Chapter 3 – Evaluating a Firm’s Internal Capabilities

_______________ in the RBV are defined as the tangible and intangible assets that a firm controls that it can use to conceive of and implement its strategies.
Resources
__________ are a subset of a firm’s resources and are defined as tangible and intangible assets that enable a firm to take full advantage of other resources it controls.
Capabilities
A firm’s marketing skills and teamwork as well as its cooperation among managers are examples of
capabilities
The training, experience, judgment, intelligence, relationships and insight of individual managers and workers in a firm are examples of
human resources
Computer hardware and software technology, robots used in manufacturing and automated warehouses are examples of which type of resources?
Physical resources
A firm’s formal reporting structure, its formal and informal planning and its controlling and coordinating systems are examples of which type of resources?
Organizational resources
The VRIO assumption that some of the resource and capability differences among firms may be long lasting is known as
resource immobility
______________ implies that for a given business activity, some firms may be more skilled in accomplishing this activity than other firms
Resource heterogeneity
The theoretical roots of the Resource-Based View can be traced to research done by
David Ricardo
Inputs whose quantity is fixed and whose demand does not respond to price increases are said to be
inelastic in supply
To the extent that a firm’s resources and capabilities enhance a firm’s competitive position by enabling a firm to exploit its opportunities or neutralize its threats, these resources and capabilities are valuable and are known as
strengths
The set of business activities in which it engages to develop, produce, and market its products or services is known as its
value chain
If in the process of maximizing its performance, a firm engages in activities that pollute the environment, the impact of that pollution is a(n)
externality
In Porter’s value chain model, which of the following activities would be considered a primary activity?
Inbound logistics
ESPN’s development of an extensive offering of X-Games coverage that is unmatched by any other sports outlet is an example of which element of the VRIO framework?
Rarity
Most firms have a resource-base that is composed primarily of resources and capabilities that are
valuable but not rare
Which of the following is not one of the six distinct activities in McKinsey and Company’s value chain model?
Inbound logistics
In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered __________ and a potential source of competitive advantage.
rare
If firms that do not possess resource or capabilities face a cost disadvantage in obtaining these resources or capabilities compared to the firms that already possess them, these resources and capabilities are termed
imperfectly imitable
Firms that possess and exploit costly-to-imitate, rare and valuable resources in choosing and implementing their strategies may enjoy a period of
sustained competitive advantage
If a firm’s resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm’s competitive advantage, this competitive advantage is said to be protected from imitation by
casual ambiguity
Resources and capabilities, such as relations among managers and a firm’s culture, that may be costly to imitate because they are beyond the ability of firms to systematically manage and influence are referred to as
socially complex
According to the research in strategic human resources management
firms that are able to use human resource practices to develop socially complex human and organizational resources are able to gain competitive advantage over firms that do not engage in these practices
Which of the following statements regarding patents is accurate?
Patents may decrease, rather than increase the costs of imitation
The range of formal and informal mechanisms to ensure that managers are behaving in ways consistent with a firm’s strategies are referred to as
management control systems
Which of the following are examples of formal management controls?
Budgeting and reporting activities
Southwest Airlines’ strong internal culture that helps ensure that employees act in ways consistent with the company’s strategy is an example of a(n)
informal management control
Resources that are valuable-but-not-rare can be categorized as
organizational strengths
Resources that generate a temporary competitive advantage are
valuable and rare but not costly to imitate
If a resource or capability is valuable and rare but not costly to imitate, exploiting this resource will generate a(n)
temporary competitive advantage
Resources and capabilities that are valuable, rare, and costly to imitate are best described as
sustainable distinctive competencies
If Delta Airlines were to significantly change its fare structure and flight schedule to enhance its competitive position in response to aggressive price cutting by Southwest Airlines, this would be an example of
competitive dynamics
Any actions a firm takes that have the effect of reducing the level of rivalry in an industry that also do not require firms in an industry to directly communicate or negotiate with each other can be thought of as
tacit cooperation
When tacit cooperation has the effect of reducing supply and increasing prices, it is known as
tacit collusion
Tacit cooperation is only a viable strategy when
there is a strong market share leader in the industry
The specific actions a firm takes to implement its strategies are known as
tactics
Which of the following statements regarding the resource based view is accurate?
Competitive advantage is too important to remain the sole property of senior management
Which of the following statements regarding competitive parity and competitive advantage is accurate?
Some firms develop valuable, rare, and costly-to-imitate resource and capabilities in being efficient second movers-that is, imitating and improving on the product and technological innovations of other firms
A firm that has a sustained competitive advantage in its domestic market
can expect that resources that are valuable, rare and costly to imitate in one country may not be valuable, rare and costly to imitate in other countries
Each of these is one of the three critical determinants of the firm’s ability to develop new resources and capabilities through its international operations except
having a sustained competitive advantage in its home market
LaserTech’s new technology appears to be
valuable, rare and costly to imitate
If one of LaserTech’s rivals were to decide to divest its industrial laser manufacturing business in response to LaserTech’s new technology this would be an example of
competitive dynamics
If LaserTech’s new technological development was due to proprietary investments the company made when it was first founded twenty years ago this would be an example of
path dependence
LaserTech’s new technology is an example of
physical resources
The inability of rivals to develop or acquire technology similar to that of LaserTech is an illustration of
resource immobility
Bates’ culture is an example of a(n)
informal management control
The budgeting and reporting activities that Bates uses are examples of
formal management controls
The reward system Bates uses to encourage employees to find ways to reduce costs is an example of a(n)
compensation policy
The fact that it would be would be difficult and costly for firms to match Bates’ capabilities in the tool industry indicates that these capabilities are
imperfectly imitable
It would be costly for competitors to duplicate Bates due to
path dependence and unique historical conditions