Crafting and Executing Strategy 19th Edition

by Thompson Peteraf Gamble Strickland III

ISBN 0078029503 9780078029509
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Chapter 04

Evaluating a Company's Resources, Capabilities, and

Competitiveness

Multiple Choice Questions

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1. Which of the following is NOT one of the six questions that comprise the task of evaluating a
company's resources and competitive position?

A. What are the company's most profitable geographic market segments?

B. How well is the company's present strategy working?

C. Are the company's cost structure and customer value proposition competitive?

D. Is the company competitively stronger or weaker than key rivals?

E. What strategic issues and problems merit front-burner managerial attention?

2. Which of the following is NOT a component of evaluating a company's resources and

competitive position?

A. Evaluating how well the present strategy is working

B. Scanning the environment to determine a company's best and most profitable customers

C. Assessing whether the company's cost structure and customer value proposition are
competitive

D. Evaluating whether the company is competitively stronger or weaker than key rivals

E. Evaluating if the company is able to seize market opportunities and overcome external
threats to its future well-being

3. Which of the following is not an analytical tool for revealing a company's competitiveness and
for helping to match the strategy to the company's own particular circumstances?

A. Resource and capability analysis

B. SWOT analysis

C. Value chain analysis

D. Bench-pressing analysis

E. Competitive strength analysis

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4. The best indicator of how well a company's strategy is working is whether the company:

A. is achieving its stated financial objectives, its financial performance equates to the
industry average, and market share gains reflect short-term preferences for capacity
maximization.

B. is attentive to its poor execution in functional areas, business goals are stretch, and the
value proposition has a product focus.

C. is geared to initiatives designed to build market share and to promote corporate

responsibility.

D. is achieving its stated financial and strategic objectives, its financial performance is better
than the industry average, and it is gaining customers and increasing market share.

E. All of these.

5. One important indicator of how well a company's present strategy is working is whether:

A. it has more core competencies than close rivals.

B. its strategy is built around at least two of the industry's key success factors.

C. the company is achieving its financial and strategic objectives and whether it is an above-
average industry performer.

D. it is customarily a first-mover in introducing new or improved products (a good sign) or a

late-mover (a bad sign).

E. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or
stronger competitive forces and pressures (a bad sign).

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6. The business strategy is made up of key "functional" strategies except:

A. R&D, technology, and product design strategies.

B. Production and information technology and supply chain management strategies.

C. Human resource and finance strategies.

D. Sales, marketing, and distribution strategies.

E. Alliance and partnerships as well as merger and acquisition growth strategies.

7. Sluggish performance results relative to rivals are a reliable warning sign that the company
has either a weak strategy or poor strategy execution or both. The best way to identify a well-
conceived, well-executed strategy is to determine whether the company is experiencing:

A. a strengthening of its image and reputation among shareholders.

B. a desirable growth rate in new customer acquisition and favorable customer retention
efforts for establishing a strong customer experience.

C. movement in its operating profit margin, satisfactory returns on investable liquid assets,
and elimination of credit access restrictions.

D. positive trends with the relevant cultural factors related to buyer's choices and product
modifications.

E. All of these.

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8. A company's resources and capabilities represent:

A. the firm's net working capital and related determinants for measuring operating
performance and capabilities.

B. the firm's competitive assets, which are considered big determinants of its
competitiveness and ability to succeed in the marketplace.

C. whether the firm has the industry's most efficient value chain.

D. management's source of funding of new strategic initiatives.

E. All of these.

9. A powerful tool for sizing up the company's competitive assets and determining whether they
can provide the foundation necessary for competitive success in the marketplace is termed:

A. Resource and capability analysis

B. SWOT

C. Competitive analysis

D. Financial and asset management analysis

E. Value chain analysis

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10. A productive input or competitive asset that is owned or controlled by a company is termed
a:

A. resource, which is the source of everything enjoyed by the firm.

B. resource, and there are different types of resources at the firm's disposal that vary not only
in kind but in quality as well.

C. resource, which is common to the firm's strategy of facilitating and replicating what they
do best.

D. resource, and it can be tangible or intangible or both and provide substantial benefits to
the firm's asset growth.

E. All of these.

11. The difference between a resource and a capability is:

A. a resource is a productive input or competitive asset, while a capability is the capacity of

the firm to perform some internal activity competently.

B. a resource is a reserve supply or back-up supply function, whereas a capability is the

ability to manage the resource function.

C. a resource is a mechanism used for carrying out some responsibility, while a capability
possesses the qualities needed to do a particular thing.

D. a resource is the firm's fixed assets, while a capability defines whether the firm is
competent to perform some function.

E. All of these.

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12. A useful way to identify a company's resources is to view them as:

A. divided into two main categories, tangible and intangible.

B. every productive input or competitive asset except human assets and intellectual capital,
which are considered capabilities or competencies.

C. physical resources, such as the company's brand, image, and reputation assets.

D. an inventory or a collection of the firm's strengths, weaknesses, opportunities, and threats.

E. All of these.

13. The main reason that listing or categorizing company resources matters is:

A. to ensure all resources are categorized correctly.

B. that the important resources are reported against strategically subjective activities.

C. that the resources are prioritized in terms of value propositions.

D. that the strategically placed resources are manageable.

E. that all the different types of resources are included.

14. Tangible resources do not include:

A. physical resources.

B. financial resources.

C. human assets.

D. technological assets.

E. organizational assets.

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15. Tangible resources include:

A. human assets and intellectual capital, which can include the talent of the work force and
the creativity and innovativeness of certain personnel.

B. reputational assets, which can include the company's reputation for quality, service, and
reliability as well as their reputation for fair dealings with suppliers.

C. relationships with alliances that provide access to technologies, specialized know-how, or

geographic markets.

D. technological assets such as patents, copyrights, and trade secrets.

E. None of these.

16. There are two approaches that can make the process of uncovering and identifying a firm's
capabilities more systematic. They include:

A. resources assessment and the functional approach.

B. strengths valuations and weaknesses estimations.

C. sustainability resource allocation methods and a resource bundling approach.

D. cross-functional analysis and collaborative resource methodology.

E. financial statement analysis and management support analysis.

17. Organizational capabilities are virtually always:

A. knowledge-based, residing in people and in the company's intellectual capital, or in

organizational processes and systems, which embody tacit knowledge.

B. more complex than resources and are exercised only through key personnel.

C. require constant evaluation to ensure cooperative support from management.

D. are easier and less challenging to categorize than resources because there are fewer to be
concerned about.

E. reflective of the industry's driving forces.

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18. A linked and closely integrated set of competitive assets centered around one or more cross-
functional capabilities and closely integrated competitive assets is termed:

A. organizational assets.

B. a resource bundle.

C. a resource capability.

D. functional method compilation.

E. integrated asset advantage.

19. A sustainable competitive advantage is gained:

A. when a company has durable competitive assets that are central to its strategy and
superior to those of rival firms.

B. when a company has sufficient resources to expedite its strategy.

C. when a company realizes its inherent weaknesses are transformable to advantages.

D. when a company can stand out relative to rivals because of resource utilization.

E. All of these.

20. The four tests of a resource's competitive power are often referred to as:

A. the SCIR test, which asks if a resource is sustainable, competitive, internalized, and
reproducible.

B. the competitive advantage sustainable method test.

C. the reliability resources simulation.

D. the VRIN test, which asks if a resource is valuable, rare, inimitable, and non-substitutable.

E. the organizational capability metric analysis.

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21. The spotlight in analyzing a company's resources, internal circumstances, and
competitiveness includes such questions/concerns as:

A. whether the company's present strategy is better than the strategies of its closest rivals
based on such performance measures as earnings per share, ROE, dividend payout ratio,
and average annual increase in the common stock price.

B. whether the company's key success factors are more dominant than the key success
factors of close rivals.

C. whether the company has the industry's most efficient and effective value chain.

D. what are the company's resource strengths and weaknesses and its external opportunities
and threats.

E. what new acquisitions the company would be well advised to make in order to strengthen
its financial performance and overall balance sheet position.

22. Which of the following is NOT pertinent in identifying a company's present strategy?

A. The key functional strategies (R&D, supply chain management, production, sales and
marketing, HR, and finance) a company is employing

B. Management's planned, proactive moves to outcompete rivals (via better product design,
improved quality or service, wider product lines, and so on)

C. The company's mission, strategic objectives, and financial objectives

D. Moves to respond and react to changing conditions in the macro-environment and in

industry and competitive conditions

E. The strategic role of its collaborative partnerships and strategic alliances with others

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23. One important indicator of how well a company's present strategy is working is whether:

A. it has more core competencies than close rivals.

B. its strategy is built around at least two of the industry's key success factors.

C. the company is achieving its financial and strategic objectives and whether it is an above-
average industry performer.

D. it is customarily a first-mover in introducing new or improved products (a good sign) or a

late -mover (a bad sign).

E. it is subject to weaker competitive forces and pressures than close rivals (a good sign) or
stronger competitive forces and pressures (a bad sign).

24. The best quantitative evidence of whether a company's present strategy is working well is:

A. whether the company has more competitive assets than it does competitive liabilities.

B. whether the company is in the industry's best strategic group.

C. the caliber of results the strategy is producing, specifically whether the company is
achieving its financial and strategic objectives and whether it is an above-average industry
performer.

D. whether the company has a shorter value chain than close rivals.

E. whether the company is in the Fortune 500.

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25. Which one of the following is NOT a reliable measure of how well a company's current
strategy is working?

A. Whether the company's sales are growing faster, slower, or about the same pace as the
industry as a whole, thus resulting in a rising, falling, or stable market share

B. Whether it has a larger number of competitive assets than competitive liabilities and
whether it has a superior quality product

C. The firm's image and reputation with its customers

D. Whether its profit margins are rising or falling and how large its margins are relative to
those of its rivals

E. How well the firm stacks up against rivals on technology, product innovation, customer
service, product quality, price, speed in getting newly developed products to market, and
other relevant factors on which buyers base their choice of which brand to purchase

26. A company's resource and capability analysis:

A. represent its core competencies.

B. are the most important parts of the company's value chain.

C. signal whether it has the wherewithal to be a strong competitor in the marketplace.

D. give it an excellent ability to insulate itself against the impact of the industry's driving
forces.

E. combine to give it a distinctive competence.

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27. How are a company's organizational capabilities developed and enabled?

