Chapter 03 - Assessing the Internal Environment of the Firm
nChapter 03 Assessing the Internal Environment of the Firm Answer Key
True / False Questions
1. (p. 82) One advantage of o f !O" analysis is that it helps managers to identify strengths that are almost always so#r$es of $ompetitive advantages that are s#staina%le. FALSE A firm&s firm&s strengths and $apa%ilities' no matter how #ni(#e or impressive' may not ena%le it to a$hieve a $ompetitive advantage in the mar)etpla$e.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
*. (p. 8$) +al#e-$hain +al#e-$hain analysis ass#mes that a firm&s %asi$ e$onomi$ p#rpose is to $reate val#e and it is a #sef#l framewor) for analy,ing a firm&s strengths and wea)nesses. TRUE +al#e-$hain +al#e-$hain analysis views the organi,ation as a se(#ential se(#en tial pro$ess of val#e-$reating a$tivities. It provides greater insights into analy,ing a firm&s $ompetitive position than !O" analysis does %y itself.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
3. (p. 8$) In val#e-$hain analysis' val#e is meas#red % y the mar)et val#e of the total sto$) o#tstanding of the $ompany. FALSE +al#e +al#e is the amo#nt that %#yers are willing to pay for what a firm provides them a nd is meas#red %y total reven#e' a refle$tion of the pri$e a firm&s prod#$t $ommands and the (#antity it $an sell.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
. (p. 8$) rimary a$tivities $ontri%#te to the physi$al $reation of a prod#$t or servi$e' its sale and transfer to the %#yer' and its servi$e after the sale. TRUE orter&s five primary a$tivities /in%o#nd logisti$s' operations' o#t%o#nd logisti$s' mar)eting and sales' and servi$e $ontri%#te to the physi$al $reation of the prod#$t or servi$e' its sale and transfer to the %#yer' and its servi$e after the sale. efer to E2hi%it 3.1
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
. (p. 8$) "he val#e-$hain $on$ept ass#mes that %oth primary and s#pport a$tivities are $apa%le of prod#$ing val#e for $#stomers. TRUE 4oth types of a$tivities $an add val#e' v al#e' either dire$tly or thro#gh important relationships with other a$tivities.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
3. (p. 8$) In val#e-$hain analysis' val#e is meas#red % y the mar)et val#e of the total sto$) o#tstanding of the $ompany. FALSE +al#e +al#e is the amo#nt that %#yers are willing to pay for what a firm provides them a nd is meas#red %y total reven#e' a refle$tion of the pri$e a firm&s prod#$t $ommands and the (#antity it $an sell.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
. (p. 8$) rimary a$tivities $ontri%#te to the physi$al $reation of a prod#$t or servi$e' its sale and transfer to the %#yer' and its servi$e after the sale. TRUE orter&s five primary a$tivities /in%o#nd logisti$s' operations' o#t%o#nd logisti$s' mar)eting and sales' and servi$e $ontri%#te to the physi$al $reation of the prod#$t or servi$e' its sale and transfer to the %#yer' and its servi$e after the sale. efer to E2hi%it 3.1
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
. (p. 8$) "he val#e-$hain $on$ept ass#mes that %oth primary and s#pport a$tivities are $apa%le of prod#$ing val#e for $#stomers. TRUE 4oth types of a$tivities $an add val#e' v al#e' either dire$tly or thro#gh important relationships with other a$tivities.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
5. (p. 8"#8/) In%o#nd logisti$s in$l#de all a$tivities asso$iated with transforming inp#ts into the final prod#$t form s#$h as ma$hining' pa$)aging' assem%ly' e(#ipment' testing' printing' and fa$ility operations. FALSE In%o#nd logisti$s is primarily asso$iated with re$eiving' storing' and distri%#ting inp#ts to the prod#$t. Operations in$l#de all a$tivities asso$iated with transforming transforming inp#ts into the final prod#$t form' s#$h as ma$hining' pa$)aging' assem%ly' testing' printing' and fa$ility operations.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!2 %&e primary primary and spport spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
6. (p. 8$) #pport a$tivities provide s#pport for primary a$tivities' %#t not ea$h other. FALSE #pport a$tivities /pro$#rement' te$hnology development' h#man reso#r$e management' and general administration either add val#e %y themselves or add val#e thro#gh important relationships with %oth primary a$tivities and other s#pport a$tivities.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its bene'its and limitations o' SO% analysis in condcting condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
7. (p. 81) Esta%lishing a $#stomer servi$e hotline to handle $#stomer $omplaints wo#ld %e $onsidered a primary a$tivity in val#e-$hain analysis. TRUE ervi$e is a primary a$tivity whi$h in$l#des all a$tions a sso$iated with providing servi$e to enhan$e or maintain the val#e of the prod#$t' s#$h as installation' repair' training' parts s#pply' and prod#$t ad8#stment.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary primary and spport spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
9. (p. 88) "e$hnology development is a m#$h %roader $on$ept than resear$h and development. TRUE Every val#e a$tivity em%odies te$hnology. "he array of te$hnologies employed in most firms is very %road' ranging from te$hnologies #sed to prepare do$#ments and transport goods to those em%odied in pro$esses and e(#ipment e(# ipment or the prod#$t itself. "e$hnology "e$hnology development related to the prod#$t and its feat#res s#pports the entire val#e $hain' while other te$hnology development is asso$iated with parti$#lar primary or s#pport a$tivities.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary primary and spport spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
10. (p. 8) In val#e-$hain analysis' finan$e and a$$o#nting are $onsidered part of a firm&s general administration. TRUE :eneral administration $onsists of a n#m%er of a$tivities' in$l#ding general management' planning' finan$e' a$$o#nting' legal and government affairs' (#ality management' and information systems. Administration Administration typi$ally s#pports the entire val#e $hain and a nd not individ#al a$tivities.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary primary and spport spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
11. (p. 8#!) ;anagers sho#ld fo$#s their attention on interrelationships among val#e-$hain a$tivities within the firm'
