Chapter Six: Resource Analysis

Multiple Choice

MC 6-1 Some of the resources required to execute a strategic proposal include

a. forecasts, budgets, and sales projections
b. financial, procedural, and environmental
c. operating, management, and equipment
d. financial, operating, and marketing

Answer: d
Difficulty: easy
Page: 112

MC 6-2 The adequacy of available resources is relative to the

a. size of the organization
b. demands of the strategic proposal
c. managerial preferences
d. number of competitors

Answer: b
Difficulty: easy
Page: 112

MC 6-3 Distinctive competencies are activities an organization

a. has outsourced
b. performs better than its competitors
c. has integrated with its suppliers
d. requires no improvement

Answer: b
Difficulty: easy
Page: 115

MC 6-4 The core skills of an organization represent

a. managerial know-how and strong links to the investor community
b. knowledge and experience developed over time
c. proprietary technology and alliances with the scientific community
d. capacity to raise capital and flexible work rules

Answer: b
Difficulty: moderate
Page: 115

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MC 6-5 Core competencies give an organization the opportunity to compete on the basis of its
a. product market focus
b. alliances
c. unique resources
d. performance

Answer: c
Difficulty: easy
Page: 115

MC 6-6 Resources that have the potential to give an organization a competitive advantage are
a. expensive, readily transferrable, covered by patents, and developed over time
b. single purpose, embedded in organizational routines, easy to copy, short lived
c. valuable, rare, difficult to copy, and organized effectively
d. codified, sustainable, technical, and sufficient

Answer: c
Difficulty: easy
Page: 116

MC 6-7 Resources that can be used by the organization to address an environmental threat are
a. valuable
b. rare
c. sustainable
d. easy to copy

Answer: a
Difficulty: moderate
Page: 116

MC 6-8 The advantage provided by resources that are held by few competitors is
a. enduring
b. sustainable
c. temporary
d. enabling

Answer: c
Difficulty: moderate
Page: 116

MC 6-9 Resources with the potential to provide a sustainable advantage as opposed to a

competitive advantage can be
a. modified by the competitor
b. upgraded reasonably easily
c. purchased in factor markets
d. leveraged by the organization

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Answer: d
Difficulty: challenging
Page: 116

MC 6-10 Path-dependency refers to resources that arise from a

a. competitive price war
b. series of events occurring over time
c. patent infringement
d. change in government policy

Answer: b
Difficulty: easy
Page: 117

MC 6-11 Competitive advantages that are not intuitively obvious are an example of
a. causal ambiguity
b. competitive parity
c. inimitable resources
d. path-dependency

Answer: a
Difficulty: moderate
Page: 117

MC 6-12 A capability arising from a network of relationships is known as

a. integrative thinking
b. social complexity
c. path dependency
d. managerial know-how

Answer: b
Difficulty: moderate
Page: 117

MC 6-13 Resource durability is sometimes associated with a

a. procedure
b. patent
c. brand
d. position

Answer: c
Difficulty: easy
Page: 118

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MC 6-14 An organization’s resources can be enhanced or undermined by
a. how rare the resources are
b. the organization’s product market focus
c. the break-even point
d. the organization’s social values

Answer: d
Difficulty: moderate
Page: 118

MC 6-15 A resource-pushed strategy is one that

a. lacks sufficiency
b. leverages unique capabilities
c. is sustainable
d. can be readily copied

Answer: b
Difficulty: moderate
Page: 120

MC 6-16 The purpose of evaluating the strategy-resources linkage is to test for

a. profitability
b. managerial fit
c. material gaps
d. sustainability

Answer: d
Difficulty: challenging
Page: 121

MC 6-17 One of the elements taken into consideration when conducting a resource analysis by
strategy component is
a. managerial preferences
b. break-even point
c. government regulation
d. value proposition

Answer: d
Difficulty: easy
Page: 122

MC 6-18 A resource analysis by resource category considers such elements as the

a. market share, technology, and employee capabilities
b. population, social values, and technology
c. economy, government regulation, and product life cycle
d. break-even point, interest rates, and consumer preferences

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Answer: a
Difficulty: challenging
Page: 113 and 122

MC 6-19 One of the considerations when evaluating resource gaps is the

a. cost of failure
b. likelihood of government subsidies
c. nature of a competitive response
d. product market focus

Answer: a
Difficulty: easy
Page: 127

MC 6-20 Strategic proposals that fit well with the environment and available resources are further
evaluated based on
a. product-market focus
b. break-even point
c. the level of initial investment
d. managerial preferences

Answer: d
Difficulty: moderate
Page: 128

MC 6-21 In a rapidly changing environment, organizations need resources that are

a. stable
b. easily replicated
c. adaptable
d. single-use

Answer: c
Difficulty: moderate
Page: 128-129

MC 6-22 Diversification can be defined as an organization’s ability to

a. define the scope of its operations
b. divest of non-core activities
c. match the capabilities of its competitors
d. leverage its current resources

Answer: d
Difficulty: moderate
Page: 129

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MC 6-23 A firm’s value chain of activities is sometimes referred to as
a. horizontal integration
b. competitive parity
c. structural functionality
d. vertical integration

Answer: d
Difficulty: easy
Page: 129

MC 6-24 The scope of a firm is traditionally defined by its

a. work force, assets, and location
b. product line, production capacity, and technological base
c. product market, geography, and vertical integration
d. technology, employee capabilities, and procedures