A. By strengthening the traditions that company executives are committed to maintaining

B. Through deployment of a company's resources or some combination of its resources

C. By talking openly about the problems of the present company and determining how new
behaviors will improve performance

D. By shifting from decentralized to centralized decision-making

E. By urging company personnel to search outside the company for work practices and
operating approaches that may be an improvement over what the company is presently
doing

28. Which of the following does NOT represent a company resource?

A. A company's brand

B. A productive input that is owned by the firm

C. Marketing and brand management

D. R&D teams

E. A productive input that is controlled by the firm

29. Which of the following is a clear representation of a company's capability?

A. A company's brand

B. A productive input that is owned or controlled by the firm

C. The capacity of a firm to perform some activity

D. An alliance or collaboration with another firm

E. All of these.

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30. Which of the following most accurately reflect a company's resource strengths?

A. Its human, physical and/or organization assets; its skills and competitive capabilities; and
its achievements or attributes that enhance the company's ability to compete effectively

B. The sizes of its unit sales, revenues, and market share vis-à-vis those of key rivals

C. The sizes of its profit margins and return on investment vis-à-vis those of key rivals

D. Whether it has more primary activities in its value chain than close rivals and a better
overall value chain than these rivals

E. Whether it has more core competencies than close rivals

31. A company's resources can include:

A. a skill, specialized expertise, or competitively important capability.

B. valuable human assets and intellectual capital.

C. an achievement or attribute that puts the company in a position of market advantage.

D. competitively valuable alliances or cooperative ventures.

E. All of these.

32. The BEST example of a company resource is:

A. having higher earnings per share and a higher return on shareholders' equity investment
than key rivals.

B. being totally self-sufficient such that the company does not have to rely in any way on key
suppliers, partnerships with outsiders, or strategic alliances.

C. having proven technological expertise and an ability to churn out new and improved
products on a regular basis.

D. having a larger number of competitive assets than competitive liabilities.

E. having more built-in key success factors than rivals.

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33. Which of the following is NOT a good example of a company's resources?

A. More intellectual capital and better e-commerce capabilities than rivals

B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance product
quality and performance

C. Having higher earnings per share and a higher stock price than key rivals

D. A well-known brand name and enjoying the confidence of customers

E. A lower-cost value chain than rivals

34. If a company doesn't possess standalone resource strengths capable of contributing to

competitive advantage:

A. all potential for competitive advantage is lost.

B. it is unlikely to survive in the marketplace and should exit the industry.

C. it may have a bundle of resources that can be leveraged to develop a distinctive

competence.

D. it is virtually blocked from using offensive strategies and must rely on defensive strategies.

E. its best strategic option is to revamp its value chain in hopes of creating stronger
competitive capabilities.

35. Resource and capability analysis is designed to:

A. ascertain the internal market place of non-distinct divisions of the company.

B. ascertain which of a company's resources and capabilities are competitively valuable.

C. stimulate demand for a product.

D. ascertain to what extent a competitor can sustain a competitive advantage.

E. stimulate economic growth for companies within the industry.

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36. Resource and capability analysis is achieved by:

A. probing the caliber of a firm's competitive assets relative to those of rival firms.

B. achieving price stability.

C. analyzing only internal strengths and weaknesses through a matrix comparison model.

D. cost-benefit analysis of the company's core product sales.

E. performing resource-specific activities within the organization to allocate available capital.

37. A company that has competitive assets that are central to its company strategy and superior
to those of rival firms creates a:

A. long-term derivative strategy.

B. cash flow feasibility analysis.

C. competitive advantage over other companies.

D. resource deployment strategic plan.

E. cost underestimation and benefit overestimation.

38. Whether a resource or capability can support a competitive advantage is determined by

which two components of the four tests of competitive power analysis?

A. Whether the resource or capability is competitively valuable and/or is something that rivals
lack

B. Whether the resource or capability is rare and/or is hard to copy

C. Whether the resource or capability can be trumped and/or is hard to copy

D. Whether the resource or capability is competitively valuable and/or there are good
substitutes available for the resource

E. Whether the resource or capability is hard to copy and/or can be trumped by different
types of resources and capabilities

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39. Which two tests of a resource's competitive power determine whether a company's
competitive advantage can be sustained in the face of active competition?

A. Whether the resource or capability is competitively valuable and/or is something that rivals
lack

B. Whether the resource or capability is rare and/or is hard to copy

C. Whether the resource or capability is easy to copy

D. Whether the resource or capability is competitively valuable and/or there are good
substitutes available for the resource

E. Whether the resource or capability is hard to copy and/or can be trumped by different
types of resources and capabilities

40. The competitive power of a company resource strength or competitive capability hinges on:

A. how hard it is for competitors to copy.

B. whether it is rare and something rivals lack.

C. whether it is really competitively valuable and has the potential to contribute to a

competitive advantage.

D. how easily it can be trumped by the substitute resources/capabilities of rivals.

E. All of these.

41. What two factors inhibit the ability of rivals to imitate a firm's most valuable resources and
capabilities?

A. Social ambiguity and causal uncertainty

B. Social simplicity and causal complexity

C. Collective complexity and causal ambiguity

D. Social complexity and causal ambiguity

E. Social simplicity and causal uncertainty

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42. A competitively valuable resource or capability is a company's:

A. enabling foundation of its business model.

B. equally valuable substitute resource providing a competitive advantage.

C. assessment of the availability of superior substitutes.

D. unsurpassed worker productivity and product quality.

E. unique piecework incentive system, providing a competitive advantage.

43. For a particular company resource/capability to have real competitive power and perhaps
qualify as a basis for competitive advantage, it should:

A. be hard to copy, be rare and something rivals lack, be competitively valuable, and not be
easily trumped by substitute resource strengths possessed by rivals.

B. be something that a company does internally rather than in collaborative arrangements

with outsiders.

C. be patentable.

D. be an industry key success factor and occupy a prime position in the company's value
chain.

E. have the potential for lowering the firm's unit costs.

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44. The competitive power of a company's resource strength is NOT measured by which one of
the following tests?

A. Is the resource rare and something rivals lack?

B. Is the resource strength something that a company does internally rather than in
collaborative arrangements with outsiders?

C. Is the resource strength easily trumped by the substitute resources/capabilities of rivals?

D. Is the resource strength hard to copy?

E. Is the resource strength competitively valuable, having the potential to contribute to a

competitive advantage?

45. A company requires a dynamically evolving portfolio of resources and capabilities to:

A. assist the strategic planning team in overall direction.

B. sustain complex manufacturing systems as a strategic recall.

C. sustain its competitiveness and help drive improvements in its performance.

D. sustain benefits of high market share as an interest in growth strategies.

E. transform knowledge into a management style supporting competition in a globally diverse

world.

46. For a company to have competitively potent resources and capabilities, they must:

A. be in sync with changes in the company's own strategy.

B. be in sync with its efforts to achieve a resource-based competitive advantage.

C. fully support company efforts to attract customers.

D. combat competitors' newly launched offensives to win bigger sales and market shares.

E. All of these.

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47. Which of the following is NOT an example of a company's dynamic capability?

A. A capacity to improve existing resources and capabilities

B. Upgrades to R&D resources to drive product innovation

C. A capacity to add new resources and capabilities to the competitive asset portfolio

D. An ability to replace degraded resources with acquired capabilities

E. An ability to keep antiquated resources by disregarding innovative capabilities

48. A dynamic capability:

A. is the ongoing capacity to modify existing resources and capabilities to create new ones.

B. is the improvement evaluation process for eliminating waste in the firm.

C. is the functional and operating resources management process.

D. is the ongoing capability to understand and establish rival commitment to resource

alignment.

E. All of these.

49. Identifying and assessing a company's resource strengths and weaknesses and its external
opportunities and threats is called:

A. a SWOT analysis.

B. a competitive asset/liability analysis.

C. a competitive positioning analysis.

D. a strategic resource assessment.

E. a company resource mapping.

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50. SWOT analysis is a simple but powerful tool for:

A. gauging whether a company has a cost-competitive value chain.

B. sizing up a company's resources and capabilities, strengths and deficiencies, its market
opportunities, and the external threats to its future well-being.

C. evaluating whether a company is in the most appropriate strategic group.

D. determining a company's competitive strength vis-à-vis close rivals.

E. identifying the market segments in which a company is strongly positioned and weakly
positioned.

51. A company's strengths are important because:

A. they pave the way for establishing a low-cost advantage over rivals.

B. they represent the quality of its competitive assets that enhance its competitiveness in the
marketplace.

C. they provide extra muscle in helping lengthen the company's value chain.

D. they give it competitive protection against the industry's driving forces.

E. they provide extra organizational muscle in turning a core competence into a key success
factor.

52. When an activity becomes something a company has learned to perform proficiently and
capably, it is said to have:

A. a competence.

B. a competitive advantage over rivals.

C. a key value chain proficiency.

D. a distinctive capability.

E. a resource advantage.

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53. When a company has a proficiency in performing a strategically and competitively important
value chain activity better than its rivals, it is said to have:

A. a company competence.

B. a core competence.

C. a distinctive competence

D. a key value chain proficiency.

E. a competitive advantage over rivals.

54. When a company is good at performing a particular internal activity, it is said to have:

A. a competitive advantage over rivals.

B. a competitive capability.

C. a distinctive competence.

D. a core competence.

E. a company competence.

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55. The difference between a company competence and a core competence is that:

A. a company competence refers to a company's best-executed functional strategy, while a

core competence refers to a company's best-executed business strategy.

B. a company competence refers to a company's strongest resource, whereas a core

competence refers to a company's lowest-cost and most efficiently performed value chain
activity.

C. a company competence is a competitively relevant activity that a firm performs especially

well relative to other internal activities, whereas a core competence is an activity that a
company has learned to perform proficiently.

D. a company competence represents real proficiency in performing an internal activity,

whereas a core competence is a competitively and strategically relevant activity.

E. a core competence usually resides in a company's technology and physical assets,

whereas a company competence usually resides in a company's human assets and
intellectual capital.

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56. The difference between a core competence and a distinctive competence is that:

A. a distinctive competence refers to a company's strongest resource or competitive

capability, while a core competence refers to a company's lowest-cost and most efficiently
executed value-chain activity.

B. a core competence usually resides in a company's base of intellectual capital, whereas a

distinctive competence stems from the superiority of a company's physical and tangible
assets.

C. a core competence is a competitively and strategically relevant activity that a firm

performs well compared to its other activities, whereas a distinctive competence is a
competitively relevant activity a firm performs well compared to other rival firms.

D. a core competence represents a resource strength, whereas a distinctive competence is

achieved by having more resource strengths than rival companies.

E. a core competence usually resides in a company's technology and physical assets,

whereas a distinctive competence usually resides in a company's know-how, expertise,
and intellectual capital.

57. A core competence:

A. retracts from a company's arsenal of competitive capabilities and competitive assets and
is not a resource strength considered to be genuine.

