The three key types of resources that are central to the resource-based view of the firm are:

61.

In a retail service industry, which of the following is not a primary value-chain activity?    A.  purchasing goods B.  operating stores C.  partnering with vendors D.  human resource management Primary value-chain activities include: inbound logistics, operations, outbound logistics, marketing and sales, and service. Human resource management is a support activity.

AACSB: Analytic Blooms: Understand Learning Objective: 03-03 How value-chain analysis can help managers create value by investigating relationships among activities within the firm and between the firm and its customers and suppliers. Level of Difficulty: 2 Medium Topic: Value-Chain Analysis

62.

The resource-based view (RBV) of the firm combines two perspectives:    A.  the primary and support activities of the firm B.  the interrelationships among the primary activities of the firm and corporate management C.  the internal analysis of the firm and the external analysis of the industry and competitive environment D.  the industry and the competitive environment The resource-based view (RBV) of the firm combines two perspectives: (1) the internal analysis of phenomena within a company and (2) an external analysis of the industry and its competitive environment.

AACSB: Analytic Blooms: Remember Learning Objective: 03-04 The resource-based view of the firm and the different types of tangible and intangible resources; as well as organizational capabilities. Level of Difficulty: 1 Easy Topic: The Resource-Based View of the Firm

63.

The three key types of resources that are central to the resource-based view of the firm are:    A.  tangible resources, intangible resources, and organizational structure B.  culture, tangible resources, intangible resources C.  tangible resources, intangible resources, and organizational capabilities D.  tangible resources, intangible resources, and top management Firm resources are all assets, capabilities, organizational processes, information, knowledge, and so forth, controlled by a firm that enable it to develop and implement value-creating strategies. The three types of resources are tangible resources, intangible resources and organizational capabilities.

AACSB: Analytic Blooms: Remember Learning Objective: 03-04 The resource-based view of the firm and the different types of tangible and intangible resources; as well as organizational capabilities. Level of Difficulty: 1 Easy Topic: The Resource-Based View of the Firm

64.

In the resource-based view of the firm, examples of tangible resources include:    A.  financial resources, human resources, and firm competencies B.  financial resources, physical resources, and technological resources C.  financial resources, physical resources, and the capacity to combine intangible resources D.  outstanding customer service, innovativeness of products, and reputation Examples of tangible resources are financial resources, physical resources, organizational resources, and technological resources.

AACSB: Analytic Blooms: Understand Learning Objective: 03-04 The resource-based view of the firm and the different types of tangible and intangible resources; as well as organizational capabilities. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

65.

Typically embedded in unique routines and practices that have evolved and accumulated over time such as effective work teams is which of the following:    A.  tangible resources B.  intangible resources C.  reputational resources D.  organizational capabilities Intangible resources are typically embedded in unique routines and practices that have evolved and accumulated over time. These include human resources (e.g., experience and capability of employees, trust, and effectiveness of work teams).

AACSB: Analytic Blooms: Understand Learning Objective: 03-04 The resource-based view of the firm and the different types of tangible and intangible resources; as well as organizational capabilities. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

66.

Apple combines and packages proven technology in new and innovative ways. This is an example of its use of ____________.    A.  tangible resources B.  intangible resources C.  organizational capabilities D.  strong primary activities Organizational capabilities are the competencies or skills that a firm employs to transform inputs into outputs. Examples of organizational capabilities are outstanding customer service, excellent product development capabilities, superb innovation processes, and flexibility in manufacturing processes.

AACSB: Analytic Blooms: Understand Learning Objective: 03-04 The resource-based view of the firm and the different types of tangible and intangible resources; as well as organizational capabilities. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

67.

__________ are the competencies or skills that a firm employs to transform inputs into outputs.    A.  Tangible resources B.  Organizational capabilities C.  Reputational resources D.  Intangible resources Organizational capabilities are the competencies or skills that a firm employs to transform inputs into outputs. Examples of organizational capabilities are outstanding customer service, excellent product development capabilities, superb innovation processes, and flexibility in manufacturing processes.

