Test Bank For Foundations of Strategy 2nd Edition By Grant

1. The trend over time has been to see sources of profit as lying mainly in the external environment rather than being located within firms. @Pages and References: Page 87 a. T *b. F 2. In a world where customer preferences are volatile and the technologies for serving them are changing, a market-focussed strategy may not provide the stability and constancy needed to guide the company @Pages and References: Page 87 *a. T b. F 3. The Honda Motor Company has always defined itself as a supplier of motor vehicles. @Pages and References: Page 88 a. T *b. F 4. The greater the rate of change in a firm’s external environment, the more likely it is that internal resources and capabilities will provide a secure foundation for long term strategy @Pages and References: Page 88 *a. T b. F 5. Resources are a firm’s productive assets; capabilities are what a firm can do. @Pages and References: Page 89 *a. T b. F 6. Intangible resources are often more valuable than tangible resources in conferring competitive advantage @Pages and References: Pages 90-91 *a. T b. F 7. The value of a brand is the confidence it instils in customers regarding the expected benefits associated with that brand. @Pages and References: Page 91 *a. T b. F 8 Resources are ultimately more important than capabilities. @Pages and References: Page 93 a. T *b. F 9. Human resources are always listed on a firm’s balance sheet. @Pages and References: Page 93 a. T *b. F 10. The culture of an organization is a key intangible resource @Pages and References: Page 93 *a. T b. F 11. The term “organizational capability” refers to those things an organization does particularly well relative to its competitors. @Pages and References: Page 94 a. T *b. F 12. A core competence makes a disproportionate contribution to ultimate customer value.. @Pages and References: Page 94 *a. T b. F 13. Individual products may succeed or fail: the key to success is learning from both successes and failures in order to build capability @Pages and References: Pages 95 *a. T b. F 14..Value chain analysis identifies organizational capabilities in relation to each of the principal functional areas of the firm @Pages and References: Pages 95-96 a. T *b. F 15. Value chain analysis separates the activities of the firm into a sequential chain and explores the linkages between activities. @Pages and References: Pages 95-96 *a. T b. F 16. Drawing up an inventory of an organization’s capabilities is straightforward @Pages and References: Pages 97-100 a. T *b. F 17. Organizational routines are a critical element of organizational capabilities. @Pages and References: Pages 97-100 *a. T b. F 18. The employees of McDonald’s hamburger restaurants develop efficient work routines because the tasks they undertake are regular and predictable. @Pages and References: Pages 97-100 *a. T b. F 19. For a resource or capability to establish a competitive advantage, the resource or capability needs to be widely available and relevant to key success factors within the market @Pages and References: Pages 100-102 a. T *b. F 20. Once established, competitive advantage tends to be sustained over time. @Pages and References: Pages 100-102 a. T *b. F 21. The internal environment: @Pages and References: Pages 87-89 a. Is the structure inside an industry b. Has become less important as an explanation of firms’ profitability *c. focuses on the relationship between a firm’s resources and capabilities and its business strategy d. focuses on industry attractiveness as a primary source of profit 22. Prahalad and Hamel’s 1990 paper: @Pages and References: Pages 87-89 a. Summarized the main constraints of the external environment b. Summarized the strategic positioning school’s point of view c. Emphasized technological innovation as the as main source of “competitiveness” *d. Was one of the papers that popularised the modern resource-based view of the firm 23. The resource-based view of the firm can be described as: @Pages and References: Pages 87-89 a. the outside-in approach *b. the inside-out approach c. the positioning approach d. the planning approach 24. In fast changing environments: @Pages and References: Pages 87-89 a. A firm should focus on its oldest markets *b. A firm may define itself by its resources and capabilities c. Both a and b d. Neither a nor b 25. 3M is: @Pages and References: Pages 87-89 a. A successful conglomerate comprising a group of unrelated businesses b. A group of businesses linked by their use of glue-based technologies c. A group of businesses with an outstanding ability to develop and market new Fast Moving Consumer Products *d. A group of businesses with a core capability to develop and launch new products using adhesives, thin-film coatings, and other technologies 26. In our discussion of the resource-based view of the firm, we categorise the resources of a firm as: @Pages and References: Pages 89-93 *a. Human, Intangible and Tangible b. Fixed, Variable and Human c. Human, Fungible and Tangible d. Physical, Financial, and Brand-related 27. When valuing a firm’s tangible resources: @Pages and References: Page 90-91 a. We should take the historic cost book value b. We must update historic cost assets to current cost (modern replacement cost) assets *c. We need to understand their