B. is typically results-based, residing in a company's tangible physical assets on the balance

sheet.

C. is often grounded in a single department's set of knowledge and expertise.

D. is an activity that a firm performs proficiently that is also central to its strategy and
competitive success.

E. All of these.

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58. A core competence:

A. is a more competitively valuable strength than a competence because of the key role the
activities play in the company's strategy.

B. typically has competitive value, the amount of which is reflected in the physical and
tangible assets on a company's balance sheet.

C. usually is grounded in the technological expertise of a particular department or work

group.

D. is more difficult for rivals to copy than a distinctive competence.

E. refers to a company's lowest-cost and most efficiently executed value-chain activity.

59. When a company performs a particular competitively important activity truly well in
comparison to its rivals, it is said to have:

A. a company competence.

B. a strategic resource.

C. a distinctive competence.

D. a core competence.

E. a key success factor.

60. Which of the following does NOT represent a potential core competence?

A. Skills in manufacturing a high-quality product at a low cost

B. Know-how in creating and operating systems for cost-efficient supply chain management

C. The capability to fill customer orders accurately and swiftly

D. Having a wider product line than rivals

E. The capability to speed new or next-generation products to the marketplace

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61. A distinctive competence:

A. is a competitively important activity that a company performs better than its rivals.

B. gives a company a competitively valuable capability that is unmatched by rivals.

C. is a basis for sustainable competitive advantage.

D. qualifies as a superior internal strength.

E. All of these.

62. Which one of the following is inaccurate as concerns a distinctive competence?

A. A distinctive competence is a competitively important activity that a company performs

better than its rivals.

B. A distinctive competence is typically less restrictive for rivals to copy than a core
competence.

C. A distinctive competence can be a basis for sustainable competitive advantage.

D. A distinctive competence qualifies as a superior internal strength.

E. A distinctive competence enables delivering stand-out value to customers (in the form of
lower prices, better product performance, or superior service).

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63. The competitive power of a company's core competence or distinctive competence depends
on:

A. whether it helps differentiate a company's product offering from the product offerings of
rival firms.

B. how hard it is to copy and how easily it can be trumped by substitute resource strengths
and competitive capabilities of rivals.

C. whether customers are aware of the competence and view the competence positively
enough to boost the company's brand-name reputation.

D. whether the competence is one of the industry's key success factors.

E. whether the competence is technology-based or based on superior marketing know-how.

64. A company resource weakness or competitive deficiency:

A. represents a problem that needs to be turned into a strength because weaknesses prevent
a firm from being a winner in the marketplace.

B. causes the company to fall into a lower strategic group than it otherwise could compete in.

C. prevents a company from having a distinctive competence.

D. usually stems from having a missing link or links in the industry value chain.

E. are shortcomings that constitute competitive liabilities.

65. A company's resource weaknesses can relate to:

A. inferior or unproven skills, expertise, or intellectual capital in competitively important parts

of the business.

B. something that it lacks or does poorly in comparison to rivals.

C. deficiencies in competitively important physical, organizational, or intangible assets.

D. missing or competitively inferior capabilities in key areas.

E. All of these.

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66. Sizing up a company's complement of resource strengths and weaknesses:

A. is akin to constructing a "strategic balance sheet" where strengths represent competitive

assets and weaknesses represent competitive liabilities.

B. is called benchmarking.

C. is called competitive strength assessment.

D. is focused squarely on ascertaining whether the company has more/less resource

strengths than weaknesses.

E. is called company resource mapping.

67. The external market opportunities which are MOST relevant to a company are the ones that:

A. can increase market share.

B. are reinforced by the overall business strategy and where the business model is
appropriate.

C. match up well with the firm's competitive assets, offer the best prospects for growth and
profitability, and present the most potential for competitive advantage.

D. qualify to correct its internal weaknesses and resource deficiencies.

E. are relevant for defending against the external threats to its well-being.

68. The market opportunities most relevant to a particular company are those that:

A. offer the best prospects for growth and profitability.

B. provide a strong defense against threats to the company's profitability.

C. embrace the most potential for product innovation.

D. provide avenues for taking market share away from close rivals.

E. hold the most potential to reduce costs.

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69. Which of the following BEST describes the market opportunities that tend to be most relevant
to a particular company?

A. Those market opportunities that provide avenues for taking market share away from close
rivals and enhance a company's image as a leader in product innovation and product
quality

B. Those market opportunities that offer the company a chance to raise entry barriers

C. Those market opportunities that help promote greater diversification of revenues and
profits

D. Those market opportunities that match up well with the firm's competitive assets, offer the
best prospect for growth and profitability, and present the most potential for competitive
advantage

E. Those market opportunities that help correct a company's biggest weaknesses and
competitive deficiencies

70. Companies that seize opportunities in the marketplace are usually those that have been:

A. actively waiting, staying alert with diligent market reconnaissance and preparing internally
to capitalize on potential opportunities.

B. the market winners in the past, because they have a proven record and are the best
competitively.

C. adopting every opportunity for understanding that not all opportunities will be successful
and rewarded commensurately.

D. first movers willing to accept business risk.

E. All of these.

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71. Which of the following is NOT an example of an external threat to a company's future
profitability?

A. The lack of a distinctive competence

B. New legislation that entails burdensome and costly government regulations

C. Slowdowns in market growth

D. More intense competitive pressures

E. The introduction of restrictive trade policies in countries where the company does
business

72. Which of the following is NOT an example of a threat to a company's future profitability and
well-being?

A. The likely entry of potent new competitors

B. The lack of a well-known brand name with which to attract new customers and help retain
existing customers

C. Shifts in buyer needs and tastes away from the industry's product

D. Costly new regulatory requirements

E. Growing bargaining power on the part of the company's major customers and major
suppliers

73. External threats may pose various degrees of adversity upon the company and can surface
from many sources and examples, EXCEPT for:

A. the surfacing of cheaper or better technologies.

B. the entry of lower-cost foreign competitors and restrictive foreign trade policies.

C. new burdensome regulations.

D. demographic shifts that can curtail product innovation.

E. rising prices on key inputs (such as energy costs).

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74. SWOT analysis:

A. provides a measure of the relative strength of resources in the company's value chain in
relation to rivals positioning.

B. is a tool for benchmarking whether a firm's strategy is closely matched to industry key
success factors.

C. reveals whether a company is competitively stronger than its closest rivals.

D. provides a good overview and conclusions about the company's overall situation.

E. identifies the reasons why a company's strategy is or is not working very well.

75. In order to gain value from the SWOT analysis, it is important that the company address the
two most important parts of a SWOT analysis, which are:

A. identifying the resource strengths and resource weaknesses.

B. understanding the relationship between the strengths, weaknesses, opportunities, and

threats and establishing criteria for remedying the company's shortfalls.

C. drawing conclusions from the SWOT listings about the company's overall situation and
translating these conclusions into strategic actions.

D. clarifying the firm's current position and ensuring the SWOT listings are complete.

E. establishing a game plan to capitalize on the company's strengths and leverage the
weaknesses in light of the available opportunities.

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76. The key questions stemming from the SWOT listings that can reveal relevant substance
about the company's overall situation are as follows, except for:

A. Are the company's internal strengths and competitive assets sufficiently strong to enable it
to compete successfully?

B. Does the company have attractive market opportunities that are well suited to its
strengths?

C. Does the company have threats that are overpowering the firm's competitive assets?

D. Are the company's activities and dynamic capabilities adequate for capitalizing on the
opportunities?

E. All of these.

77. A company's internal strengths should always serve as the basis of strategy because:

A. placing heavy reliance on the company's best competitive assets is the soundest route to
attracting customers and competing successfully against rivals.

B. they represent what the company considers relevant despite the prevailing opportunities.

C. they can overpower the impact of important external threats.

D. they form the foundation of the firm's position in the marketplace.

E. All of these.

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78. How much attention a company should devote to defending against external threats hinges
on primarily on:

A. whether offensive moves are feasible, cost-effective, and represent the best use of
company resources.

B. how serious, relevant, and timely the threats are to the company.

C. the degree of vulnerability the company has to the threat.

D. the compatibility of the pending threats to the company's competitive assets.

E. None of these.

79. The payoff of doing a thorough SWOT analysis is:

A. identifying whether the company's value chain is cost-effective vis-à-vis the value chains
of rivals.

B. helping strategy-makers benchmark the company's resource strengths against industry

key success factors.

C. enabling a company to assess its overall competitive position relative to its key rivals.

D. revealing whether a company's market share, measures of profitability, and sales compare
favorably or unfavorably vis-à-vis key competitors.

E. assisting strategy-makers in crafting a strategy that is well-matched to the company's

resources and capabilities, its market opportunities, and the external threats to its future
well-being.

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80. In doing SWOT analysis, which one of the following is NOT an example of a potential
resource weakness or competitive deficiency that a company may have?

A. Less productive R&D efforts than rivals

B. Having a single, unified functional strategy instead of several distinct functional strategies

C. Lack of a strong brand image and reputation (as compared to rivals)

D. Higher overall unit costs relative to rivals

E. Too narrow a product line relative to rivals

81. In doing SWOT analysis and trying to identify a company's market opportunities, which of the
following is NOT an example of a potential market opportunity that a company may have?

A. Serving additional customer groups or market segments

B. Growing buyer preferences for substitutes for the industry's product

C. Acquiring rival firms or companies with attractive technological expertise or capabilities

D. Expanding into new geographic markets

E. Openings to win market share away from rivals

82. The primary lesson stemming from a SWOT analysis is that a company's strategy should:

A. leverage resource strengths, capitalize on market opportunities, overcome important

weaknesses, and defend against external threats.

B. be aimed at opportunities that offer the best potential for improved profitability.

C. seek aggressively to defend against those threats to the company's immediate profitability.

D. be designed to place heavy demands on areas where the company has proven
competencies to meet the threats head-on.

E. concentrate on making the SWOT's four lists relevant for strategic discussion and
planning.

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83. Which one of the following is NOT part of conducting a SWOT analysis?

A. Identifying a company's resource strengths and competitive assets

B. Benchmarking the company's resource strengths and competitive capabilities against

industry key success factors

C. Identifying a company's market opportunities

D. Drawing conclusions about the company's overall business situation—what is attractive

and what is unattractive about the company's circumstances

E. Translating the results of the analysis into actions for improving the company's strategy
and market position

84. Two important parts of SWOT analysis are:

A. pinpointing the company's competitive assets and pinpointing its competitive liabilities.

B. identifying the company's resource strengths and identifying the company's best market
opportunities.

C. identifying the external threats to a company's future profitability and pinpointing how
many market opportunities it has.