AACSB: Analytic Blooms: Remember Learning Objective: 03-04 The resource-based view of the firm and the different types of tangible and intangible resources; as well as organizational capabilities. Level of Difficulty: 1 Easy Topic: The Resource-Based View of the Firm

68.

For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes?    A.  rare B.  valuable C.  easy for competitors to substitute D.  difficult for competitors to imitate For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. First, the resource must be valuable in the sense that it exploits opportunities and/or neutralizes threats in the firm's environment. Second, it must be rare among current and potential competitors of the firm. Third, the resource must be difficult for competitors to imitate. Fourth, the resource must have no strategically equivalent substitutes.

AACSB: Analytic Blooms: Remember Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 1 Easy Topic: The Resource-Based View of the Firm

69.

A competitive advantage based on inimitability can be sustained for at least some time if it has the following characteristics:    A.  psychographic uniqueness, path dependency, causal ambiguity, and substitutability B.  physical uniqueness, path dependency, causal ambiguity, and social complexity C.  rarity, path dependency, causal ambiguity, and social substitutability D.  geographic uniqueness, cause dependency, social ambiguity, and path complexity An advantage based on inimitability will not last forever. Competitors will eventually discover a way to copy most valuable resources. However, managers can forestall them and sustain profits for a while by developing strategies around resources that have at least one of the following four characteristics: physical uniqueness, path dependency, causal ambiguity, and social complexity.

AACSB: Analytic Blooms: Understand Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

70.

A crash R&D program by one firm cannot replicate a successful technology developed by another firm, when research findings cumulate. This is an example of ____________.    A.  social complexity B.  physical uniqueness C.  path dependency D.  causal ambiguity Path dependency means that resources are unique and therefore scarce because of all that has happened along the path followed in their development and/or accumulation. A crash R&D program generally cannot replicate a successful technology, when research findings cumulate. These path-dependent conditions build protection for the original resource. The benefits from experience and learning through trial and error cannot be duplicated overnight.

AACSB: Analytic Blooms: Understand Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

71.

A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon ____.    A.  path dependency B.  social complexity C.  physical uniqueness D.  tangible resources Resources of a firm may be imperfectly inimitable, because they reflect a high level of social complexity. A wide variety of firm resources may be considered socially complex. Examples include interpersonal relations among the managers in a firm, its culture, and its reputation with its suppliers and customers.

AACSB: Analytic Blooms: Remember Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 1 Easy Topic: The Resource-Based View of the Firm

72.

All of the following are examples of socially complex organizational phenomena EXCEPT:    A.  a firm's culture B.  complex physical technology C.  interpersonal relations among a firm's managers D.  leadership and trust Social complexity is a characteristic of the resources of a firm that is costly to imitate because the social engineering required is beyond the capability of competitors, including interpersonal relations among managers, organizational culture, and reputation with suppliers and customers.

AACSB: Analytic Blooms: Understand Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

73.

A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain ____________.    A.  no competitive advantage B.  a temporary competitive advantage C.  competitive parity D.  a sustainable competitive advantage Resources and capabilities must be rare and valuable as well as difficult to imitate or substitute in order for a firm to attain competitive advantages that are sustainable over time. When a resource is valuable and rare but neither difficult to imitate nor without substitutes, it is likely to result in a temporary competitive advantage.

AACSB: Analytic Blooms: Understand Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

74.

Employees will be able to obtain a proportionately high level of profits they generate (relative to the firm) if ___________.    A.  suppliers are loyal to the firm B.  their expertise is firm-specific C.  the cost to the firm of replacing them is high D.  the firm's resources are path dependent Several factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits, including if they generate high employee replacement costs. If employee skills are idiosyncratic and rare (a source of resource-based advantages), they should have high bargaining power based on the high cost required by the firm to replace them.

AACSB: Analytic Blooms: Understand Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

75.

