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Exam 3: The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

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Question 1

Multiple Choice

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Valuable capabilities

A) allow the firm to exploit opportunities in its external environment.
B) allow the firm to neutralize threats in its internal environment.
C) allow the firm to exploit opportunities or neutralize threats in its external environment.
D) none of the these are correct.

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

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C

Question 2

Multiple Choice

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Which of the following is NOT an external event that reveals the "dark side" of core capabilities?

A) A new competitor figures out a better way to serve the firm's customers.
B) New technologies emerge and replace those used by the firm.
C) A firm changes its focus to a new core competence.
D) Political or social events shift the foundation of current core capabilities.

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

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Question 3

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The owner of a store retailing fine quality fabrics for home-sewers bewails the fact that few young women know how to do fine tailoring, much less simple dressmaking. Many potential customers are unable to appreciate the premium quality of the fabrics available and are deterred by the high prices, as well as the complexity of fine sewing. In the past, the store had a strong demand for fabrics, large classes for women learning the fine points of sewing, and a reputation for excellent service and technical advice. Now the store is earning lower-than-average returns. This case is an example of

Value is created when the firm exploits its core competencies or competitive advantages to meet or exceed the demanding standards of global competition.

A financial management firm has existed for over 70 years. Some of its original clients' grandchildren are now clients of the firm themselves. The partners and staff of the firm have spent most or all of their careers with the firm. Many have even married into each other's families. This firm has capabilities that would be costly to imitate because of its

Analyzing the internal environment enables a firm to determine what it can do by identifying what opportunities exist.

The value of tangible assets such as the firm's borrowing capacity and its physical plant are high because they can be easily leveraged to derive additional value.

All of the following are tangible resources EXCEPT

A major reason outsourcing is being used is that

Value chain support activities include

Interpersonal relationships, trust, friendships, and a firm's reputation are all examples of complex social phenomena that make capabilities costly to imitate.

Every core competence is a capability and every capability is a core competence.

Some resources, such as financial capital, have inherent value to the firm, while others are not inherently valuable.

Regardless of the industry, the most valuable links on a firm's value chain will likely be

Value is measured by the variable and fixed costs associated with the production and marketing of a particular product compared with the revenue and profits the product generates.

The Strategic Focus on GE in Chapter 3 details actions by the company which resulted in significant increases in the firm's stock value. The resources which played the greatest role in these actions were

A local restaurant, Farm Fresh Ingredients, has become highly successful through its menu based solely on organically-raised chicken, beef, and organic seasonal produce. It has opened new locations in other cities, and these new locations are becoming highly profitable. Farm Fresh can expect that, at best, its competitive advantage will be

Capabilities that other firms cannot develop easily are classified as

How many core competencies should a firm seek to develop?

Value chain activities