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!" 3o4 ale#c&ain analysis can &elp managers create ale by inestigating relations&ips among actiities 4it&in t&e 'irm and bet4een t&e 'irm and its cstomers and sppliers. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
1*. (p. !) ome leading edge $ompanies are applying the >pros#mer> $on$ept. ?ere' firms team #p with their s#ppliers and allian$e partners to satisfy their $#stomers& needs. FALSE In the f#t#re' we will %e tal)ing more and more a%o#t the >pros#mer>' a $#stomer@prod#$er who is even more e2tensively integrated into the val#e $hain. As a $onse(#en$e' prod#$tion pro$esses will %e $#stomi,ed more pre$isely and individ#ally. In$l#ding $#stomers in the a$t#al prod#$tion pro$ess $an $reate greater satisfa$tion among them' res#lt in signifi$ant $ost savings' and generate innovative ideas for the firm.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!" 3o4 ale#c&ain analysis can &elp managers create ale by inestigating relations&ips among actiities 4it&in t&e 'irm and bet4een t&e 'irm and its cstomers and sppliers. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
13. (p. 2) +al#e-$hain analysis $an only %e applied to man#fa$t#ring operations. FALSE "he val#e $hain $an %e applied to servi$e organi,ations' s#ggesting that the val#e-adding pro$ess may %e $onfig#red differently depending on the type of %#siness a firm is engaged in. efer to E2hi%it 3.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!" 3o4 ale#c&ain analysis can &elp managers create ale by inestigating relations&ips among actiities 4it&in t&e 'irm and bet4een t&e 'irm and its cstomers and sppliers. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
1. (p. ") "he reso#r$e-%ased view of the firm fo$#ses solely on the internal analysis of a firm&s operations and $ompeten$ies. FALSE "he reso#r$e-%ased view /4+ of the firm $om%ines two perspe$tives= /1 the internal analysis of phenomena within a $ompany and /* an e2ternal analysis of the ind#stry and its $ompetitive environment.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
1. (p. "#/) "angi%le reso#r$es are assets that are relatively easy to identify s#$h as finan$ial and physi$al assets. TRUE "angi%le reso#r$es are assets that are relatively easy to identify. "hey in$l#de the physi$al and finan$ial assets that an organi,ation #ses to $reate val#e for its $#stomers.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
15. (p. ) A firm&s intangi%le reso#r$es refer to its $apa$ity to dep loy tangi%le reso#r$es over time and leverage those reso#r$es effe$tively. FALSE Intangi%le reso#r$es are organi,ational assets that are diffi$#lt to identify and a$$o#nt for and are typi$ally em%edded in #ni(#e ro#tines and pra$ti$es' in$l#ding h#man reso#r$es' innovation reso#r$es' and rep#tation reso#r$es.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
16. (p. ) rod#$ts and servi$es that are diffi$#lt to imitate help firms s#stain their profita%ility. TRUE For a reso#r$e to provide a firm with the potential for a s#staina%le $ompetitive advantage' it m#st have fo#r attri%#tes. Among these is the idea that the reso#r$e m#st %e diffi$#lt for $ompetitors to imitate.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
17. (p. 8) ath dependen$y has no impa$t on the inimita%ility of reso#r$es. FALSE ;any reso#r$es $annot %e imitated %e$a#se of what e$onomists refer to as path dependen$y. "his simply means that reso#r$es are #ni(#e and therefore s$ar$e %e$a#se of all that has happened along the path followed in their development and@or a$$#m#lation. Competitors $annot go o#t and %#y these reso#r$es (#i$)ly and easily they m#st %e %#ilt #p over time in ways that are diffi$#lt to a$$elerate.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
19. (p. 8) Capa%ilities that e2hi%it $a#sal am%ig#ity are diffi$#lt to imitate. TRUE One so#r$e of inimita%ility is termed $a#sal am%ig#ity. "his means that wo#ld-%e $ompetitors may %e thwarted %e$a#se it is impossi%le to disentangle the $a#ses /or possi%le e2planations of either what the val#a%le reso#r$e is or how it $an %e re-$reated.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
*0. (p. #1) For a reso#r$e to provide a firm with potential s#staina%le advantages it m#st satisfy only two $riteria= rareness and diffi$#lty in s#%stit#tion. FALSE For a reso#r$e to provide a firm with the potential for a s#staina%le $ompetitive advantage' it m#st have fo#r attri%#tes. First' the reso#r$e m#st %e val#a%le in the sense that it e2ploits opport#nities and@or ne#trali,es threats in the firm&s environment. e$ond' it m#st %e rare among the firm&s $#rrent and potential $ompetitors. "hird' the reso#r$e m#st %e diffi$#lt for $ompetitors to imitate. Fo#rth' the reso#r$e m#st have no strategi$ally e(#ivalent s#%stit#tes.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
*1. (p. $!") Firms that are s#$$essf#l in $reating $ompetitive advantages that are s#staina%le for a period of time do not have to %e $on$erned a%o#t profits %eing retained /or >appropriated> %y employees or managers. FALSE Firms may %e s#$$essf#l in $reating $ompetitive advantages that $an %e s#staina%le for a period of time. ?owever' m#$h of the profits $an %e retained /or >appropriated> %y its employees and managers or other sta)eholders instead of flowing to the owners of the firm. everal fa$tors help e2plain the e2tent to whi$h employees and managers will %e a%le to o%tain a proportionately high level of the profits that they generate.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
**. (p. $!") Employee e2it $ost is a fa$tor that $an in$rease an employee&s %argaining and help him or her appropriate a firm&s profits. FALSE Employee e2it $osts may tend to red#$e an employee&s %argaining power. An individ#al may fa$e high personal $osts when leaving the organi,ation. "h#s' that individ#al&s threat of leaving may not %e $redi%le. In addition' an employee&s e2pertise may %e firm-spe$ifi$ and of limited val#e to other firms.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
*3. (p. $!) Finan$ial analysis provides an a$$#rate wa y to assess the relative strengths of firms and $an %e #sed as a $omplete g#ide to st#dy $ompanies. FALSE A firm&s finan$ial position sho#ld not %e analy,ed in isolation. Important referen$e points are needed. ome iss#es that m#st %e ta)en into a$$o#nt to ma)e finan$ial analysis more meaningf#l= histori$al $omparisons' $omparisons with ind#stry norms' and $omparisons with )ey $ompetitors.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: 2 +edim %opic: alating 7irm er'ormance: %4o Approac&es