Answer: c
Difficulty: easy
Page: 129

MC 6-25 The purpose of assessing an organization’s capabilities is to determine what the

a. competition might do in response
b. government might choose to regulate
c. suppliers might try to copy
d. organization might do to leverage an opportunity

Answer: d
Difficulty: moderate
Page: 129

MC 6-26 Supplier relationships, logistics reliability and efficiency, and quality reputation are
examples of the following resource category:
a. operations
b. development
c. financial
d. corporate reputation

Answer: a
Difficulty: moderate
Page: 113

MC 6-27 The Dow Chemical company is the leader in the low-cost production of commodity
chemicals. Dow’s ability to execute this is observed as a
a. core competence
b. distinctive competence

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 c. core skill
d. distinctive skill

Answer: B
Difficulty: moderate
Page: 115

MC 6-28 When considering the VRIO model, understanding how many competing firms possess
specific, valuable resources and capabilities answers the question of
a. value
b. rareness
c. inimitability
d. organization

Answer: b
Difficulty: moderate
Page: 116

MC 6-29 In 2001, Yahoo replaced a significant number of its salesforce, brought in new
leadership and refocused its effort on direct selling. This is an example of link strategy
to the following resource:
a. marketing
b. operations
c. finance
d. human Resources

Answer: a
Difficulty: challenging
Page: 124

MC 6-30 If testing the resource-strategy linkage leads to identifying resource gaps you know
immediately you cannot close, you should then
a. ignore gaps and ensure current business requirements are being addressed
b. recycle the strategy for the next generation of proposals
c. select workable part(s) of the strategy and move forward
d. proceed and adjust gaps going forward

Answer: b
Difficulty: challenging
Page: 126

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True/False

TF 6-31 Resources provide an organization with the potential to act.

Answer: t
Difficulty: easy
Page: 112

TF 6-32 A firm’s logistics capability is an example of an operational resource.

Answer: t
Difficulty: easy
Page: 113

TF 6-33 The value of a resource depends on the context in which it is intended to be used.

Answer: T
Difficulty: moderate
Page: 114

TF 6-34 Resources considered to be valuable give the organization a sustainable competitive

advantage.

Answer: f
Difficulty: moderate
Page: 116

TF 6-35 Resources that are easy to imitate or readily substitutable give the organization a
competitive advantage.

Answer: f
Difficulty: moderate
Page: 116

TF 6-36 Unique historical conditions can give an organization a competitive advantage.

Answer: t
Difficulty: easy
Page: 116

TF 6-37 Interconnected organizational capabilities are seldom sources of competitive

advantage.

Answer: f
Difficulty: moderate
Page: 117

TF 6-38 The social values of an organization can enhance or undermine the resources of the

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 organization.

Answer: t
Difficulty: easy
Page: 117-118

TF 6-39 Resources can drive strategy, but they seldom constrain strategy.

Answer: f
Difficulty: easy
Page: 119

TF 6-40 Innovative strategic proposals built on unique resources are unlikely to fail.

Answer: f
Difficulty: challenging
Page: 120

TF 6-41 Inwardly focused firms that base their strategies on leveraging existing resources are
well positioned to take advantage of changes in customer preferences.

Answer: f
Difficulty: challenging
Page: 120

TF 6-42 One of the factors to consider when evaluating the strategy-resource linkage is the
feasibility of closing any material gaps.

Answer: t
Difficulty: moderate
Page: 120-121

TF 6-43 Qualitative resource requirements are often difficult to predict.

Answer: t
Difficulty: moderate
Page: 122

TF 6-44 A strategy based on superior product features will require a careful analysis of the
development resources of the organization.

Answer: t
Difficulty: moderate
Page: 113 and 123

TF 6-45 Strategic proposals with formidable resource gaps should be abandoned.

Answer: f

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Difficulty: challenging
Page: 123

TF 6-46 Gap-closing initiatives that depend on some form of organization change are riskier
than those entailing additional costs.

Answer: t
Difficulty: challenging
Page: 127

TF 6-47 When an organization is in crisis, it is sometimes easier to advance riskier proposals.

Answer: t
Difficulty: challenging
Page: 127

TF 6-48 Failure to implement a strategic proposal may result in penalties such as loss of
market position.

Answer: t
Difficulty: moderate
Page: 128

TF 6-49 In rapidly changing environments, organizations need resources that can be re-
configured relatively easily.

Answer: t
Difficulty: easy
Page: 128-129

TF 6-50 Strategic alliances are sometimes used to complement the capabilities of the
organization.

Answer: t
Difficulty: moderate
Page: 128-129

TF 6-51 Opportunities and threats emerge from a scan of the internal environment.

Answer: f
Difficulty: moderate
Page: 128-129

TF 6-52 An acquisition could be a mechanism for addressing a resource gap.

Answer: t
Difficulty: moderate
Page: 129

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TF 6-53 The purpose of testing the strategy-resource linkage is to establish where value can be
created.

Answer: t
Difficulty: moderate
Page: 124

TF 6-54 Leveraging current resources is an example of horizontal diversification.

Answer: f
Difficulty: easy
Page: 124

TF 6-55 Testing the strategy-resource linkage identifies what the organization needs to do to
compete.

Answer: f
Difficulty: easy
Page: 124

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