.

Tangible assets can be bought on the open market, whereas intangible assets cannot be easily purchased.

Tangible resources take a longer time to build, whereas intangible assets can be built comparatively easily.

Tangible assets are difficult to imitate, whereas intangible assets can be easily replicated.

Question 9

_____ are barriers to imitation that prevent rivals from competing away the advantage a firm may enjoy.

Embargoes

Cartel arrangements

Isolating mechanisms

Market niches

Question 10

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

The resource stock of Bass Automobiles Inc. increased.

Bass Automobiles Inc. faced resource leakage.

The resource flow into Unicorn Autos Inc. reduced.

Bass Automobiles Inc.'s tangible assets decreased.

Question 11

BioTree Inc. has used $350,000, from its total annual earnings of $1,250,000, to invest in the research and development of a multi-purpose vaccine. Its account receivable from customers is estimated to be $150,000 and accounts payable $80,000. In monetary terms, what would BioTree Inc.'s resource flows be?

$1,250,000

$150,000

$80,000

$350,000

Question 12

Which of the following statements accurately describes a firm's resource flow?

It is the firm's level of investments to maintain or build a resource.

It is the firm's current level of intangible resources.

It is the firm's current level of tangible resources that are common to other firms.

It is the firm's level of expertise to efficiently deploy a valuable resource.

Question 13

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?

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

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.

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.

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.

Question 14

Mova Electronics, a leading pager manufacturer, recently declared itself bankrupt. This was attributed to a decision the company made in the past. While most of Mova's competitors were shifting their research focus toward cell phones, Mova invested most of its retained earnings on improvising its pagers. Once the pager market drastically declined, Mova Electronics was unable to capitalize on the new technology. Which of the following does this scenario best illustrate?

Causal ambiguity

Knowledge diffusion

Social complexity

Path dependence

Question 15

_____ allows managers to synthesize insights obtained from an internal analysis of a company's strengths and weaknesses with those from an analysis of external opportunities and threats.

The VRIO framework

The SWOT analysis

The break-even analysis

Ansoff's matrix

Question 16

If a resource is rare or unique to a particular firm, then:

the industry in which the firm operates will experience perfect competition.

the mobility of the resource will be high.

the firm will be able to maintain a competitive advantage for a long period.

it will be less costly for rivals to imitate the resource.

Question 17

Which of the following resources is a firm's resource stock?

Cash at bank

Reputation for quality

Land and building

Plant and machinery

Question 18

True Sync Inc. is a software company, which has built and acquired numerous assets over the years. According to the resource-based view of a firm, which of the following assets of True Sync Inc. will best enable it to gain and sustain a competitive advantage?

The resources of the company that are mobile

The capital raised by the company from its shareholders

The expertise acquired by the employees in the company

The headquarters owned by the company

Question 19

Which of the following statements fails to bring out the essence of the dynamic capabilities perspective?

A firm's competitive advantage is derived from static resource or market advantages.

A firm must be able to change its resource base as the external environment changes in order to sustain its competitive advantage.

A firm should modify its core competencies to effectively compete in dynamic markets.

A firm's external environment is rarely stable, and in many industries, change is fast and ferocious.

Question 20

Which of the following is an example of a firm's intangible resources?

The firm's cash at bank

The firm's finished goods inventory

The firm's organizational culture

The firm's land and building

Question 21

The resource-based view of a firm assumes that the:

resources of firms are highly scarce and hence the government interferes to ensure equal distribution.

resources of firms are highly exhaustible and hence they cannot contribute to their competitive advantage.

resource bundles of firms competing in the same industry are unique to some extent and thus differ from one another.

resource bundles of firms competing in the same industry tend to be highly mobile, moving easily from firm to firm.

Question 22

To make the SWOT analysis an effective management tool, a strategist must first:

distinguish a firm's resources, competencies, and capabilities from each other.

separate a firm's primary activities from support activities.

analyze the pros and cons of strategic options.

scan a firm's internal and external environments.

Question 23

Amazon.com's ability to provide the largest selection of items online, combined with superior IT systems and customer service, can be referred to as its _____.

equity reserve

economic equity

core competency

capital gain

Question 24

Competitors have found it extremely difficult to imitate Gene Electronics Inc.'s valuable resources, capabilities, or competencies. This is primarily because the source for the company's success has been unclear. The competitors are uncertain if Gene Electronics Inc.'s success is due to its strong leadership, the skills of its research and development team, or the timing of the company' s product introductions. Gene Electronics Inc. has been protected from losing its competitive advantage as a result of _____.

time compression diseconomies

resource homogeneity

causal ambiguity

path dependence

Question 25

How did McDonald's leverage internal strengths in brand name and consistency to minimize the external threat of easy-to-prepare grocery items?

By developing an offensive strategic option to launch new restaurants in China and Mexico

By launching a chain of premium restaurants that offered customers a healthy food menu

By launching a McDonald's line of frozen foods in grocery stores

By developing a defensive strategic option and shutting down all its drive-thru outlets