Which of the following is not a factor that helps to explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate?    A.  Employees have high bargaining power. B.  The cost of employee replacement is high. C.  The cost of exit is high for an employee. D.  Managers have low bargaining power. Four factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate: employee bargaining power, employee replacement cost, employee exit costs, and manager bargaining power. Manager power is based on how well they create resource-based advantages. They are generally charged with creating value through the process of organizing, coordinating, and leveraging employees as well as other forms of capital such as plant, equipment, and financial capital. Such activities provide managers with sources of information that may not be readily available to others.

AACSB: Analytic Blooms: Understand Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

76.

Amazon Prime is credited for helping to increase the Amazon stock price by nearly 300 percent from 2008 to 2010. This is competitive advantage is known as _________.    A.  causal ambiguity B.  product rarity C.  service validity D.  substitutability Causal ambiguity means that would-be competitors may be thwarted because it is impossible to disentangle the causes (or possible explanations) of either what the valuable resource is or how it can be re-created. The continued success of Amazon as the largest global online marketplace is an example of competitive advantage through causal ambiguity. Competitors recently tried to imitate the Amazon free shipping strategy, but with limited success. The reason is that Amazon has developed an array of interrelated elements of strategy which their rivals find too difficult to imitate.

AACSB: Analytic Blooms: Understand Learning Objective: 03-05 The four criteria that a firm's resources must possess to maintain a sustainable advantage and how value created can be appropriated by employees and managers. Level of Difficulty: 2 Medium Topic: The Resource-Based View of the Firm

77.

Historical comparisons provide information to managers about changes in the competitive position of a firm. Historical comparisons often are misleading _____________.    A.  if the overall strategy of the firm is the same B.  if the firm shows constant growth C.  in periods of recession or economic boom D.  if the firm's stock is publicly traded Exhibit 3.10 illustrates a 10-year period of return on sales (ROS) for a hypothetical company. As indicated by the dotted trend lines, the rate of growth (or decline) differs substantially over time periods, and periods of recession and economic boom may make the trends unreliable.

AACSB: Analytic Blooms: Understand Learning Objective: 03-06 The usefulness of financial ratio analysis; its inherent limitations; and how to make meaningful comparisons of performance across firms. Level of Difficulty: 2 Medium Topic: Evaluating Firm Performance: Two Approaches

78.

The best measure of a company's ability to meet imminent financial obligations is known as the    A.  debt ratio B.  current ratio C.  total asset turnover D.  profit margin According to Exhibit 3.9, short-term solvency ratios are also known as liquidity ratios. The best measure of the ability of a company to meet imminent financial obligations is the current ratio, the ratio of current assets to current liabilities.

AACSB: Analytic Blooms: Remember Learning Objective: 03-06 The usefulness of financial ratio analysis; its inherent limitations; and how to make meaningful comparisons of performance across firms. Level of Difficulty: 1 Easy Topic: Evaluating Firm Performance: Two Approaches

79.

Which of the following would be most difficult to assess?    A.  the liquidity position of a firm B.  market share growth C.  the legitimacy and reputation of a firm D.  the efficiency with which a firm utilizes its assets The legitimacy and reputation of a firm are harder to assess, because there is no simple mathematical formula to compute them.

AACSB: Analytic Blooms: Understand Learning Objective: 03-06 The usefulness of financial ratio analysis; its inherent limitations; and how to make meaningful comparisons of performance across firms. Level of Difficulty: 2 Medium Topic: Evaluating Firm Performance: Two Approaches

80.

Which of these categories of financial ratios is used to measure the ability of a firm to meet its short-term financial obligations?    A.  leverage ratios B.  profitability ratios C.  activity ratios D.  liquidity ratios Short-term solvency ratios are also known as liquidity ratios. These ratios are used to assess the ability of a company to meet imminent financial obligations.

AACSB: Analytic Blooms: Remember Learning Objective: 03-06 The usefulness of financial ratio analysis; its inherent limitations; and how to make meaningful comparisons of performance across firms. Level of Difficulty: 1 Easy Topic: Evaluating Firm Performance: Two Approaches