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Chapter 03 - Assessing the Internal Environment of the Firm
*. (p. $!) Beverage ratios provide meas#res of a firm&s $apa$ity to meet its long-term finan$ial o%ligations. TRUE A$$ording to E2hi%it 3.9' finan$ial leverage ratios are also )nown as long-term solven$y ratios. "hey meas#re a firm&s $apa$ity to meets its long-term o%ligations. efer to E2hi%it 3.9
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: $ asy %opic: alating 7irm er'ormance: %4o Approac&es
*. (p. $!1) ?istori$al $omparisons are most appropriate d#ring periods of re$ession or e$onomi$ %oom. FALSE E2hi%it 3.10 ill#strates a 10-year period of ret#rn on sales /O for a hypotheti$al $ompany. As indi$ated %y the dotted trend lines' the rate of growth /or de$line differs s#%stantially over time periods' and periods of re$ession and e$ onomi$ %oom may ma)e the trends #nrelia%le. efer to E2hi%it 3.10
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: 2 +edim %opic: alating 7irm er'ormance: %4o Approac&es
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Chapter 03 - Assessing the Internal Environment of the Firm
*5. (p. $!1) !hen #sing ind#stry norms as a standard of $omparison' managers m#st %e s#re that the firms #sed in the $omparisons are representative of all si,es and strategies within the ind#stry. FALSE Comparing yo#r firm with all other firms in yo#r ind#stry assesses relative performan$e. 4an)s often #se s#$h $omparisons when eval#ating a firm&s $reditworthiness.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: 2 +edim %opic: alating 7irm er'ormance: %4o Approac&es
*6. (p. $!;) A primary %enefit of the >%alan$ed s$ore$ard> is that it $omplements finan$ial indi$ators with operational meas#res of $#stomer satisfa$tion' internal pro$esses' and the organi,ation&s innovation and improvement a$tivities. TRUE A >%alan$ed s$ore$ard> provides top managers with a fast %#t $omprehensive view of the %#siness. In a n#tshell' it in$l#des finan$ial meas#res that refle$t the res#lts of a$tions already ta)en' %#t it $omplements these indi$ators with meas#res of $#stomer satisfa$tion' internal pro$esses' and the organi,ation&s innovation and improvement a$tivitiesoperational meas#res that drive f#t#re finan$ial performan$e.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!; %&e ale o' t&e
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Chapter 03 - Assessing the Internal Environment of the Firm
*7. (p. $!8) "he %alan$ed s$ore$ard ena%les managers to eval#ate their %#siness from only two perspe$tives= $#stomer and finan$ial. FALSE "he %alan$ed s$ore$ard ena%les managers to $onsider their %#siness from fo#r )ey perspe$tives= $#stomer' internal' innovation and learning' and finan$ial. "hese are %riefly des$ri%ed in E2hi%it 3.1*. efer to E2hi%it 3.1*
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!; %&e ale o' t&e
*9. (p. $!) An important impli$ation of the %alan$ed s$ore$ard is that managers need
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!; %&e ale o' t&e
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Chapter 03 - Assessing the Internal Environment of the Firm
30. (p. $!) One strength of the %alan$ed s$ore$ard is that it is very easy to implement and that there is little need for e2e$#tive sponsorship. FALSE "he )ey limitation of the %alan$ed s$ore$ard is that some e2e$#tives may view it as a >(#i$) fi2> that $an %e easily installed. Implementing a %alan$ed metri$s system is an evol#tionary pro$ess. It is not a one-time tas) that $an %e (#i$)ly $he$)ed off as >$ompleted.> If managers do not re$ogni,e this from the %eginning and fail to $ommit to it long term' the organi,ation will %e disappointed.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!; %&e ale o' t&e
31. (p. $$;#$$8) Eval#ation a$tivities add val#e %y helping firms finali,e transa$tions in$l#ding negotiating $ontra$ts' ma)ing payments' and ta)ing delivery. FALSE Eval#ation a$tivities are a way that digital te$hnologies and the Internet have added val#e to firms& operations %y fa$ilitating the $omparison of the $osts and %enefits of v ario#s options. "ransa$tion a$tivities are those in$l#ded in the pro$ess of $ompleting the sale' in$l#ding negotiating and agreeing $ontra$t#ally' ma)ing payments' and ta)ing delivery.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: 2 +edim %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
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Chapter 03 - Assessing the Internal Environment of the Firm
3*. (p. $$8) Content s#$h as entertainment programming does little to improve the val#e proposition of a we%site. FALSE "hree types of $ontent $an improve the val#e proposition of a we%site' on e of whi$h is entertainment programming. "he Internet is %eing #sed %y more people as an entertainment medi#m.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: 2 +edim %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
33. (p. $$) 4#siness models $an %e defined as methods $ompanies #se to $reate val#e and earn profits in a $ompetitive environment. TRUE A %#siness model is a method and a set of ass#mptions that e2plain how a %#siness $reates val#e and earns profits in a $ompetitive environment.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: $ asy %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
3. (p. $$) A $ommission-%ased %#siness model' when applied to the Internet' is similar to the %road$ast television model in whi$h viewers wat$h shows prod#$ed with reven#es from $ommission fees. FALSE On the Internet' $ommission-%ased models are #sed %y %#sinesses that provide servi$es for a fee. Advertising-%ased models are #sed %y $ompanies that provide $ontent and@or servi$es to visitors and sell advertising to %#sinesses that want to rea$h those visitors' similar to the %road$ast television model.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: 2 +edim %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
3-1
Chapter 03 - Assessing the Internal Environment of the Firm
Multiple Choice Questions
3. (p. 82) !hi$h of the following is
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!$ %&e bene'its and limitations o' SO% analysis in condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: $ asy %opic: ,ale#C&ain Analysis