D. drawing conclusions from the SWOT listings about the company's overall situation and
translating these into strategic actions to better match the company's strategy to its
resource strengths and market opportunities, to correct the important weaknesses, and to
defend against external threats.

E. making accurate lists of the company's strengths, weaknesses, opportunities, and threats,
and then using these lists as a basis for ascertaining how well the company's strategy is
working.

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85. The steps of SWOT analysis are:

A. identifying the company's resource strengths and weaknesses and its opportunities and
threats, drawing conclusions about the company's overall situation, and translating the
conclusions into strategic actions to improve the company's strategy.

B. pinpointing the company's competitive assets, pinpointing its competitive deficiencies, and
determining whether it enjoys a competitive advantage.

C. determining whether the company has more competitive assets than competitive liabilities,
determining whether the company has good market opportunities, and evaluating the
seriousness of the threats to the company's future profitability.

D. matching the company's strategy to its resource strengths, correcting the company's
important resource weaknesses, and identifying the company's best market opportunities.

E. benchmarking the company's strengths and weaknesses against those of key rivals,
identifying its market opportunities and the external threats it faces, and determining the
company's potential for establishing a competitive advantage over rivals.

86. Which one of the following is NOT something that can be gleaned from a company's SWOT?

A. How to improve a company's strategy by using company strengths and capabilities as

cornerstones for its strategy

B. Which market opportunities are best suited to a company's strengths and capabilities

C. Which resource weaknesses and deficiencies need to be corrected so as to better enable

the pursuit of important market opportunities and to better defend against certain external
threats

D. How to turn a core competence into a distinctive competence

E. Whether any of the company's resource strengths can be used to help lessen the impact of
external threats

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87. The higher a company's costs are above those of close rivals, the more:

A. competitively vulnerable the company becomes.

B. a net profit margin analysis becomes vital.

C. its value proposition remains attractive.

D. important cost-tracking becomes.

E. All of these.

88. One of the most telling signs of whether a company's market position is strong or precarious
is:

A. whether its product is strongly or weakly differentiated from rivals.

B. whether its prices and costs are competitive with those of key rivals.

C. whether it has a lower stock price than key rivals.

D. the opinions of buyers regarding which seller has the best product quality and customer
service.

E. whether it is in a bigger or smaller strategic group than its closest rivals.

89. A company is less competitively vulnerable when:

A. the company has well-known profit levels.

B. the company's stock price is the highest.

C. the company's management is recognized as being strategic thinkers.

D. the company can offer a greater amount of customer value profitability relative to close
rivals.

E. the company has less financial risk than rivals.

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90. Two analytical tools useful in determining whether a company's prices and costs are
competitive are:

A. SWOT analysis and key success factor analysis.

B. SWOT analysis and benchmarking.

C. value chain analysis and benchmarking.

D. competitive position assessment and competitive strength assessment.

E. driving forces analysis and SWOT analysis.

91. A company's value chain identifies:

A. the steps it goes through to convert its net income into value for shareholders.

B. the primary activities and related support activities it performs in creating customer value.

C. the series of steps it takes to get a product from the raw materials stage into the hands of
end users.

D. the activities it performs in transforming its competencies into distinctive competencies.

E. the competencies and competitive capabilities that underpin its efforts to create value for
customers and shareholders.

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92. A company's value chain consists of two broad categories of activities:

A. consists of the primary activities that it performs in seeking to deliver value to

shareholders in the form of higher dividends and a higher stock price.

B. depicts the internally performed activities associated with creating and enhancing the
company's competitive assets.

C. consists of two broad categories of activities: the primary activities that create customer
value and the requisite support activities that facilitate and enhance the performance of
the primary activities.

D. concerns the basic process the company goes through in performing R&D and developing
new products.

E. consists of the series of steps a company goes through to develop a new product, get it
produced and distributed into the marketplace, and then start collecting revenues and
earning a profit.

93. With its focus on value-creating activities, the value chain:

A. is an ideal tool for examining how a company delivers on its customer value proposition.

B. preserves cost structure advantages.

C. provides identification of customer differentiation shortfalls.

D. is a recognized method for classifying the relevant support activities that are relevant to
operations tasks.

E. is crucial in understanding cost disadvantages and economies of scale and scope

shortfalls.

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94. The primary purpose of value chain analysis is to:

A. segregate the company's operations into different types of functions.

B. facilitate a comparison activity-by-activity of how effectively and efficiently a company

delivers value to its customers, relative to its competitors.

C. eliminate unproductive and obsolete functionality in the firm's operating strategy.

D. compare cost structure efficiency with the operating effectiveness of rivals to determine
the strategy content of rival firms.

E. All of these.

95. Identifying the primary activities and support activities that comprise a company's value
chain:

A. indicates whether a company's resource strengths will ultimately translate into greater
value for shareholders.

B. reveals whether a company's resource strengths are well-matched to the industry's key
success factors.

C. is the first step in understanding a company's internal cost structure since each activity in
the value chain gives rise to costs.

D. is called benchmarking.

E. is called resource value analysis.

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96. The value chains of rival companies:

A. tend to be essentially the same—any differences are typically minor.

B. can differ substantially, reflecting differences in the evolution of each company's own
particular business, differences in strategy, and differences in the approaches being used
to execute strategy.

C. are fairly similar or fairly different, depending on how many activities are performed
internally and how many are outsourced.

D. can be either fairly similar or fairly different, depending on the extent to which each
company's primary and support activities are comprised of fixed-cost activities and
variable cost activities.

E. are fairly similar except when rival companies have quite different product designs.

97. The three main areas in the value chain where significant differences in the costs of
competing firms can occur include:

A. age of plants and equipment, number of employees, and advertising costs.

B. operating-level activities, functional area activities, and line of business activities.

C. the nature and makeup of their own internal operations, the activities performed by
suppliers, and the activities performed by wholesale distribution and retailing allies.

D. human resource activities (particularly labor costs), vertical integration activities, and
strategic partnership activities.

E. variable cost activities, fixed cost activities, and administrative activities.

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98. Activity-based costing is used to evaluate a company's cost-competitiveness and:

A. determine whether the value chains of rival companies are similar or different.

B. benchmark the costs of primary value chain activities against the costs of the support
value chain activities.

C. determine the costs of each primary and support activity comprising a company's value
chain and thereby reveal the nature and makeup of a company's internal cost structure.

D. determine the costs of each strategic action a company initiates.

E. None of these.

99. Activity-based cost accounting aims at:

A. making cross-company comparisons of the costs of each value chain activity.

B. dividing all company expenses into two categories: activities whose costs are variable and
activities whose costs are fixed.

C. determining the costs of each activity comprising a company's value chain by establishing
expense categories for specific value chain activities and assigning costs to the activity
responsible for creating the cost.

D. determining the costs of each strategic action a company initiates.

E. None of these.

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100.Activity-based costing:

A. is an accounting system that assigns a company's expenses to whichever activity in a

company's value chain is responsible for creating the cost.

B. involves using benchmarking techniques to develop cost estimates for the value chain
activities of each major rival.

C. is a powerful tool for identifying the different pieces of a company's value chain and
classifying them as primary activities and support activities.

D. involves determining which value chain activities represent variable costs and which
represent fixed costs.

E. is a tool for identifying the activities that cause a company's product to be strongly
differentiated from the products of rivals.

101.Costs and price differences among competing companies can have origins in activities
performed by:

A. the company's internally performed activities (its own value chain) compared to the cost
structure of the internally performed activities of rival companies.

B. value chains of the company's suppliers.

C. value chains of a company's distributors and retail dealers and forward channel allies.

D. the company's internally performed activities (its own value chain), but also on costs in
the value chain of its suppliers and distribution channel allies.

E. whether the company has a longer or shorter value chain than its close rivals.

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102.The value chains of company distribution channel partners are relevant because:

A. their costs and margins are part of the price the ultimate consumer pays.

B. the activities they perform affect sales volumes and customer satisfaction.

C. they have a competitive interest in promoting higher sales volumes and customer
satisfaction.

D. they perform primary and support activities that are related to the entire value chain
system.

E. All of these apply.

103.Determining whether a company's overall prices and costs are competitive requires an entire
value chain analysis, which typically demands:

A. looking at the costs of a company's competitively relevant suppliers and forward channel
allies (distributors/dealers).

B. considering the costs of a company's internally performed activities.

C. the use of benchmarking the costs in a company's value chain system (the costs of its
suppliers, its internally performed activities, the costs of its distributors/dealers) against
the costs of the value chain systems employed by rival firms.

D. the use of activity-based cost accounting.

E. All of these.

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104.Benchmarking involves:

A. comparing how different companies perform various value chain activities and then
making cross-company comparisons of the costs and effectiveness of these activities.

B. checking whether a company has achieved more of its financial and strategic objectives
over the past five years relative to the other firms it is in direct competition with.

C. studying whether a company's resource strengths are more/less powerful than the
resource strengths of rival companies.

D. studying how a company's competitive capabilities stack up against the competitive

capabilities of selected companies known to have world-class competitive capabilities.

E. comparing the best practices in one industry against the best practices in another
industry.

105.A much-used and potent managerial tool for determining whether a company performs
particular functions or activities in a manner that represents "the best practice" when both
cost and effectiveness are taken into account is:

A. competitive strength analysis.

B. activity-based costing.

C. resource cost mapping.

D. SWOT analysis.

E. benchmarking.

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106.Which of the following is NOT one of the objectives of benchmarking?

A. To identify the best practices in performing various value chain activities

B. To learn how best practice companies achieve lower costs or better results in performing
benchmarked activities

C. To help construct a company value chain and identify which activities are primary and
which are support activities

D. To develop cross-company comparisons of the costs of performing specific value chain

activities

E. To take actions to improve a company's cost competitiveness when benchmarking reveals

that its costs and results of performing an activity are not as good as what other
companies have achieved

107.Benchmarking provides a company with which of the following?

A. Hard evidence of cost competitiveness

B. Proof of resource availability

C. A company strategy

D. Verification of total cost ownership

E. Improvements to internal processes

108.The most difficult part of benchmarking is:

A. the decision of whether to do it at all.

B. how to gain access to information regarding rivals' practices and costs.

C. when to initiate the process.

D. what information to utilize in the analysis process.

E. when to stop the process and move forward with strategy.

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109.Obtaining cost information is a primary difficulty associated with benchmarking. The
following are typical sources for collecting information, except:

A. from published reports, industry research firms, and trade groups.

B. from talking to knowledgeable industry leaders.

C. from field trips to the facilities of competitors or non-competing firms.

D. from independent firms and consulting firms to gather best practices and comparative
cost data without identifying competing firms.

