MGT 449 FINAL EXAM QUESTIONS WITH VERIFIED
ANSWERS
A firm's ability to gain and sustain competitive advantage is party driven by
___________________, unique strengths embedded within a firm - Answers - core
competencies
core competencies - Answers - unique strengths, embedded deep within a firm. Allow firm to
offer differentiation in the products/services from rivals, create higher value to customer, or offer
at a lower cost
Core competencies are made of - Answers - resources and capabilities
VRIO Framework - Answers - A theoretical framework that explains and predicts firm-level
competitive advantage. Valuable, Rare, Costly to Imitate, Organized to Capture Value.
Valuable example: - Answers - Honda's competency in designing and producing efficient
engines increases the perceived value of its products for consumers. That competency,
supported by its lean manufacturing system, enables quality to be designed and built directly
into the product and also helps Honda lower its costs.
Rare example: - Answers - As Toyota built its initial position as a global auto manufacturer, its
lean manufacturing system was a valuable and rare resource. As the leading innovator in
developing an efficient and effective approach to manufacturing, Toyota was the first carmaker
to resolve a trade-off that had existed for many decades: to lower production costs and increase
the quality of essentially "mass-customized" cars.
Costly to Imitate: - Answers - Google's core competency in creating proprietary algorithms to
develop software products and services for the Internet and mobile computing is valuable, rare,
and costly to imitate. Although Microsoft clearly has a strength in developing operating system
and application software for the PC, it lacks Google's ability to create a superior web search
engine despite its efforts with Bing. Google's core competency in developing proprietary
algorithms that underlie its web-based products and services is thus costly and difficult for
Microsoft (and others) to imitate.
Organized to Capture Value: - Answers - Kodak's executives did not see any potential in digital
camera technology back in the 1970s. Steven Sasson, the Kodak engineer who actually the first
fully-contained digital camera in 1975 was discouraged from pursuing his interests because the
company saw digital camera technology as a competitor to their own film products rather than
the future of photography.
Resources - Answers - all assets organizational processes, attributes, information, and
knowledge controlled by a firm that enables the firm to conceive and implement strategies that
improve its efficiency/effectiveness
Tangible Resources - Answers - assets that can be seen, touched, quantified
, Capabilities - Answers - bundles of tangible/intangible resources that allow an organization to
perform certain aspects well
Intangible Resources - Answers - resources that do not have physical attributes and thus are
invisible, like knowledge or stakeholder trust
Describe a resource-based view of the firm. How is it different from the tools you were
introduced to for external analysis like PESTLE and Porter's 5 forces? - Answers - RVB is a
theory that a firm can develop a competitive advantage through the collection and harvesting of
resources. RVB is different than external analysis tools because it places more pressure on
internal forces.
Compare and contrast tangible and intangible resources. Which of the two is more likely to be a
source of competitive advantage in this day and age? - Answers - Intangible resources are
those that cannot be seen or touched like knowledge, stakeholder trust, or innovation
capabilities. Intangible resources are more likely to be a competitive advantage because they
are more difficult for competitors to imitate
Describe the term 'causal ambiguity' and provide an example of how it can act as a barrier
against imitation of a firm's valuable resources. - Answers - Causal ambiguity is a characteristic
of a firm's resources that is costly to imitate because a competitor cannot determine what the
resource is and/or how it can be re-created. The uncertainty of the phenomenon is a natural
barrier against imitation.
Describe a few intellectual property protection mechanisms used to protect intangible resources.
- Answers - - Patents:
- Designs
- Copyrights
- Trademarks
- Trade Secrets
value chain perspective - Answers - describes the internal activities a firm engages in when
transforming inputs into outputs
Primary activities in a firm's value chain - Answers - supply chain management, operations,
distributions, marketing and sales, after-sales service
Secondary activities in a firm's value chain - Answers - research and development, information
systems, human resources, accounting/finance, firm infrastructure
What are core rigidities? How do they affect future competitive advantage? - Answers - Former
core competency that turned into a liability because the firm failed to hone, refine, and upgrade
the competency as the environment changed.