35. (p. 8$@ 81) In val#e-$hain analysis' the a$tivities of an organi,ation are divided into two ma8or $ategories of val#e a$tivities= primary and s#pport. !hi$h of the following is a primary a$tivityD A. #r$hasing )ey inp#ts. 4. e$r#iting and training employees. C. epairing the prod#$t for the $ons#mer. . ;onitoring the $ost of prod#$ing the prod#$t thro#gh a $ost a$$o#nting system. Five primary a$tivities /in%o#nd logisti$s' operations' o#t%o#nd logisti$s' mar)eting and sales' and servi$e /whi$h in$l#des repairs $ontri%#te to the physi$al $reation of the prod#$t or servi$e' its sale and transfer to the %#yer' and its servi$e after the sale. efer to E2hi%it 3.*
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!$ %&e bene'its and limitations o' SO% analysis in condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
36. (p. 8") In%o#nd logisti$s in$l#de A. ma$hining and pa$)aging. B. wareho#sing and inventory $ontrol. C. repair and parts s#pply. . promotion and pa$)aging. In%o#nd logisti$s is primarily asso$iated with re$eiving' storing' and distri%#ting inp#ts to the prod#$t. It in$l#des material handling' wareho#sing' inventory $ontrol' vehi$le s$hed#ling' and ret#rns to s#ppliers.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
37. (p. 8$@ 8/) In assessing its primary a$tivities' an airline wo#ld e2amine A. employee training programs. B. %aggage handling. C. $riteria for lease vers#s p#r$hase de$isions. . the effe$tiveness of its lo%%ying a$tivities. Five primary a$tivities /in%o#nd logisti$s' operations /whi$h wo#ld in$l#de %aggage handling for an airline' o#t%o#nd logisti$s' mar)eting and sales' and servi$e $ontri%#te to the physi$al $reation of the prod#$t or servi$e' its sale and transfer to the %#yer' and its servi$e after the sale.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
39. (p. 8$@ 8"#8) Advertising is a a$tivity. #pply of repla$ement parts is a a$tivity. A. primary primary 4. s#pport primary C. s#pport se$ondary . primary s#pport Five primary a$tivities /in%o#nd logisti$s' operations' o#t%o#nd logisti$s' mar)eting and sales' and servi$e $ontri%#te to the physi$al $reation of the prod#$t or servi$e' its sale and transfer to the %#yer' and its servi$e after the sale. In%o#nd logisti$s is primarily asso$iated with re$eiving' storing' and distri%#ting inp#ts to the prod#$t. ;ar)eting an d sales a$tivities in$l#de advertising.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
0. (p. 8") !hi$h of the following e2amples demonstrates how s#$$essf#l organi,ations manage their primary a$tivitiesD A. 4y employing GI" inventory systems' ?ewlett a$)ard has %een a%le to $#t lead time from five days to one. 4. ;otorola has revised its $ompensation system to reward employees who learn a variety of s)ills. C.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
1. (p. 8") !hi$h of the following is not an advantage of G#st-In-"ime inventory systemsD A. ed#$ed raw material storage $osts. 4. ;inimi,ed idle prod#$tion fa$ilities and wor)ers. C. ed#$ed wor)-in-pro$ess inventories. D. ed#$ed dependen$e on s#ppliers. !ith GI" inventory systems' parts deliveries arrive at the assem%ly plants only ho#rs %efore they are needed. "his re(#ires greater relian$e on s#perior performan$e of one&s s#ppliers.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
*. (p. 8") HJ Corp. is fo$#sing on the o%8e$tive of low-$ost' high (#ality' on-time prod#$tion %y minimi,ing idle prod#$tive fa$ilities and wor)ers. "he HJ Corp. is ta)ing advantage of a system. A. Bast In' First O#t /BIFO B. G#st-in-time /GI" C. First In' First O#t /FIFO . ?ighly me$hani,ed G#st-in-time /GI" inventory systems were designed to a$hieve effi$ient in%o#nd logisti$s' whi$h is one of the five primary a$tivities in val#e-$hain analysis. !ith GI" inventory systems' parts deliveries arrive at the assem%ly plants only ho#rs %efore they are needed' whi$h red#$es idle prod#$tion $apa$ity.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
3. (p. 8/) is@are asso$iated with $olle$ting' storing' and distri%#ting the prod#$t or servi$e to %#yers. "hey $onsist of wareho#sing' material handling' de livery operation' order pro$essing' and s$hed#ling. A. ervi$es 4. In%o#nd logisti$s C. O#t%o#nd logisti$s . Operations O#t%o#nd logisti$s is asso$iated with $olle$ting' storing' and distri%#ting the prod#$t or servi$e to %#yers. "hese a$tivities in$l#de finished goods' wareho#sing' material handling' delivery vehi$le operation' order pro$essing' and s$hed#ling.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
. (p. 81) C#stomer servi$e wo#ld in$l#de A. prod#$t promotion. 4. prod#$t distri%#tion. C. parts s#pply. . pro$#rement of $riti$al s#pplies. ervi$e a$tivity in$l#des all a$tions asso$iated with providing servi$e to enhan$e or maintain the val#e of the prod#$t' s#$h as installation' repair' training' parts s#pply' and prod#$t ad8#stment.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
. (p. 81#8;) !hi$h of the following is a s#pport a$tivityD A. In%o#nd logisti$s. 4. Operations. C. "e$hnology development. . C#stomer servi$e. #pport a$tivities in the val#e $hain $an %e divided into fo#r generi$ $ategories /general administration' h#man reso#r$e management' te$hnology development' and pro$#rement' as shown in E2hi%it 3.3. efer to E2hi%it 3.3
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
5. (p. 81#8;) !hi$h of the following lists $onsists of s#pport a$tivitiesD A. ?#man reso#r$e management' te$hnology development' $#stomer servi$e' and pro$#rement. 4. ?#man reso#r$e management' $#stomer servi$e' mar)eting and sales' and operations. C. ?#man reso#r$e management' te$hnology development' pro$#rement' and firm infrastr#$t#re. . C#stomer servi$e' information systems' te$hnology development' and pro$#rement. #pport a$tivities in the val#e $hain $an %e divided into fo#r generi$ $ategories /general administration' h#man reso#r$e management' te$hnology development' and pro$#rement' as shown in E2hi%it 3.3. efer to E2hi%it 3.3
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
6. (p. 88) ?#man reso#r$e management $onsists of a$tivities involved in re$r#iting' hiring' training' development' and $ompensation of all types of personnel. It A. s#pports only individ#al primary a$tivities. 4. s#pports only individ#al s#pport a$tivities. C. s#pports %oth individ#al primary and s#pport a$tivities and the entire val#e $hain. . s#pports mostly s#pport a$tivities %#t does have some impa$t o n primary a$tivities. ?#man reso#r$e management $onsists of a$tivities involved in re$r#iting' hiring' training' development' and $ompensation of all types of personnel. It s#pports %oth individ#al primary and s#pport a$tivities /e.g.' hiring of engineers and s$ientists and the entire val#e $hain /e.g.' negotiations with la%or #nions.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