E. All of these.

110.Which of the following areas within a company's total value chain system can managers use
to improve efficiency and effectiveness?

A. A company's own internal activity segments, the suppliers' part, and the forward
(distribution) channel portion of the value chain system

B. A company's reinforced activities identified as efficiency measures for improved

effectiveness

C. A company's comparative disadvantages schedule identified with benchmarking practices

D. None of these.

E. All of these.

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111.An option for NOT remedying an internal cost disadvantage includes:

A. investing in productivity-enhancing, cost-saving technological improvements.

B. redesigning the product or some of its components to facilitate speedier and more
economical manufacture or assembly.

C. implementing the use of best practices throughout the company, particularly for high-cost
activities.

D. eliminating some cost-producing activities altogether by revamping the value chain.

E. investing in best practices.

112.Which of the following is NOT a good option for trying to remedy high internal costs vis-à-vis
rivals' firms?

A. Finding ways to detour around activities or items where costs are high

B. Redesigning the product or some of its components to permit more economical

manufacture or assembly

C. Implementing aggressive strategic resource mapping to permit across-the-board cost

reduction

D. Outsourcing high-cost activities to vendors or contractors who can perform them more
economically

E. Relocating high-cost activities (like manufacturing) to geographic areas (like China or

Latin America or Eastern Europe) where they can be performed more cheaply

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113.A company's strategic options for remedying cost disadvantages in internally performed value
chain activities do not include:

A. revamping its value chain to eliminate or bypass some cost-producing activities

(particularly low value-added activities).

B. implementing the use of best practices, particularly for high-cost activities.

C. investing in productivity-enhancing, cost-saving technological improvements.

D. switching to activity-based costing.

E. outsourcing the performance of high-cost activities to vendors that can perform them
more cheaply.

114.To improve the effectiveness of its value proposition and enhance differentiation, firms must
adopt certain approaches except:

A. implement the use of best practices for quality improvement, especially high-value
activities important to the customer

B. adopt best practices and technologies that spur innovation

C. reallocate resources to activities that address buyers' most important purchase criteria

D. adopt best practices for marketing, brand management, and enhancing customer
perceptions

E. adopt outsourcing capabilities to add value to the high-cost activities

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115.The options for remedying a supplier-related cost disadvantage include:

A. pressuring suppliers for more favorable prices, switching to lower-priced substitute inputs,
and collaborating closely to identify mutual cost-saving opportunities.

B. instituting forward vertical integration.

C. shifting into the production of substitute products.

D. shifting from a low-cost leadership strategy to a differentiation or focus strategy.

E. cutting selling prices and trying to win a bigger market share.

116.Which of the following is NOT an option for remedying a supplier-related cost disadvantage?

A. Integrate backward into the business of high-cost suppliers in an effort to reduce the
costs of the items being purchased.

B. Negotiate more favorable prices with suppliers.

C. Collaborate closely with suppliers to identify mutual cost-saving opportunities.

D. Switch to lower-priced substitute inputs.

E. Persuade forward channel allies to implement best practices.

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117.Which of the following is NOT an option for remedying a cost disadvantage associated with
activities performed by forward channel allies (wholesale distributors and retail dealers)?

A. Change to a more economical distribution strategy such as putting more emphasis on

cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating
forward into company-owned retail outlets

B. Enhance differentiation through activities such as cooperative advertising) at the forward

end of the value chain

C. Pressure distributors/dealers and other forward-channel allies to reduce their costs and
markups

D. Insisting on across-the-board cost cuts in all value chain activities—those performed by

suppliers, those performed in-house, and those performed by distributors/dealers

E. Collaborate with forward channel allies to identify win-win opportunities to reduce costs

118.The means to enhance differentiation through activities at the forward end of the value chain
system include:

A. Engaging in cooperative advertising and promotions

B. Creating exclusive arrangements with downstream sellers or other mechanisms that

increase their incentives for enhanced-delivery customer value

C. Creating and enforcing standards for downstream activities

D. Assisting in training channel partners in business practices

E. Enhancing cost-reducing activities with defensive functionality designed to create

incentives

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119.A company that does a first-rate job of managing its value chain activities relative to
competitors:

A. is likely to have more distinctive competencies than rivals.

B. stands a good chance of profiting from its competitive advantage.

C. is almost certainly going to have a longer and more profitable value chain.

D. usually has strong proficiencies in activity-based costing and benchmarking.

E. usually has the fewest primary activities and the lowest costs in the industry.

120.Value chain analysis and benchmarking in comparison to that of rivals:

A. is one of the most useful ways a company can uncover and strengthen competitive
advantages.

B. allows a company to drive the impact of the five competitive forces.

C. is one of the best ways for a company to avoid being impacted by the industry's driving
forces.

D. allows a company to move into a higher strategic group.

E. helps neutralize external threats to a company's future business prospects.

121.A company's value-creating activities can offer a competitive advantage in one of two ways:

A. contribute greater efficiency and lower costs and provide a basis for differentiation.

B. contribute expense savings and enhance product exclusivity.

C. reduce cost disadvantages and market price anomalies.

D. contribute customer experience value and conserve operating functionality.

E. contribute to competitive assets and continue distinctive competencies.

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122.For a company to translate its performance of value chain activities into competitive
advantage, it must:

A. undertake ongoing and persistent efforts to be cost-efficient and develop differentiation

advantages.

B. have more core competencies than rivals.

C. have at least three distinctive competencies.

D. have competencies that allow it to produce the highest-quality product in the industry.

E. have more competitive assets than competitive liabilities.

123.To build a competitive advantage by out-managing rivals in performing value chain activities,
a company must:

A. position itself in the industry's more favorably situated strategic group.

B. develop resource strengths that will enable it to pursue the industry's most attractive
opportunities.

C. develop core competencies and maybe a distinctive competence that rivals don't have or
can't quite match and that are instrumental in helping it deliver attractive value to
customers or else be more cost-efficient in how it performs value chain activities such
that it has a low-cost advantage.

D. outsource all of its value chain activities to world-class vendors and suppliers.

E. eliminate its resource weaknesses.

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124.Resource analysis is a tool:

A. based on cross-department combinations of intellectual capital and expertise.

B. for identifying a company's superior resources and capabilities, and such value can only be
assessed objectively after they are employed.

C. based on a standalone resource strength such as technological expertise.

D. for analyzing a company's most efficiently executed value-chain activity.

E. for identifying industry key success factors that can provide a company with a core
competence that rivals cannot effectively imitate.

125.When companies engage in value-creating activities, they do so by:

A. focusing on exploiting a company's best-executed operating strategy.

B. concentrating on efficient performance of the company's primary value chain activities.

C. concentrating on minimizing the costs associated with the design of a product or service.

D. drawing on specific company resources and capabilities that underlie and enable the
activity.

E. focusing on working with forward-channel allies to develop capabilities to outmatch the

capabilities of rivals.

126.The road to competitive advantage begins with management's efforts:

A. to build organizational expertise in performing certain competitively important value chain

activities.

B. to understand the value chain activities providing opportunity for growth.

C. to build value-creating activities all along the value chain.

D. to give superiority over rivals in performing tasks and activities extremely well.

E. All of these.

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127.The value of doing competitive strength assessment is to:

A. determine how competitively powerful the company's core competencies are.

B. learn if the company's market opportunities are better than those of its rivals.

C. learn whether a company has a distinctive competence.

D. learn how the company ranks relative to rivals on each of the important factors that
determine market success and ascertain whether the company has a net competitive
advantage or disadvantage vis-à-vis key rivals.

E. determine whether a company's resource strengths are sufficient to allow it to earn bigger
profits than rivals.

128.Understanding where the company is competitive requires:

A. determining whether a company has a cost-effective value chain.

B. developing quantitative strength ratings for the company and key rivals on each industry
key success factor and each pivotal resource, capability, and value chain activity.

C. identifying a company's core competencies and distinctive competencies (if any).

D. analyzing whether a company is well positioned to gain market share and be the industry's
profit leader.

E. developing quantitative measures of a company's chances for future profitability.

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129.Assigning a weight to each measure of competitive strength assessment is generally
analytically superior because:

A. a weighted ranking identifies which competitive advantages are most powerful.

B. an unweighted ranking doesn't discriminate between companies with high and low market
shares.

C. it singles out which competitor has the most competitively potent core competencies.

D. weighting each company's overall competitive strength by its percentage share of total
industry profits produces a more accurate measure of its true competitive strength.

E. all of the various measures of competitive strength are not equally important.

130.Competitive strength can be determined by assigning measures based on perceived

importance because:

A. it provides a more accurate assessment of the strength of competitive forces.

B. it eliminates the bias introduced for those firms having large market shares.

C. the different measures of competitive strength are unlikely to be equally important.

D. the results provide a more reliable measure of what competitive moves rivals are likely to
make next.

E. weighting each company's overall competitive strength by the size of its market share
produces a more accurate measure of its true competitive strength.

131.In a weighted competitive strength assessment, the sum of the weights should add up to:

A. 100%.

B. 1.0

C. 10.

D. 100.

E. None of these.

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132.In a weighted competitive strength analysis, each strength measure is assigned a weight
based on:

A. its percentage share of total industry revenues.

B. the importance of each competitive strength measure in building a sustainable competitive

advantage.

C. its perceived importance in determining a company's competitive success in the

marketplace.

D. its percentage share of total industry profits.

E. what it takes to provide better analytical balance between the companies with high ratings
and the companies with low ratings and thus get the sum of the weights to add up to 1.0.

133.A higher company's overall weighted strength rating does not signal:

A. greater implied net competitive advantage

B. stronger overall competitiveness versus rivals.

C. weaker overall competitiveness versus rivals.

D. the possession of a competitive advantage.

E. None of these.

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134.Calculating competitive strength ratings for a company and its rivals using the industry's
most telling measures of competitive strength or weakness:

A. is a way of determining which competitor has the highest overall competitive advantage in
the marketplace and which competitor is faced with the lowest overall competitive
disadvantage.

B. is the most reliable indicator of which industry member has the highest overall product
quality.

C. is a powerful way of revealing which competitors are in the best and worst strategic
groups.

D. is the most reliable indicator of which industry member has the lowest overall costs and is
the low-cost leader.

E. pinpoints which industry rivals are most insulated from the industry's driving forces.

135.Quantitative measures of a company's competitive strength:

A. signal which competitor has the most distinctive competencies and which competitor has
the fewest.

B. provide useful indicators of how a company compares against key rivals, factor by factor
and capability by capability—thus indicating whether the company has a net overall
competitive advantage or disadvantage against each rival.