potential for creating competitive advantage d. We need to rely on the services of professional accountants 28. Companies’ “book values” can be much less than their stock market valuations because: @Pages and References: Page 91-92 a. Auditors tend to err on the conservative side *b. Accountants are generally required by accounting standards to ignore the value of brands and all other reputational assets c. To be on the safe side accountants tend to undervalue brand values d. Accountants and marketing experts have different methods of valuing brands 29. Brand values are a: @Pages and References: Page 91-92 a. Type of tangible resource *b. Type of intangible resource c. Type of synergistic resource d. Type of sustainable resource 30.'Reputation' in the context of an organization's resources can provide competitive advantage because: @Pages and References: Pages 91-92 *a. It is difficult to copy b. It is based on word-of-mouth c. it is essential for a firm to do business d. it is easily destroyed by bad publicity 31. Human Resource capabilities: @Pages and References: Pages 91-93 *a. Include the skills to train and develop people b. generally constitute a firm’s greatest resources c. Are the distinctive capability of most large organisations d. Answer b and c 32. Organizational culture is: @Pages and References: Page 91-93 a. The way a firm is organized b. A firm’s distinctive myths, rituals and symbols c. A firm’s deeply held values, traditions and social norms *d. Answers b and c 33. Jay Barney in his 1986 paper argues that a strong organizational culture: @Pages and References: Pages 91-93 a. is rarely of strategic importance b. is often associated with poor financial performance c. often results in inflexibility and corporate rigidity *d. is potentially a very valuable strategic resource 34. Which of the following is not a primary characteristic of Emotional intelligence: @Pages and References: Page 91-93 *a. the ability to perceive emotions accurately b. the recognition of the importance of interpersonal skills c. the ability to think rationally and solve problems d. the ability to access and generate feelings 35. A capability requires: @Pages and References: Pages 93-94 a. Many unique resources b. Just one unique resource c. No unique resources *d. Individuals to coordinate with each other, and some capital or technology, to achieve a valuable transformation to goods or services 36. The difference between a capability and a competence is: @Pages and References: Page 94 a. A competence is core to a firm’s operations b. A capability is necessary to survive, but a competence is essential to thrive c. A competence is necessary to survive, but a capability is essential to thrive *d. No difference in this textbook where they are taken as interchangeable 37. Threshold capabilities enable a firm to do what every firm in its industry must do. Distinctive or core competences: @Pages and References: Page 94 *a. Enable it to earn higher profits or greater market share than its competitors in the same industry b. Are its unique selling point c. Are those product features that stop non-customers from buying the product d. Are captured in logos, trademarks etc. 38. Which of the following is typically viewed as a functional area of firm activity: @Pages and References: pages 95-96 a. financial control b. research and development c. marketing *d. all of the above 39. Porter’s firm value chain is often used to: @Pages and References: Pages 96-97 a. Estimate the revenue the firm derives at each stage of a good’s production and distribution b. Show the after-tax profit generated by each part of the firm c. Show the pre-tax profit generated by each part of the firm *d. Map out a firm’s main activities into threshold and distinctive capabilities 40. When firms develop organizational routines they are: @Pages and References: Pages 97-99 a. Seeking to liven up boring production manuals *b. Learning by doing c. In the mature stage of an industry’s life cycle d. In the declining stage of an industry’s life cycle 41. Tight complex organizational routines: @Pages and References: Pages 97-99 a. Are based on unique corporate structures b. Can be copied if rivals hire the right employees *c. Are hard for rivals to replicate d. Answers a and c 42. The hierarchy of capabilities refers to: @Pages and References: Pages 99-100 *a. How capabilities to do market research time-effectively and buy advertising cost-effectively, belong under marketing capabilities b. How capabilities are made up of processes that use resources to achieve a desired result c. How the CEO should have more capabilities than the CFO, the COO etc. d. How core capabilities are more valuable than threshold capabilities 43. The creation of organizational capabilities: @Pages and References: Page 99 a. is simply a matter of allowing routines to merge *b. requires conscious and systematic action by management c. is a result of lucky coincidences d. requires a stable environment 44. A capability that is “needed to play” is often referred to as: @Pages and References: Pages 100-101 a. A threshold resource b. A unique resource *c. A threshold competence d. A core competence 45. For a resource or capability to establish a competitive advantage two conditions must be present. These are: @Pages and References: Pages 100-101 