Answer & Question : One advantage of SWOT analysis is that it helps managers to identify strengths that are almost always sources of competitive advantages that are sustainable.

One advantage of SWOT analysis is that it helps managers to identify strengths that are almost always sources of competitive advantages that are sustainable.

FALSE

The strengths and capabilities of a firm, no matter how unique or impressive, may not enable it to achieve a competitive advantage in the marketplace.

AACSB: Analytic
Blooms: Understand
Learning Objective: 03-01 The benefits and limitations of SWOT analysis in conducting an internal analysis of the firm.
Level of Difficulty: 2 Medium
Topic: The benefits and limitations of SWOT analysis

The SWOT analysis can show managers how to achieve a competitive advantage.

FALSE

But SWOT has its limitations. It is just a starting point for discussion. By listing the firm's attributes, managers have the raw material needed to perform more in-depth strategic analysis. However, SWOT cannot show them how to achieve a competitive advantage. They must not make SWOT analysis an end in itself, temporarily raising awareness about important issues but failing to lead to the kind of action steps necessary to enact strategic change.

The strengths and capabilities of a firm are enough to enable it to achieve a competitive advantage in the marketplace.

FALSE

The strengths and capabilities of a firm, no matter how unique or impressive, may not enable it to achieve a competitive advantage in the marketplace. If a firm builds its strategy on a capability that cannot, by itself, create or sustain competitive advantage, it is essentially a wasted use of resources.

Toyota paid a heavy price for its excessive emphasis on cost control. By focusing on only one strength exclusively, it suffered severe losses. This is an example of the limitations of a SWOT analysis.

TRUE

Sometimes firms become preoccupied with a single strength or a key feature of the product or service they are offering and ignore other factors needed for competitive success. For example, Toyota, the giant automaker, paid a heavy price for its excessive emphasis on cost control. The resulting problems with quality and the negative publicity led to severe financial losses and an erosion of its reputation in many markets.

In conducting a SWOT analysis, a risk for strategists is that they rely on traditional definitions of their industry and competitive environment and therefore focus too narrowly on current competitors.

TRUE

Strategists who rely on traditional definitions of their industry and competitive environment often focus their sights too narrowly on current customers, technologies, and competitors. Hence they fail to notice important changes on the periphery of their environment that may trigger the need to redefine industry boundaries and identify a whole new set of competitive relationships.

Value-chain analysis assumes that the basic economic purpose of a firm is to create value and it is a useful framework for analyzing the strengths and weaknesses of the firm.

TRUE

Value-chain analysis views the organization as a sequential process of value-creating activities. It provides greater insights into analyzing the competitive position of a firm than SWOT analysis does by itself.

AACSB: Analytic
Blooms: Remember
Learning Objective: 03-02 The primary and support activities of a firm's value chain.
Level of Difficulty: 1 Easy
Topic: Value-Chain Analysis

In value-chain analysis, value is measured by the market value of the total stock outstanding of the company.

FALSE

Value is the amount that buyers are willing to pay for what a firm provides them and is measured by total revenue, a reflection of the price the product of the firm commands and the quantity it can sell.

AACSB: Analytic
Blooms: Remember
Learning Objective: 03-02 The primary and support activities of a firm's value chain.
Level of Difficulty: 1 Easy
Topic: Value-Chain Analysis

Primary activities contribute to the physical creation of a product or service, its sale and transfer to the buyer, and its service after the sale.

TRUE

The five primary activities in the Porter value chain model (inbound logistics, operations, outbound logistics, marketing and sales, and service) contribute to the physical creation of the product or service, its sale and transfer to the buyer, and its service after the sale.

AACSB: Analytic
Blooms: Remember
Learning Objective: 03-02 The primary and support activities of a firm's value chain.
Level of Difficulty: 1 Easy
Topic: Value-Chain Analysis

9.	The value-chain concept assumes that both primary and support activities are capable of producing value for customers. TRUE Both types of activities can add value, either directly or through important relationships with other activities.

AACSB: Analytic
Blooms: Remember
Learning Objective: 03-02 The primary and support activities of a firm's value chain.
Level of Difficulty: 1 Easy
Topic: Value-Chain Analysis

10.

Inbound logistics include all activities associated with transforming inputs into the final product form such as machining, packaging, assembly, equipment, testing, printing, and facility operations.

FALSE

Inbound logistics is primarily associated with receiving, storing, and distributing inputs to the product. Operations include all activities associated with transforming inputs into the final product form, such as machining, packaging, assembly, testing, printing, and facility operations.

AACSB: Analytic
Blooms: Remember
Learning Objective: 03-02 The primary and support activities of a firm's value chain.
Level of Difficulty: 1 Easy
Topic: Value-Chain Analysis

11.

Support activities provide support for primary activities, but not each other.

FALSE

Support activities (procurement, technology development, human resource management, and general administration) either add value by themselves or add value through important relationships with both primary activities and other support activities.

AACSB: Analytic
Blooms: Remember
Learning Objective: 03-02 The primary and support activities of a firm's value chain.
Level of Difficulty: 1 Easy
Topic: Value-Chain Analysis

12.

Establishing a customer service hotline to handle customer complaints would be considered a primary activity in value-chain analysis.

TRUE

Service is a primary activity which includes all actions associated with providing service to enhance or maintain the value of the product, such as installation, repair, training, parts supply, and product adjustment.