7. (p. 8) A$$ording to val#e-$hain analysis' whi$h of the following wo#ld %e $onsidered p art of a firm&s general administrationD A. ?#man reso#r$e management. B. Information systems. C. "e$hnology development. . ro$#rement. :eneral administration $onsists of a n#m%er of a$tivities' in$l#ding general management' planning' finan$e' a$$o#nting' legal and government affairs' (#ality management' and information systems. Administration typi$ally s#pports the entire val#e $hain and not individ#al a$tivities.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
9. (p. 8) Altho#gh general administration is often viewed only as overhead e2pense' it $an %e$ome a so#r$e of $ompetitive advantage. E2amples in$l#de all of the following EHCE" A. negotiating and maintaining ongoing relations with reg#latory %odies. 4. effe$tive information systems $ontri%#ting signifi$antly to a firm&s overall $ost leadership strategy. C. mar)eting e2pertise in$reasing a firm&s reven#es and ena%ling it to enter new mar)ets. . top management providing a )ey role in $olla%orating with important $#stomers. :eneral administration $onsists of a n#m%er of a$tivities' in$l#ding general management' planning' finan$e' a$$o#nting' legal and government affairs' (#ality management' and information systems. ;ar)eting is a primary a$tivity.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
0. (p. 8) For firm&s s#$h as !algreen Co. /a $hain of dr#gstores' information systems have %een a so#r$e of $ompetitive advantage %y ena%ling them to A. differentiate servi$e. 4. a#tomate some operations. C. respond to $ons#mer needs. D. all of these. Information systems $an also play a )ey role in in$reasing operating effi$ien$ies and enhan$ing a firm&s performan$e. !algreen Co.&s Inter$om l#s is a $omp#ter-%ased pres$ription management system. Bin)ed %y $omp#ter to %oth do$tors& offi$es and third-party payment plans' the system a#tomates telephone refills' store-to-store pres$ription transfers' and dr#g reordering. It also provides information on dr#g intera$tions and frees #p pharma$ists from administrative tas)s to devote more time to patient $o#nseling.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
1. (p. 8#!) A mar)eting department that promises delivery faster than the prod#$tion department&s a%ility to prod#$e is an e2ample of a la$) of #nderstanding of the A. interrelationships among f#n$tional areas and firm strategies. 4. need to maintain the rep#tation of the $ompany. C. organi,ational $#lt#re and leadership. . synergy of the %#siness #nits. Important to val#e-$hain analysis are interrelationships' the $olla%orative and strategi$ e2$hange relationships %etween val#e-$hain a$tivities either /a within firms or /% %etween firms. trategi$ e2$hange relationships involve e2$hange of reso#r$es s#$h as information' people' te$hnology' or money that $ontri%#te to the s#$$ess of the firm.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!" 3o4 ale#c&ain analysis can &elp managers create ale by inestigating relations&ips among actiities 4it&in t&e 'irm and bet4een t&e 'irm and its cstomers and sppliers. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
*. (p. ") "he reso#r$e-%ased view /4+ of the firm $om%ines two perspe$tives= A. the primary and s#pport a$tivities of the firm. 4. the interrelationships among the primary a$tivities of the firm and $orporate management. C. the internal analysis of the firm as well as the e2ternal analysis of the ind#stry and $ompetitive environment. . the ind#stry and the $ompetitive environment. "he reso#r$e-%ased view /4+ of the firm $om%ines two p erspe$tives= /1 the internal analysis of phenomena within a $ompany and /* an e2ternal analysis of the ind#stry and its $ompetitive environment.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
3. (p. "#/) "he three )ey types of reso#r$es that are $entral to the reso#r$e-%ased view of the firm&s are A. tangi%le reso#r$es' intangi%le reso#r$es' and organi,ational str#$t#re. 4. $#lt#re' tangi%le reso#r$es' intangi%le reso#r$es. C. tangi%le reso#r$es' intangi%le reso#r$es' and organi,ational $apa%ilities. . tangi%le reso#r$es' intangi%le reso#r$es' and top manage ment. Firm&s reso#r$es are all assets' $apa%ilities' organi,ational pro$esses' information' )nowledge' and so forth' $ontrolled %y a firm&s that ena%le it to develop and implement val#e-$reating strategies. "he three types of reso#r$es in E2hi%it 3. are tangi%le reso#r$es' intangi%le reso#r$es' and organi,ational $apa%ilities. efer to E2hi%it 3.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
. (p. /) E2amples of tangi%le reso#r$es /in the reso#r$e-%ased view of the firm in$l#de= A. finan$ial reso#r$es' h#man reso#r$es' and firm $ompeten$ies. 4. finan$ial reso#r$es' physi$al reso#r$es' and the $ap a$ity to $om%ine intangi%le reso#r$es. C. finan$ial reso#r$es' physi$al reso#r$es' and te$hnologi$al reso#r$es. . o#tstanding $#stomer servi$e' innovativeness of prod#$ts' and rep#tation. E2amples of tangi%le reso#r$es are finan$ial reso#r$es /e.g.' a firm&s $ash' a$$o#nts re$eiva%les' and its a%ility to %orrow f#nds physi$al reso#r$es /e.g.' the $ompany&s plant' e(#ipment' and ma$hinery as well as its pro2imity to $#stomers and s#ppliers organi,ational reso#r$es /e.g.' the $ompany&s strategi$ planning pro$ess an d its employee development' eval#ation' and reward systems and te$hnologi$al reso#r$es /e.g.' trade se$rets' patents' and $opyrights.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
. (p. ) are typi$ally em%edded in #ni(#e ro#tines and pra$ti$es that have evolved and a$$#m#lated over time - s#$h as tr#st and effe$tive wor) teams. A. "angi%le reso#r$es B. Intangi%le reso#r$es C. ep#tational reso#r$es . Organi,ational $apa%ilities Intangi%le reso#r$es are typi$ally em%edded in #n i(#e ro#tines and pra$ti$es that have evolved and a$$#m#lated over time. "hese in$l#de h#man reso#r$es /e.g.' e2perien$e and $apa%ility of employees' tr#st' and effe$tiveness of wor) teams.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
