The Management of Strategy Concepts International Edition 10th Edition by R. Duane Ireland – Test Bank

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The Management of Strategy Concepts International Edition 10th Edition by R. Duane Ireland – Test Bank

Chapter 3—The Internal Environment: Resources, Capabilities, Competencies, and Competitive Advantages

TRUE/FALSE

1.The Chapter 3 Opening Case demonstrates that although conditions in the economic environment influenced Subway’s success, the manner in which Subway used its resources and capabilities also influenced that success.

ANS: T PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

2.People are a critical resource for helping organizations learn how to continuously innovate.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Managing human capital | Bloom: Comprehension

3.Firms should seek to continually develop new core competencies because all core competencies have limited life spans.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

4.The sustainability of a competitive advantage depends upon the rate of obsolescence of the core competence, the availability of substitutes for the core competence, and the imitability of the core competence.

ANS: T PTS: 1 DIF: Medium OBJ: Knowledge

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Knowledge

5.Firms achieve strategic competitiveness and earn above average returns by acquiring, bundling, and leveraging their resources for the purpose of  taking advantage of opportunities in the external environment in ways that create value for customers.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Knowledge

6.Analyzing the internal environment enables a firm to determine what it might do by identifying what opportunities and threats exist.

ANS: F PTS: 1 DIF: Hard OBJ: Comprehension

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

7.Analyzing the internal environment enables a firm to determine what it can do by identifying resources, capabilities, and core competencies in the internal organization.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

8.Given enough time, any firm’s competitive advantage can be imitated by its competitors.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Knowledge

9.Understanding how to leverage the firm’s unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal organization.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

10.In today’s global economy, traditional factors such as labor costs, access to financial resources and raw materials, and protected or regulated markets are less likely to become core competencies and possibily competitive advantages.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT:AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Knowledge

11.A global mind-set is free of the assumptions of a single country, culture, or context.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Knowledge

12.Resources are the source of capabilities, some of which lead to the development of core competencies; in turn, some core competencies may lead to competitive advantage.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Knowledge of general business functions | Bloom: Knowledge

13.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.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

14.Value is created when firms innovately bundle and leverage their resources to form capabilities and core competencies.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

15.Creating customer value is the source of the firm’s potential to earn above-average returns.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

16.Walmart uses core competencies such as information technology and distribution channels to create value for its customers through its “everyday low price.”

ANS: T PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills|  Bloom: Application

17.The challenge and difficulty of making effective decisions are implied by preliminary evidence suggesting that one-half of organizational decisions fail.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT:AACSB: Reflective Thinking Skills | Management: Strategy | Dierdorff & Rubin: Managing decision-making processes | Bloom: Knowledge

18.The need to meet quarterly earnings numbers disciplines managers to accurately examine the firm’s internal organization.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Foundational skills | Bloom: Comprehension

19.The learning generated by making and correcting mistakes is generally unimportant to efforts to create new capabilities and core competencies.

ANS: F PTS: 1 DIF: Medium OBJ: Knowledge

NOT: AACSB: Reflective Thinking Skills | Management: Leadership Principles | Dierdorff & Rubin: Managing decision-making processes |Bloom: Knowledge

20.The Chapter 3 Strategic Focus illustrates the challenge facing strategic managers in making decisions about the appropriate use of their companies’ resources and capabilities.  While a number of firms have successfully used resources and capabilities to earn above average returns, others have not been so successful.

ANS: T PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

21.The Chapter 3 Strategic Focus shows that inability to effectively use a firm’s resources and capabilities can contribute to a CEO’s short tenure as happened with Christina Norman, former CEO of the Oprah Winfrey Network (OWN).

ANS: T PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

22.Judgment is the capability of making successful decisions when no obviously correct model or rule is available or when relevant data are unreliable or incomplete.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

23.By themselves, resources can allow firms to create value for customers as the foundation for earning above-average returns.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT:AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

24.Resources must be combined to form capabilities as illustrated by Subway which linked its fresh ingredients with several other resources including the continuous training it provides to those running the firm’s units as the foundation for customer service as a capability.

ANS: T PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

25.Coca-Cola’s brand name is a tangible source of competitive advantage for the company.

ANS: F PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

26.Trademarks and copyrights are examples of a firm’s tangible resources.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

27.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.

ANS: F PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

28.Although an organization’s good reputation is a valuable resource that takes years of superior marketplace competence to achieve, it is not a good basis for building a competitive advantage because it can be destroyed almost instantly by bad publicity.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

29.Compared to tangible resources, intangible resources are an inferior source of core competencies.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

30.

The firm combines individual tangible and intangible resources to create capabilities.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff & Rubin: Managing human capital | Bloom: Knowledge