a. The resource or capability must be widely available and relevant to the key success factors in the market *b. the resource or capability needs to be scarce and relevant to the key success factors in the market c. The resource or capability must be central to operations and its strategic role well understood by all employees d. The resource or capability must be central to operations and its strategic role appreciate by just a few members of the organization 46. Resources and capabilities can generate higher profits @Pages and References: Pages 101-102 a. If competition is fierce *b. If the competitive advantage they generate is sustained for some years c. Only if governments allow firms to share resources d. Only where cartels are effectively allowed 47. To stop rivals acquiring a core resource or capability: @Pages and References: Pages 101-102 a. Is foolish: a firm cannot stop its rivals from doing things they want to *b. Firms must make that resource or capability immobile c. Firms have to rely on patent and copyright legislation d. Everyone involved in this activity must be paid at a higher rate than that offered by rivals 48. Three characteristics of resources and capabilities determine the sustainability of the competitive advantage they offer: @Pages and References: Pages 101-102 *a. durability, transferability and replicability b. scarcity, relevance and property rights c. property rights, relative bargaining power and embededness d. None of the above 49. Superior capabilities are often traced to staff skills and efforts so: @Pages and References: Pages 101-102 a. the organization should, if possible, lock key staff in through their employment contracts b. the organization needs to pay a good market rate to attract and retain top talent c. it is important to have the right corporate culture and motivate staff *d. all of the above 50. Firms try to develop resources and capabilities to: @Pages and References: Pages 137-143 a. Maximize attractiveness to our customers *b. Create sustainable competitive advantage c. Maximize current profit rates d. Attract the best employees 51. We need to appraise our resources and capabilities against: @Pages and References: Pages 103-105 a. Our past record; we must continually improve b. The best firms around the world, no matter in what country, market or industry *c. Our competitors’ resources and capabilities d. The best that our competitors might attain in the future 52. Internal appraisal of a company’s capabilities against the best competitors: @Pages and References: Pages 103-105 a. Cannot be done; only external appraisal is valid b. Can be done using discussion of past successes and failures c. Can be done using external benchmarking *d. Answers b and c 53. The final appraisal of the strengths and weaknesses of a firm’s resources & capabilities: @Pages and References: Pages 103-105 a. Is a quantitative appraisal by an objective outside body *b. Requires an objective appraisal of the firm’s resources and capabilities c. Requires artistic flair and creative questioning d. Requires detailed knowledge of business strategy theory, and all its intellectual roots 54. If a company has only a few key strengths this suggests the company should : @Pages and References: Pages 106-108 a. sell up and exit its existing business as soon as possible *b. adopt a niche strategy c. move into new unrelated product markets d. recruit a more dynamic management team 55. Outsourcing to specialists can help a firm: @Pages and References: Pages 106-108 a. Reduce unnecessary costs b. Increase control over a key production process *c. Reduce a relative weakness in its capabilities d. Improve launch times for new products 56. Harley-Davidson retained its competitiveness in the motorcycle market by: @Pages and References: 106-108 a. investing heavily in new technology b. introducing a broad range of motorcycles targeted at different customer segments *c. making a virtue out of its traditional designs d. by outsourcing much of its production process 57. In appraising resources and capabilities we need to acknowledge the important role that industry context plays. In general it is best to define the industry context: @Pages and References: Pages 108-110 a. very narrowly *b. relatively broadly c. on the basis of the firm’s existing strategy d. on the basis of the firm’s likely future strategy 58. The management systems of most firms: @Pages and References: Pages 110-111 *a. pay more attention to the physical and financial assets on their balance sheets than to their intangible and human resources b. pay more attention to intangible and human resources than to the physical and financial resources on their balance sheet c. provide detailed and up-to-date information on the firm’s resources and capabilities d. provide an easy way of identifying key resources and capabilities 59. Developing the strategic implications of the resource-based view of the firm, requires the firm to: @Pages and References: Pages 110-111 a. identify its strengths and assess how these can be exploited more fully b. identify its weaknesses and c. consider whether it can outsource activities that can be performed better by other organizations identify its weaknesses and assess whether these can be corrected by acquiring new resources and capabilities *d. all of the above