5. (p. ) :illette $om%ines several te$hnologies /e.g.' metall#rgy' physiology' physi$s to attain #nparalleled s#$$ess in the wet shaving ind#stry. "his is an e2ample of their A. tangi%le reso#r$es. 4. intangi%le reso#r$es. C. organi,ational $apa%ilities. . strong primary a$tivities. Organi,ational $apa%ilities are the $ompeten$ies or s)ills that a firm employs to transform inp#ts into o#tp#ts. E2amples of organi,ational $apa%ilities are o#tstanding $#stomer servi$e' e2$ellent prod#$t development $apa%ilities' s#per% innovation pro$esses' and fle2i%ility in man#fa$t#ring pro$esses.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
6. (p. ) are the $ompeten$ies or s)ills that a firm employs to transform inp#ts into o#tp#ts. A. "angi%le reso#r$es 4. Intangi%le reso#r$es C. ep#tational reso#r$es D. Organi,ational $apa%ilities Organi,ational $apa%ilities are the $ompeten$ies or s)ills that a firm employs to transform inp#ts into o#tp#ts. E2amples of organi,ational $apa%ilities are o#tstanding $#stomer servi$e' e2$ellent prod#$t development $apa%ilities' s#per% innovation pro$esses' and fle2i%ility in man#fa$t#ring pro$esses.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
7. (p. #1) For a reso#r$e to provide a firm with the potential for a s#staina%le $ompetitive advantage' it m#st have fo#r attri%#tes. !hi$h of the following is not one of these attri%#tesD A. are. B. Easy for $ompetitors to s#%stit#te. C. +al#a%le. . iffi$#lt for $ompetitors to imitate. For a reso#r$e to provide a firm with the potential for a s#staina%le $ompetitive advantage' it m#st have fo#r attri%#tes. First' the reso#r$e m#st %e val#a%le in the sense that it e2ploits opport#nities and@or ne#trali,es threats in the firm&s environment. e$ond' it m#st %e rare among the firm&s $#rrent and potential $ompetitors. "hird' the reso#r$e m#st %e diffi$#lt for $ompetitors to imitate. Fo#rth' the reso#r$e m#st have no strategi$ally e(#ivalent s#%stit#tes.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
9. (p. ;#8) A $ompetitive advantage %ased on inimita%ility $an %e s#stained for at least some time if it has the following $hara$teristi$s= A. physi$al #ni(#eness' path dependen$y' $a#sal am%ig#ity' and so$ial $omple2ity. 4. psy$hographi$ #ni(#eness' path dependen$y' $a#sal am%ig#ity' and s#%stit#ta%ility. C. rarity' path dependen$y' $a#sal am%ig#ity' and so$ial s#%stit#ta%ility. . geographi$ #ni(#eness' $a#se dependen$y' so$ial am%ig#ity' and path $omple2ity. An advantage %ased on inimita%ility won&t last forever. Competitors will event#ally dis$over a way to $opy most val#a%le reso#r$es. ?owever' managers $an forestall them and s#stain profits for a while %y developing strategies aro#nd reso#r$es that have at least one of the following fo#r $hara$teristi$s= physi$al #ni(#eness' path dependen$y' $a#sal am%ig#ity' and so$ial $omple2ity.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
50. (p. 8) A $rash program %y one firm $annot repli$ate a s#$$essf#l te$hnology developed %y another firm when resear$h findings $#m#late. "his is an e2ample of A. so$ial $omple2ity. B. path dependen$y. C. physi$al #ni(#eness. . $a#sal am%ig#ity. ath dependen$y means that reso#r$es are #ni(#e and therefore s$ar$e %e$a#se of all that has happened along the path followed in their development and@or a$$# m#lation. A $rash program generally $annot repli$ate a s#$$essf#l te$hnology when resear$h findings $#m#late. "hese path-dependent $onditions %#ild prote$tion for the original reso#r$e. "he %enefits from e2perien$e and learning thro#gh trial and error $annot %e d#pli$ated overnight.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
51. (p. 8) A variety of firm&s reso#r$es in$l#de interpersonal relations among managers in the firm' its $#lt#re' and its rep#tation with its s#ppliers and $#stomers. #$h $ompetitive advantages are %ased #pon A. so$ial $omple2ity. 4. path dependen$y. C. physi$al #ni(#eness. . tangi%le reso#r$es. A firm&s reso#r$es may %e imperfe$tly inimita%le %e$a#se they refle$t a high level of so$ial $omple2ity. A wide variety of firm&s reso#r$es may %e $onsidered so$ially $omple2. E2amples in$l#de interpersonal relations among the managers in a firm' its $#lt#re' and its rep#tation with its s#ppliers and $#stomers.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: $ asy %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
5*. (p. 8) "he following are e2amples of so$ially $omple2 organi,ational phenomena EHCE" A. a firm&s $#lt#re. 4. interpersonal relations among a firm&s managers. C. $omple2 physi$al te$hnology. . leadership and tr#st. o$ial $omple2ity is a $hara$teristi$ of a firm&s reso#r$es that is $ostly to imitate %e$a#se the so$ial engineering re(#ired is %eyond the $apa%ility of $ompetitors' in$l#ding interpersonal relations among managers' organi,ational $#lt#re' and rep#tation with s#ppliers and $#stomers.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
53. (p. $!!#$!$) A reso#r$e is val#a%le and rare %#t neither diffi$#lt to imitate nor witho#t s#%stit#tes. "his sho#ld ena%le the firm to attain A. no $ompetitive advantage. 4. $ompetitive parity. C. a temporary $ompetitive advantage. . a s#staina%le $ompetitive advantage. eso#r$es and $apa%ilities m#st %e rare and v al#a%le as well as diffi$#lt to imitate or s#%stit#te in order for a firm to attain $ompetitive advantages that are s#staina%le over time. E2hi%it 3.6 ill#strates the relationship among the fo#r $riteria of s#staina%ility and shows the $ompetitive impli$ations. !hen a reso#r$e is val#a%le and rare %#t neither diffi$#lt to imitate nor witho#t s#%stit#tes it is li)ely to res#lt in a temporary $ompetitive advantage.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
5. (p. $!") Employees will %e a%le to o%tain a proportionately high level of profits they generate /relative to the firm if A. s#ppliers are loyal to the firm. B. the $ost to the firm of repla$ing them is high. C. their e2pertise is firm-spe$ifi$. . the firm&s reso#r$es are path dependent. everal fa$tors help e2plain the e2tent to whi$h employees and managers will %e a%le to o%tain a proportionately high level of the profits' in$l#ding if they generate high employee repla$ement $osts. If employees& s)ills are idiosyn$rati$ and rare /a so#r$e of reso#r$e-%ased advantages' they sho#ld have high %argaining power %ased on the high $ost re(#ired %y the firm to repla$e them.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
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Chapter 03 - Assessing the Internal Environment of the Firm