C. reveal which competitors are in the best and worst strategic groups.

D. show which industry rival has the best overall market opportunities and which competitor
has the poorest market opportunities.

E. pinpoint which industry rival is subject to the least amount of competitive pressures from
the five competitive forces.

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136.Which one of the following is an accurate interpretation of the scores that result from doing a
competitive strength assessment?

A. High scores signal a strong competitive position and possession of a competitive

advantage over companies with lower scores.

B. High scores indicate that a company is a power-user of best practices, while low scores
signal minimal or ineffective adoption of best practices.

C. The company with the lowest score has the lowest-cost value chain.

D. The company with the lowest score has the strongest net competitive advantage over its
rivals.

E. High scores indicate which rivals are most vulnerable to competitive attack.

137.Which one of the following is NOT something that can be learned from doing a competitive
strength assessment?

A. The factors on which a company is competitively strongest and weakest vis-à-vis key
rivals

B. Whether a company should correct its weaknesses by adopting best practices and
revamping the makeup of its value chain

C. Which of the rated companies is competitively strongest and what size competitive
advantage it enjoys

D. Whether a company has a net competitive advantage or a net competitive disadvantage

relative to key rivals (with the size of the advantage/disadvantage being indicated by the
differences among the companies' competitive strength scores)

E. Which rival company is competitively weakest and the areas where it is most vulnerable to
competitive attack

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138.The company with the highest rating on a given measure has an implied competitive edge on
that specific measure, with the size of its edge:

A. providing the company with an overall net competitive score that is reduced by the
weighted measure.

B. signaling a weak position and competitive disadvantage.

C. reflecting the difference between its weighted rating and rivals' weighted ratings.

D. reflecting an area of potential improvement in order to achieve a sustainable competitive

advantage.

E. requiring reevaluation of the weighted measure.

139.Calculating competitive strength ratings for a company and comparing them against strength
ratings for its key competitors helps indicate:

A. which weaknesses and vulnerabilities of competitors the company might be able to attack
successfully.

B. which competitors are in profitable strategic groups and which competitors are in
unprofitable strategic groups.

C. which competitors are employing offensive strategies and which competitors are
employing defensive strategies.

D. which competitors are likely to make money and which are likely to lose money in the
years ahead.

E. what the industry's key success factors are.

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140.A company's competitive strength scores pinpoint its strengths and weaknesses against
rivals and:

A. suggest the company use its strengths to exploit its own competitive liabilities.

B. point directly to the kinds of offensive/defensive actions it can use to exploit its
competitive strengths and reduce its competitive liabilities.

C. point directly to the company to use its weaknesses as offensive moves to challenge
rivals' weaknesses.

D. suggest receptivity for astute companies to drive their operating practices if the strength
scores are very low.

E. point directly to accepting the competitive strength scores on face value.

141.Identifying the strategic issues a company faces and compiling a "worry list" of problems and
roadblocks is an important component of company situation analysis because:

A. without a precise fix on what problems/issues a company confronts, managers cannot

know what the industry's key success factors are.

B. the "worry list" sets the management agenda for taking actions to improve the company's
performance and business outlook.

C. without a precise fix on what problems/roadblocks a company confronts, managers are

less clear about what value chain activities to benchmark.

D. the "worry list" helps company managers clarify their thinking about how best to modify
the company's value chain.

E. these issues and obstacles must be cleared before management can focus clearly on what
is the best strategy for the company to pursue.

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142.Identifying the strategy-related issues and problems that company managers need to
address and resolve for the company to be more financially and competitively successful
entails all of the following EXCEPT:

A. drawing on the results of both industry analysis and the evaluations of the company's own
competitiveness.

B. drawing on the evaluations of the company's own resources, internal circumstances, and
competitiveness.

C. locking in on what challenges/obstacles/roadblocks the company has to overcome in

order to be financially and competitively successful in the years ahead.

D. developing a "worry list" of "how to…," "whether to…," and "what to do about…"

E. developing a competitive strength assessment that details the strategic moves and
countermoves necessary for ensuring the company's financial future.

143.Identifying the strategic issues and problems that merit front-burner managerial attention:

A. is accomplished solely by analyzing the company's internal working environment.

B. helps set management's agenda for taking actions to improve the company's performance
and business outlook.

C. is done solely by evaluating the company's own internal situation—its resources and
competitive position—to help come up with a "worry list" of "how to…," "whether to…,"
and "what to do about…"

D. is done solely as a basis for drawing conclusions about whether to stick with a company's
present strategy or to modify it.

E. None of these.

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144.Which of the following is NOT part of the task of identifying the strategic issues and
problems that merit front-burner managerial attention?

A. Analyzing the company's external environment

B. Evaluating the company's own resources and competitive position

C. Surveying a company's board members, managers, select employees, and key investors
regarding what strategic issues they think the company faces

D. Developing a "worry list" of "how to…," "whether to…," and "what to do about…"

E. Assessing what challenges the company must overcome to be financially and

competitively successful in the years ahead

145.Which of the following is NOT accurate as concerns the task of identifying the strategic
issues and problems that merit front-burner managerial attention?

A. It entails drawing upon the results and conclusions from analyzing the company's external
environment.

B. It entails drawing on the results and conclusions from evaluating the company's own
resources and competitive position.

C. It entails developing a "worry list" of "how to…," "whether to…," and "what to do about…"

D. Identifying the strategic issues and problems that the company faces is the first thing that
company managers need to do before starting to analyze the company's internal and
external environment.

E. Developing a list of issues and problems that management need to address (and to
resolve) should always precede deciding upon a strategy and what actions to take to
improve the company's position and prospects.

Short Answer Questions

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146.Identify and explain the six questions to consider in evaluating a company's ability to
compete successfully against market rivals.

147.Identify at least three indicators of whether a company's present strategy is working well.

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148.Briefly discuss the meaning and significance of each of the following terms.

a. SWOT analysis
b. company value chain
c. industry value chain
d. activity-based costing
e. benchmarking

149.Explain the difference between a company activity, capability, competence, a core

competence, and a distinctive competence.

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150.A core competence represents a basis for competitive advantage. True or false? Explain your
answer.

151.A distinctive competence represents competitively superior resource strength. True or false?
Explain your answer.

152.A distinctive competence represents a basis for competitive advantage. True or false?
Explain your answer.

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153.Why do a company's core competencies matter in crafting strategy?

154.What are the four tests that should be used to measure the competitive power of a
company's resource strengths?

155.What test determines the power of a resource's competitive strength?

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156.A company lacking stand-alone resource strength should focus on bundling several resource
strengths into a core competence. True or false? Explain and support your answer.

157.Instead of trying to match the resource strengths of rivals, what option(s) should a company
consider to enhance its competitive power in the marketplace?

158.In conducting a SWOT analysis, is it enough to simply compile lists of the company's
strengths, weaknesses, opportunities, and threats? Why or why not?

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159.What are the three parameters of conducting a SWOT analysis?

160.The ability of a company to perform value chain activities more proficiently or more cheaply
than rivals is a potential source of competitive advantage. True or false? Explain and defend
your answer.

161.Draw a typical company value chain and briefly explain why the proficiency with which a firm
performs the activities comprising its value chain matters.

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162.Why does it matter whether a company is able to perform value chain activities more
proficiently or more cheaply than rivals? Explain and support your answer.

163.What is benchmarking and why is it a strategically important analytical tool?

164.What is meant by the term "best practices"? Why does it matter whether a company utilizes
"best practices" in performing the activities comprising its value chain?

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165.Assume a firm is at a cost disadvantage with rivals because its internal costs are higher than
rivals. Identify five strategic moves that it can make to restore cost parity.

166.Assume a firm is at a cost disadvantage with rivals because of higher supplier-related costs
than key rivals. Identify three strategic moves that it can make to restore cost parity.

167.Assume a firm is at a cost disadvantage with rivals because of higher distributor/dealer costs
than rivals. Identify three strategic moves that it can make to restore cost parity.

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168.Explain why a weighted competitive strength assessment is important.

169.In determining the various strategic issues that a company needs to address, managers need
to consider BOTH the results of its analysis of the company's external environment and the
results of its evaluation of the company's resources and competitive position. True or false?
Explain and defend your answer.

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170.Why is it important for company managers to develop a "worry list" of strategic issues and
problems that they need to address and resolve? What should they consider to develop this
list?

171.Explain why a good strategy must contain ways to deal with all the strategic issues and
obstacles that stand in the way of the company's financial and competitive success.

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 Chapter 04 Evaluating a Company's Resources, Capabilities, and
Competitiveness Answer Key

Multiple Choice Questions

1. Which of the following is NOT one of the six questions that comprise the task of
evaluating a company's resources and competitive position?

A. What are the company's most profitable geographic market segments?

B. How well is the company's present strategy working?

C. Are the company's cost structure and customer value proposition competitive?

D. Is the company competitively stronger or weaker than key rivals?

E. What strategic issues and problems merit front-burner managerial attention?

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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2. Which of the following is NOT a component of evaluating a company's resources and
competitive position?

A. Evaluating how well the present strategy is working

B. Scanning the environment to determine a company's best and most profitable

customers

C. Assessing whether the company's cost structure and customer value proposition are
competitive

D. Evaluating whether the company is competitively stronger or weaker than key rivals

E. Evaluating if the company is able to seize market opportunities and overcome external
threats to its future well-being

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

3. Which of the following is not an analytical tool for revealing a company's competitiveness
and for helping to match the strategy to the company's own particular circumstances?

A. Resource and capability analysis

B. SWOT analysis

C. Value chain analysis

D. Bench-pressing analysis

E. Competitive strength analysis

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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4. The best indicator of how well a company's strategy is working is whether the company:

A. is achieving its stated financial objectives, its financial performance equates to the
industry average, and market share gains reflect short-term preferences for capacity
maximization.

B. is attentive to its poor execution in functional areas, business goals are stretch, and
the value proposition has a product focus.

C. is geared to initiatives designed to build market share and to promote corporate

responsibility.

D. is achieving its stated financial and strategic objectives, its financial performance is
better than the industry average, and it is gaining customers and increasing market
share.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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5. One important indicator of how well a company's present strategy is working is whether:

A. it has more core competencies than close rivals.

B. its strategy is built around at least two of the industry's key success factors.

C. the company is achieving its financial and strategic objectives and whether it is an
above-average industry performer.

D. it is customarily a first-mover in introducing new or improved products (a good sign) or

a late-mover (a bad sign).

E. it is subject to weaker competitive forces and pressures than close rivals (a good sign)
or stronger competitive forces and pressures (a bad sign).