4 generic business strategies - Answers - Cost leader, differentiation, focused differentiation,
and focused cost leadership
Cost leadership strategy - Answers - generic business strategy that seeks to create the same or
similar value for customers at a lower cost
ANSWERS
A firm's ability to gain and sustain competitive advantage is party driven by
___________________, unique strengths embedded within a firm - Answers - core
competencies
core competencies - Answers - unique strengths, embedded deep within a firm. Allow firm to
offer differentiation in the products/services from rivals, create higher value to customer, or offer
at a lower cost
Core competencies are made of - Answers - resources and capabilities
VRIO Framework - Answers - A theoretical framework that explains and predicts firm-level
competitive advantage. Valuable, Rare, Costly to Imitate, Organized to Capture Value.
Valuable example: - Answers - Honda's competency in designing and producing efficient
engines increases the perceived value of its products for consumers. That competency,
supported by its lean manufacturing system, enables quality to be designed and built directly
into the product and also helps Honda lower its costs.
Rare example: - Answers - As Toyota built its initial position as a global auto manufacturer, its
lean manufacturing system was a valuable and rare resource. As the leading innovator in
developing an efficient and effective approach to manufacturing, Toyota was the first carmaker
to resolve a trade-off that had existed for many decades: to lower production costs and increase
the quality of essentially "mass-customized" cars.
Costly to Imitate: - Answers - Google's core competency in creating proprietary algorithms to
develop software products and services for the Internet and mobile computing is valuable, rare,
and costly to imitate. Although Microsoft clearly has a strength in developing operating system
and application software for the PC, it lacks Google's ability to create a superior web search
engine despite its efforts with Bing. Google's core competency in developing proprietary
algorithms that underlie its web-based products and services is thus costly and difficult for
Microsoft (and others) to imitate.
Organized to Capture Value: - Answers - Kodak's executives did not see any potential in digital
camera technology back in the 1970s. Steven Sasson, the Kodak engineer who actually the first
fully-contained digital camera in 1975 was discouraged from pursuing his interests because the
company saw digital camera technology as a competitor to their own film products rather than
the future of photography.
Resources - Answers - all assets organizational processes, attributes, information, and
knowledge controlled by a firm that enables the firm to conceive and implement strategies that
improve its efficiency/effectiveness
Tangible Resources - Answers - assets that can be seen, touched, quantified
, Capabilities - Answers - bundles of tangible/intangible resources that allow an organization to
perform certain aspects well
Intangible Resources - Answers - resources that do not have physical attributes and thus are
invisible, like knowledge or stakeholder trust
Describe a resource-based view of the firm. How is it different from the tools you were
introduced to for external analysis like PESTLE and Porter's 5 forces? - Answers - RVB is a
theory that a firm can develop a competitive advantage through the collection and harvesting of
resources. RVB is different than external analysis tools because it places more pressure on
internal forces.
Compare and contrast tangible and intangible resources. Which of the two is more likely to be a
source of competitive advantage in this day and age? - Answers - Intangible resources are
those that cannot be seen or touched like knowledge, stakeholder trust, or innovation
capabilities. Intangible resources are more likely to be a competitive advantage because they
are more difficult for competitors to imitate
Describe the term 'causal ambiguity' and provide an example of how it can act as a barrier
against imitation of a firm's valuable resources. - Answers - Causal ambiguity is a characteristic
of a firm's resources that is costly to imitate because a competitor cannot determine what the
resource is and/or how it can be re-created. The uncertainty of the phenomenon is a natural
barrier against imitation.
Describe a few intellectual property protection mechanisms used to protect intangible resources.
- Answers - - Patents:
- Designs
- Copyrights
- Trademarks
- Trade Secrets
value chain perspective - Answers - describes the internal activities a firm engages in when
transforming inputs into outputs
Primary activities in a firm's value chain - Answers - supply chain management, operations,
distributions, marketing and sales, after-sales service
Secondary activities in a firm's value chain - Answers - research and development, information
systems, human resources, accounting/finance, firm infrastructure
What are core rigidities? How do they affect future competitive advantage? - Answers - Former
core competency that turned into a liability because the firm failed to hone, refine, and upgrade
the competency as the environment changed.
4 generic business strategies - Answers - Cost leader, differentiation, focused differentiation,
and focused cost leadership
Cost leadership strategy - Answers - generic business strategy that seeks to create the same or
similar value for customers at a lower cost