5. (p. $!1) ?istori$al $omparisons provide information to managers a%o#t $hanges in a firm&s $ompetitive position. ?istori$al $omparisons are often misleading A. if the overall strategy of the firm is the same. B. in periods of re$ession or e$onomi$ %oom. C. if the firm shows $onstant growth. . if the firm&s sto$) is p#%li$ly traded. E2hi%it 3.10 ill#strates a 10-year period of ret#rn on sales /O for a hypotheti$al $ompany. As indi$ated %y the dotted trend lines' the rate of growth /or de$line differs s#%stantially over time periods' and periods of re$ession and e$ onomi$ %oom may ma)e the trends #nrelia%le. efer to E2hi%it 3.10
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: 2 +edim %opic: alating 7irm er'ormance: %4o Approac&es
55. (p. $!) "he %est meas#re of a $ompany&s a%ility to meet imminent finan$ial o%ligations is )nown as the A. $#rrent ratio. 4. total asset t#rnover. C. de%t ratio. . profit margin. A$$ording to E2hi%it 3.9' short-term solven$y ratios are also )n own as li(#idity ratios. "he %est meas#re of a $ompany&s a%ility to meet imminent finan$ial o%ligations is the $#rrent ratio' the ratio of $#rrent assets to $#rrent lia%ilities. efer to E2hi%it 3.9
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: $ asy %opic: alating 7irm er'ormance: %4o Approac&es
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Chapter 03 - Assessing the Internal Environment of the Firm
56. (p. $!) !hi$h of the following wo#ld %e most diffi$#lt to assessD A. "he li(#idity position of a firm. B. "he legitima$y and rep#tation of a firm. C. ;ar)et share growth. . "he effi$ien$y with whi$h a firm #tili,es its assets. "he legitima$y and rep#tation of a firm are harder to assess %e$a#se there is no simple mathemati$al form#la to $omp#te them.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: 2 +edim %opic: alating 7irm er'ormance: %4o Approac&es
57. (p. $!) !hi$h of these $ategories of finan$ial ratios is #sed to meas#re a $ompany&s a%ility to meet its short-term finan$ial o%ligationsD A. Beverage ratios. 4. rofita%ility ratios. C. A$tivity ratios. D. Bi(#idity ratios. A$$ording to E2hi%it 3.9' short-term solven$y ratios are also )nown as li(#idity ratios. "hese ratios are #sed to assess $ompany&s a%ility to meet imminent finan$ial o%ligations. efer to E2hi%it 3.9
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: $ asy %opic: alating 7irm er'ormance: %4o Approac&es
3-3*
Chapter 03 - Assessing the Internal Environment of the Firm
59. (p. $!) atios that refle$t whether or not a firm is effi$iently #sing its reso#r$es are )nown as A. t#rnover ratios. 4. leverage ratios. C. li(#idity ratios. . profita%ility ratios. E2hi%it 3.9 shows that asset #tili,ation' or t#rnover' ratios are one meas#re of whether a firm is effi$iently #sing its reso#r$es. efer to E2hi%it 3.9
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: $ asy %opic: alating 7irm er'ormance: %4o Approac&es
60. (p. $!;) "he >%alan$ed s$ore$ard> provides top managers with a view of the %#siness. A. detailed and $omple2 B. fast %#t $omprehensive C. simple and ro#tine . long-term finan$ial A >%alan$ed s$ore$ard> provides top managers with a fast %#t $omprehensive v iew of the %#siness. In a n#tshell' it in$l#des finan$ial meas#res that refle$t the res#lts of a$tions already ta)en' %#t it $omplements these indi$ators with meas#res of $#stomer satisfa$tion' internal pro$esses' and the organi,ation&s innovation and improvement a$tivities' the operational meas#res that drive f#t#re finan$ial performan$e.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!; %&e ale o' t&e
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Chapter 03 - Assessing the Internal Environment of the Firm
61. (p. $!8) "he >%alan$ed s$ore$ard> developed %y Kaplan and
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!; %&e ale o' t&e
6*. (p. $!8) "he %alan$ed s$ore$ard ena%les managers to $onsider their %#siness from all of the following perspe$tives EHCE" A. $#stomer perspe$tive. 4. internal perspe$tive. C. innovation and learning perspe$tive. D. ethi$al perspe$tive. "he %alan$ed s$ore$ard ena%les managers to $onsider their %#siness from fo#r )ey perspe$tives= $#stomer' internal' innovation and learning' and finan$ial. "hese are %riefly des$ri%ed in E2hi%it 3.1*. efer to E2hi%it 3.1*
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!; %&e ale o' t&e
3-3
Chapter 03 - Assessing the Internal Environment of the Firm
63. (p. $!) An important impli$ation of the >%alan$ed s$ore$ard> approa$h is that A. managers need to re$ogni,e tradeoffs in sta)eholder demands and reali,e that s#$h demands represent a >,ero-s#m> game in whi$h one sta)eholder will gain only at another&s loss. 4. the )ey emphasis on $#stomer satisfa$tion and finan$ial goals are only a means to that end. C. managers sho#ld not loo) at their 8o% as primarily %alan$ing sta)eholder demands in$reasing satisfa$tion among m#ltiple sta)eholders $a n %e a$hieved sim#ltaneo#sly. . gains in finan$ial performan$e and $#stomer satisfa$tion m#st often $ome at a $ost of employee satisfa$tion. A )ey impli$ation is that managers do not need to loo) at their 8o% as %alan$ing sta)eholder demands. "he %alan$ed s$ore$ard provides a win-win approa$h' in$reasing satisfa$tion among a wide variety of organi,ational sta)eholders' in$l#ding employees /at all levels' $#stomers' and sto$)holders.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!; %&e ale o' t&e
6. (p. $$1#$$;) Fo#r Internet-%ased a$tivities that are enhan$ing firms& $apa%ilities to #se the Internet to add val#e in$l#de A. o#tso#r$ing' pro%lem-solving' %ill-paying' and delivery. 4. eval#ating' %ill-paying' $#stomi,ing' and ret#rning. C. sear$h' res$#e' repair' ret#rn. D. sear$h' eval#ation' pro%lem-solving' and transa$tion. E2hi%it 3A.1 ill#strates fo#r related a$tivities that are %eing revol#tioni,ed %y the Internet sear$h' eval#ation' pro%lem solving' and transa$tions. efer to E2hi%it 3A.1
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: $ asy %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
3-3
Chapter 03 - Assessing the Internal Environment of the Firm
6. (p. $$;) Internet sear$h a$tivities in$l#de A. generating a$tion plans. 4. $onsidering alternatives. C. gathering information. . ma)ing payments and ta)ing delivery. ear$h refers to the pro$ess of gathering information and identifying p#r$hase options. "he Internet has enhan$ed %oth the speed of information gathering and the %readth of information that $an %e a$$essed.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: $ asy %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