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

6. The business strategy is made up of key "functional" strategies except:

A. R&D, technology, and product design strategies.

B. Production and information technology and supply chain management strategies.

C. Human resource and finance strategies.

D. Sales, marketing, and distribution strategies.

E. Alliance and partnerships as well as merger and acquisition growth strategies.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
7. Sluggish performance results relative to rivals are a reliable warning sign that the
company has either a weak strategy or poor strategy execution or both. The best way to
identify a well-conceived, well-executed strategy is to determine whether the company is
experiencing:

A. a strengthening of its image and reputation among shareholders.

B. a desirable growth rate in new customer acquisition and favorable customer retention
efforts for establishing a strong customer experience.

C. movement in its operating profit margin, satisfactory returns on investable liquid

assets, and elimination of credit access restrictions.

D. positive trends with the relevant cultural factors related to buyer's choices and product
modifications.

E. All of these.

AACSB: Reflective Thinking

Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
8. A company's resources and capabilities represent:

A. the firm's net working capital and related determinants for measuring operating
performance and capabilities.

B. the firm's competitive assets, which are considered big determinants of its
competitiveness and ability to succeed in the marketplace.

C. whether the firm has the industry's most efficient value chain.

D. management's source of funding of new strategic initiatives.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

9. A powerful tool for sizing up the company's competitive assets and determining whether
they can provide the foundation necessary for competitive success in the marketplace is
termed:

A. Resource and capability analysis

B. SWOT

C. Competitive analysis

D. Financial and asset management analysis

E. Value chain analysis

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
10. A productive input or competitive asset that is owned or controlled by a company is
termed a:

A. resource, which is the source of everything enjoyed by the firm.

B. resource, and there are different types of resources at the firm's disposal that vary not
only in kind but in quality as well.

C. resource, which is common to the firm's strategy of facilitating and replicating what
they do best.

D. resource, and it can be tangible or intangible or both and provide substantial benefits
to the firm's asset growth.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
11. The difference between a resource and a capability is:

A. a resource is a productive input or competitive asset, while a capability is the capacity

of the firm to perform some internal activity competently.

B. a resource is a reserve supply or back-up supply function, whereas a capability is the

ability to manage the resource function.

C. a resource is a mechanism used for carrying out some responsibility, while a capability
possesses the qualities needed to do a particular thing.

D. a resource is the firm's fixed assets, while a capability defines whether the firm is
competent to perform some function.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
12. A useful way to identify a company's resources is to view them as:

A. divided into two main categories, tangible and intangible.

B. every productive input or competitive asset except human assets and intellectual
capital, which are considered capabilities or competencies.

C. physical resources, such as the company's brand, image, and reputation assets.

D. an inventory or a collection of the firm's strengths, weaknesses, opportunities, and

threats.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

13. The main reason that listing or categorizing company resources matters is:

A. to ensure all resources are categorized correctly.

B. that the important resources are reported against strategically subjective activities.

C. that the resources are prioritized in terms of value propositions.

D. that the strategically placed resources are manageable.

E. that all the different types of resources are included.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
14. Tangible resources do not include:

A. physical resources.

B. financial resources.

C. human assets.

D. technological assets.

E. organizational assets.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

15. Tangible resources include:

A. human assets and intellectual capital, which can include the talent of the work force
and the creativity and innovativeness of certain personnel.

B. reputational assets, which can include the company's reputation for quality, service,
and reliability as well as their reputation for fair dealings with suppliers.

C. relationships with alliances that provide access to technologies, specialized know-how,

or geographic markets.

D. technological assets such as patents, copyrights, and trade secrets.

E. None of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
16. There are two approaches that can make the process of uncovering and identifying a
firm's capabilities more systematic. They include:

A. resources assessment and the functional approach.

B. strengths valuations and weaknesses estimations.

C. sustainability resource allocation methods and a resource bundling approach.

D. cross-functional analysis and collaborative resource methodology.

E. financial statement analysis and management support analysis.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

17. Organizational capabilities are virtually always:

A. knowledge-based, residing in people and in the company's intellectual capital, or in

organizational processes and systems, which embody tacit knowledge.

B. more complex than resources and are exercised only through key personnel.

C. require constant evaluation to ensure cooperative support from management.

D. are easier and less challenging to categorize than resources because there are fewer
to be concerned about.

E. reflective of the industry's driving forces.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
18. A linked and closely integrated set of competitive assets centered around one or more
cross-functional capabilities and closely integrated competitive assets is termed:

A. organizational assets.

B. a resource bundle.

C. a resource capability.

D. functional method compilation.

E. integrated asset advantage.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

19. A sustainable competitive advantage is gained:

A. when a company has durable competitive assets that are central to its strategy and
superior to those of rival firms.

B. when a company has sufficient resources to expedite its strategy.

C. when a company realizes its inherent weaknesses are transformable to advantages.

D. when a company can stand out relative to rivals because of resource utilization.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
20. The four tests of a resource's competitive power are often referred to as:

A. the SCIR test, which asks if a resource is sustainable, competitive, internalized, and
reproducible.

B. the competitive advantage sustainable method test.

C. the reliability resources simulation.

D. the VRIN test, which asks if a resource is valuable, rare, inimitable, and non-
substitutable.

E. the organizational capability metric analysis.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
21. The spotlight in analyzing a company's resources, internal circumstances, and
competitiveness includes such questions/concerns as:

A. whether the company's present strategy is better than the strategies of its closest
rivals based on such performance measures as earnings per share, ROE, dividend
payout ratio, and average annual increase in the common stock price.

B. whether the company's key success factors are more dominant than the key success
factors of close rivals.

C. whether the company has the industry's most efficient and effective value chain.

D. what are the company's resource strengths and weaknesses and its external
opportunities and threats.

E. what new acquisitions the company would be well advised to make in order to
strengthen its financial performance and overall balance sheet position.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the company's Competitively Important Resources?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
22. Which of the following is NOT pertinent in identifying a company's present strategy?

A. The key functional strategies (R&D, supply chain management, production, sales and
marketing, HR, and finance) a company is employing

B. Management's planned, proactive moves to outcompete rivals (via better product

design, improved quality or service, wider product lines, and so on)

C. The company's mission, strategic objectives, and financial objectives

D. Moves to respond and react to changing conditions in the macro-environment and in

industry and competitive conditions

E. The strategic role of its collaborative partnerships and strategic alliances with others

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
23. One important indicator of how well a company's present strategy is working is whether:

A. it has more core competencies than close rivals.

B. its strategy is built around at least two of the industry's key success factors.

C. the company is achieving its financial and strategic objectives and whether it is an
above-average industry performer.

D. it is customarily a first-mover in introducing new or improved products (a good sign) or

a late -mover (a bad sign).

E. it is subject to weaker competitive forces and pressures than close rivals (a good sign)
or stronger competitive forces and pressures (a bad sign).

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
24. The best quantitative evidence of whether a company's present strategy is working well
is:

A. whether the company has more competitive assets than it does competitive liabilities.

B. whether the company is in the industry's best strategic group.

C. the caliber of results the strategy is producing, specifically whether the company is
achieving its financial and strategic objectives and whether it is an above-average
industry performer.

D. whether the company has a shorter value chain than close rivals.

E. whether the company is in the Fortune 500.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
25. Which one of the following is NOT a reliable measure of how well a company's current
strategy is working?

A. Whether the company's sales are growing faster, slower, or about the same pace as
the industry as a whole, thus resulting in a rising, falling, or stable market share

B. Whether it has a larger number of competitive assets than competitive liabilities and
whether it has a superior quality product

C. The firm's image and reputation with its customers

D. Whether its profit margins are rising or falling and how large its margins are relative to
those of its rivals

E. How well the firm stacks up against rivals on technology, product innovation, customer
service, product quality, price, speed in getting newly developed products to market,
and other relevant factors on which buyers base their choice of which brand to
purchase

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
26. A company's resource and capability analysis:

A. represent its core competencies.

B. are the most important parts of the company's value chain.

C. signal whether it has the wherewithal to be a strong competitor in the marketplace.

D. give it an excellent ability to insulate itself against the impact of the industry's driving
forces.

E. combine to give it a distinctive competence.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

27. How are a company's organizational capabilities developed and enabled?

A. By strengthening the traditions that company executives are committed to maintaining

B. Through deployment of a company's resources or some combination of its resources

C. By talking openly about the problems of the present company and determining how
new behaviors will improve performance

D. By shifting from decentralized to centralized decision-making

E. By urging company personnel to search outside the company for work practices and
operating approaches that may be an improvement over what the company is presently
doing

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
28. Which of the following does NOT represent a company resource?

A. A company's brand

B. A productive input that is owned by the firm

C. Marketing and brand management

D. R&D teams

E. A productive input that is controlled by the firm

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

29. Which of the following is a clear representation of a company's capability?

A. A company's brand

B. A productive input that is owned or controlled by the firm

C. The capacity of a firm to perform some activity

D. An alliance or collaboration with another firm

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
30. Which of the following most accurately reflect a company's resource strengths?

A. Its human, physical and/or organization assets; its skills and competitive capabilities;
and its achievements or attributes that enhance the company's ability to compete
effectively

B. The sizes of its unit sales, revenues, and market share vis-à-vis those of key rivals

C. The sizes of its profit margins and return on investment vis-à-vis those of key rivals

D. Whether it has more primary activities in its value chain than close rivals and a better
overall value chain than these rivals

E. Whether it has more core competencies than close rivals

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

31. A company's resources can include:

A. a skill, specialized expertise, or competitively important capability.

B. valuable human assets and intellectual capital.

C. an achievement or attribute that puts the company in a position of market advantage.

D. competitively valuable alliances or cooperative ventures.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
32. The BEST example of a company resource is:

A. having higher earnings per share and a higher return on shareholders' equity
investment than key rivals.

B. being totally self-sufficient such that the company does not have to rely in any way on
key suppliers, partnerships with outsiders, or strategic alliances.

C. having proven technological expertise and an ability to churn out new and improved
products on a regular basis.

D. having a larger number of competitive assets than competitive liabilities.

E. having more built-in key success factors than rivals.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

33. Which of the following is NOT a good example of a company's resources?

A. More intellectual capital and better e-commerce capabilities than rivals

B. Fruitful partnerships or alliances with suppliers that reduce costs and/or enhance
product quality and performance

C. Having higher earnings per share and a higher stock price than key rivals

D. A well-known brand name and enjoying the confidence of customers

E. A lower-cost value chain than rivals

AACSB: Analytic
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
34. If a company doesn't possess standalone resource strengths capable of contributing to
competitive advantage:

A. all potential for competitive advantage is lost.

B. it is unlikely to survive in the marketplace and should exit the industry.

C. it may have a bundle of resources that can be leveraged to develop a distinctive

competence.