65. (p. $$;) "he val#e-adding a$tivity )nown as pro%lem-solving A. involves streamlining operations. B. is typi$ally #sed in the $onte2t of providing #ni(#e servi$es. C. refers to $omparing the $osts and %enefits of vario#s options. . $reates a$$ess to prod#$ts ratings and pri$e $omparisons. ro%lem solving refers to the pro$ess of identifying pro%lems or needs and generating ideas and a$tion plans to address those needs. !hereas eval#ation is primarily prod#$t-related' pro%lem solving is typi$ally #sed in the $onte2t of servi$es. C#stomers #s#ally have #ni(#e pro%lems that are handled one at a time.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: $ asy %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
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Chapter 03 - Assessing the Internal Environment of the Firm
66. (p. $$1#$$;) Lni(#e $ontent will not add val#e to an Internet we%site #nder the following $ondition/s= A. the $ost of developing the $ontent e2$eeds the %enefits gained. 4. visitors to the we%site do not val#e or #se the $ontent. C. the $ontent is #nrelia%le. D. all of these. Lni(#e $ontent will not add val#e to an Internet we%site #nder any of these $onditions.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: $ asy %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
67. (p. $$8) E2amples of val#e-adding $ontent often fo#nd on we%sites in$l#de all of the following e2$ept A. $#stomer feed%a$). B. advertising. C. e2pertise. . entertainment programming. "hree types of $ontent $an improve the val#e proposition of a we%site= $#stomer feed%a$)' e2pertise' and entertainment programming.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: 2 +edim %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
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Chapter 03 - Assessing the Internal Environment of the Firm
69. (p. $$) Internet %#siness models A. o#tline methods that online %#sinesses #se to $reate val#e. 4. $annot %e #sed %y traditional %#sinesses. C. o#tline spe$ifi$ a$tions a firm needs to ta)e to %e profita%le. . $annot %e $om%ined to $reate additional $ompetitive advantages. A %#siness model is a method and a set of ass#mptions that e2plain how a %#siness $reates val#e and earns profits in a $ompetitive environment. "he te2t dis$#sses seven Internet %#siness models that a$$o#nt for the vast ma8ority of %#siness $ond#$ted online.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: 2 +edim %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
70. (p. $$) All of the following are e2amples of Internet %#siness models EHCE" A. referral-%ased model. 4. s#%s$ription-%ased model. C. pres$ription-%ased model. . prod#$tion-%ased model. "he te2t dis$#sses seven Internet %#siness models that a$$o#nt for the vast ma8ority of %#siness $ond#$ted online= $ommission-%ased models' advertising-%ased models' mar)#p %ased models' prod#$tion-%ased models' referral-%ased models' s#%s$ription-%ased models' and fee-for-servi$e-%ased models.
AACSB: Analytic Blooms: -emember Learning Objectie: !"#!8 3o4 'irms are sing =nternet tec&nologies to add ale and ac&iee ni>e adantages. (Appendi?) Leel o' *i''iclty: $ asy %opic: 3o4 t &e =nternet and *igital %ec&nologies Add ,ale
3-37
Chapter 03 - Assessing the Internal Environment of the Firm Essay Questions
71. (p. 82) !hat are some of the )ey strengths and limitations of !O" analysisD Answers will vary.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!$ %&e bene'its and limitations o' SO% analysis in condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
7*. (p. 8$#8") !hat are the )ey advantages of val#e-$hain analysis over !O" analysisD Answers will vary.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!$ %&e bene'its and limitations o' SO% analysis in condcting an internal analysis o' t&e 'irm. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
73. (p. 8) !hat are some ways in whi$h a firm&s general administration $an help $reate /or enhan$e $ompetitive advantagesD Answers will vary.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!2 %&e primary and spport actiities o' a 'irm0s ale c&ain. Leel o' *i''iclty: 2 +edim %opic: ,ale#C&ain Analysis
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Chapter 03 - Assessing the Internal Environment of the Firm
7. (p. 8#!) ?ow $an a firm develop /or enhan$e its advantages in the mar)etpla$e %y having strong' positive interrelationships among its val#e $hain a$tivities and those of its s#ppliers and $#stomersD rovide an e2ample. Answers will vary.
AACSB: Analytic Blooms: Apply Learning Objectie: !"#!" 3o4 ale#c&ain analysis can &elp managers create ale by inestigating relations&ips among actiities 4it&in t&e 'irm and bet4een t&e 'irm and its cstomers and sppliers. Leel o' *i''iclty: " 3ard %opic: ,ale#C&ain Analysis
7. (p. ") "he reso#r$e-%ased view /4+ $om%ines %oth the internal analysis of the firm and the e2ternal analysis of the environment. is$#ss and provide e2amples. Answers will vary.
AACSB: Analytic Blooms: Apply Learning Objectie: !"#!/ %&e resorce#based ie4 o' t&e 'irm and t&e di''erent types o' tangible and intangible resorces5 as 4ell as organi6ational capabilities. Leel o' *i''iclty: " 3ard %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
75. (p. #;) E2plain the fo#r attri%#tes that a reso#r$e m#st have to provide a firm with a s#staina%le $ompetitive advantage. Answers will vary.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#! %&e 'or criteria t&at a 'irm0s resorces mst possess to maintain a sstainable adantage and &o4 ale created can be appropriated by employees and managers. Leel o' *i''iclty: 2 +edim %opic: %&e -esorce#Based ,ie4 o' t&e 7irm
3-0
Chapter 03 - Assessing the Internal Environment of the Firm
76. (p. $!#$!1) !hat are the %enefits and limitations of ma)ing histori$al $omparisons in analy,ing a firm&s performan$eD Answers will vary.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!1 %&e se'lness o' 'inancial ratio analysis5 its in&erent limitations5 and &o4 to ma9e meaning'l comparisons o' per'ormance across 'irms. Leel o' *i''iclty: 2 +edim %opic: alating 7irm er'ormance: %4o Approac&es
77. (p. $!8) !hat are the fo#r perspe$tives that the >%alan$ed s$ore$ard> ena%les managers to eval#ate their %#sinessD Answers will vary.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!; %&e ale o' t&e
79. (p. $!) !hat are some of the most important impli$ations of #sing the >%alan$ed s$ore$ard> approa$hD Answers will vary.
AACSB: Analytic Blooms: Understand Learning Objectie: !"#!; %&e ale o' t&e
3-1