D. it is virtually blocked from using offensive strategies and must rely on defensive
strategies.

E. its best strategic option is to revamp its value chain in hopes of creating stronger
competitive capabilities.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

35. Resource and capability analysis is designed to:

A. ascertain the internal market place of non-distinct divisions of the company.

B. ascertain which of a company's resources and capabilities are competitively valuable.

C. stimulate demand for a product.

D. ascertain to what extent a competitor can sustain a competitive advantage.

E. stimulate economic growth for companies within the industry.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
36. Resource and capability analysis is achieved by:

A. probing the caliber of a firm's competitive assets relative to those of rival firms.

B. achieving price stability.

C. analyzing only internal strengths and weaknesses through a matrix comparison model.

D. cost-benefit analysis of the company's core product sales.

E. performing resource-specific activities within the organization to allocate available

capital.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

37. A company that has competitive assets that are central to its company strategy and
superior to those of rival firms creates a:

A. long-term derivative strategy.

B. cash flow feasibility analysis.

C. competitive advantage over other companies.

D. resource deployment strategic plan.

E. cost underestimation and benefit overestimation.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
38. Whether a resource or capability can support a competitive advantage is determined by
which two components of the four tests of competitive power analysis?

A. Whether the resource or capability is competitively valuable and/or is something that

rivals lack

B. Whether the resource or capability is rare and/or is hard to copy

C. Whether the resource or capability can be trumped and/or is hard to copy

D. Whether the resource or capability is competitively valuable and/or there are good
substitutes available for the resource

E. Whether the resource or capability is hard to copy and/or can be trumped by different
types of resources and capabilities

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
39. Which two tests of a resource's competitive power determine whether a company's
competitive advantage can be sustained in the face of active competition?

A. Whether the resource or capability is competitively valuable and/or is something that

rivals lack

B. Whether the resource or capability is rare and/or is hard to copy

C. Whether the resource or capability is easy to copy

D. Whether the resource or capability is competitively valuable and/or there are good
substitutes available for the resource

E. Whether the resource or capability is hard to copy and/or can be trumped by different
types of resources and capabilities

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
40. The competitive power of a company resource strength or competitive capability hinges
on:

A. how hard it is for competitors to copy.

B. whether it is rare and something rivals lack.

C. whether it is really competitively valuable and has the potential to contribute to a

competitive advantage.

D. how easily it can be trumped by the substitute resources/capabilities of rivals.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

41. What two factors inhibit the ability of rivals to imitate a firm's most valuable resources and
capabilities?

A. Social ambiguity and causal uncertainty

B. Social simplicity and causal complexity

C. Collective complexity and causal ambiguity

D. Social complexity and causal ambiguity

E. Social simplicity and causal uncertainty

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

4-100
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
42. A competitively valuable resource or capability is a company's:

A. enabling foundation of its business model.

B. equally valuable substitute resource providing a competitive advantage.

C. assessment of the availability of superior substitutes.

D. unsurpassed worker productivity and product quality.

E. unique piecework incentive system, providing a competitive advantage.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

43. For a particular company resource/capability to have real competitive power and perhaps
qualify as a basis for competitive advantage, it should:

A. be hard to copy, be rare and something rivals lack, be competitively valuable, and not
be easily trumped by substitute resource strengths possessed by rivals.

B. be something that a company does internally rather than in collaborative arrangements

with outsiders.

C. be patentable.

D. be an industry key success factor and occupy a prime position in the company's value
chain.

E. have the potential for lowering the firm's unit costs.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

4-101
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
44. The competitive power of a company's resource strength is NOT measured by which one
of the following tests?

A. Is the resource rare and something rivals lack?

B. Is the resource strength something that a company does internally rather than in
collaborative arrangements with outsiders?

C. Is the resource strength easily trumped by the substitute resources/capabilities of

rivals?

D. Is the resource strength hard to copy?

E. Is the resource strength competitively valuable, having the potential to contribute to a

competitive advantage?

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

4-102
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
45. A company requires a dynamically evolving portfolio of resources and capabilities to:

A. assist the strategic planning team in overall direction.

B. sustain complex manufacturing systems as a strategic recall.

C. sustain its competitiveness and help drive improvements in its performance.

D. sustain benefits of high market share as an interest in growth strategies.

E. transform knowledge into a management style supporting competition in a globally

diverse world.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

46. For a company to have competitively potent resources and capabilities, they must:

A. be in sync with changes in the company's own strategy.

B. be in sync with its efforts to achieve a resource-based competitive advantage.

C. fully support company efforts to attract customers.

D. combat competitors' newly launched offensives to win bigger sales and market shares.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

4-103
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
47. Which of the following is NOT an example of a company's dynamic capability?

A. A capacity to improve existing resources and capabilities

B. Upgrades to R&D resources to drive product innovation

C. A capacity to add new resources and capabilities to the competitive asset portfolio

D. An ability to replace degraded resources with acquired capabilities

E. An ability to keep antiquated resources by disregarding innovative capabilities

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

48. A dynamic capability:

A. is the ongoing capacity to modify existing resources and capabilities to create new
ones.

B. is the improvement evaluation process for eliminating waste in the firm.

C. is the functional and operating resources management process.

D. is the ongoing capability to understand and establish rival commitment to resource

alignment.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

4-104
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
49. Identifying and assessing a company's resource strengths and weaknesses and its
external opportunities and threats is called:

A. a SWOT analysis.

B. a competitive asset/liability analysis.

C. a competitive positioning analysis.

D. a strategic resource assessment.

E. a company resource mapping.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

50. SWOT analysis is a simple but powerful tool for:

A. gauging whether a company has a cost-competitive value chain.

B. sizing up a company's resources and capabilities, strengths and deficiencies, its market
opportunities, and the external threats to its future well-being.

C. evaluating whether a company is in the most appropriate strategic group.

D. determining a company's competitive strength vis-à-vis close rivals.

E. identifying the market segments in which a company is strongly positioned and weakly
positioned.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-105
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
51. A company's strengths are important because:

A. they pave the way for establishing a low-cost advantage over rivals.

B. they represent the quality of its competitive assets that enhance its competitiveness in
the marketplace.

C. they provide extra muscle in helping lengthen the company's value chain.

D. they give it competitive protection against the industry's driving forces.

E. they provide extra organizational muscle in turning a core competence into a key
success factor.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

52. When an activity becomes something a company has learned to perform proficiently and
capably, it is said to have:

A. a competence.

B. a competitive advantage over rivals.

C. a key value chain proficiency.

D. a distinctive capability.

E. a resource advantage.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-106
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
53. When a company has a proficiency in performing a strategically and competitively
important value chain activity better than its rivals, it is said to have:

A. a company competence.

B. a core competence.

C. a distinctive competence

D. a key value chain proficiency.

E. a competitive advantage over rivals.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

54. When a company is good at performing a particular internal activity, it is said to have:

A. a competitive advantage over rivals.

B. a competitive capability.

C. a distinctive competence.

D. a core competence.

E. a company competence.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-107
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
55. The difference between a company competence and a core competence is that:

A. a company competence refers to a company's best-executed functional strategy, while

a core competence refers to a company's best-executed business strategy.

B. a company competence refers to a company's strongest resource, whereas a core

competence refers to a company's lowest-cost and most efficiently performed value
chain activity.

C. a company competence is a competitively relevant activity that a firm performs

especially well relative to other internal activities, whereas a core competence is an
activity that a company has learned to perform proficiently.

D. a company competence represents real proficiency in performing an internal activity,

whereas a core competence is a competitively and strategically relevant activity.

E. a core competence usually resides in a company's technology and physical assets,

whereas a company competence usually resides in a company's human assets and
intellectual capital.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-108
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
56. The difference between a core competence and a distinctive competence is that:

A. a distinctive competence refers to a company's strongest resource or competitive

capability, while a core competence refers to a company's lowest-cost and most
efficiently executed value-chain activity.

B. a core competence usually resides in a company's base of intellectual capital, whereas

a distinctive competence stems from the superiority of a company's physical and
tangible assets.

C. a core competence is a competitively and strategically relevant activity that a firm

performs well compared to its other activities, whereas a distinctive competence is a
competitively relevant activity a firm performs well compared to other rival firms.

D. a core competence represents a resource strength, whereas a distinctive competence

is achieved by having more resource strengths than rival companies.

E. a core competence usually resides in a company's technology and physical assets,

whereas a distinctive competence usually resides in a company's know-how, expertise,
and intellectual capital.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-109
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
57. A core competence:

A. retracts from a company's arsenal of competitive capabilities and competitive assets

and is not a resource strength considered to be genuine.

B. is typically results-based, residing in a company's tangible physical assets on the

balance sheet.

C. is often grounded in a single department's set of knowledge and expertise.

D. is an activity that a firm performs proficiently that is also central to its strategy and
competitive success.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-110
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
58. A core competence:

A. is a more competitively valuable strength than a competence because of the key role
the activities play in the company's strategy.

B. typically has competitive value, the amount of which is reflected in the physical and
tangible assets on a company's balance sheet.

C. usually is grounded in the technological expertise of a particular department or work

group.

D. is more difficult for rivals to copy than a distinctive competence.

E. refers to a company's lowest-cost and most efficiently executed value-chain activity.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

59. When a company performs a particular competitively important activity truly well in
comparison to its rivals, it is said to have:

A. a company competence.

B. a strategic resource.

C. a distinctive competence.

D. a core competence.

E. a key success factor.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-111
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
60. Which of the following does NOT represent a potential core competence?

A. Skills in manufacturing a high-quality product at a low cost

B. Know-how in creating and operating systems for cost-efficient supply chain

management

C. The capability to fill customer orders accurately and swiftly

D. Having a wider product line than rivals

E. The capability to speed new or next-generation products to the marketplace

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

61. A distinctive competence:

A. is a competitively important activity that a company performs better than its rivals.

B. gives a company a competitively valuable capability that is unmatched by rivals.

C. is a basis for sustainable competitive advantage.

D. qualifies as a superior internal strength.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-112
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
62. Which one of the following is inaccurate as concerns a distinctive competence?

A. A distinctive competence is a competitively important activity that a company performs

better than its rivals.

B. A distinctive competence is typically less restrictive for rivals to copy than a core
competence.

C. A distinctive competence can be a basis for sustainable competitive advantage.

D. A distinctive competence qualifies as a superior internal strength.

E. A distinctive competence enables delivering stand-out value to customers (in the form
of lower prices, better product performance, or superior service).

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-113
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
63. The competitive power of a company's core competence or distinctive competence
depends on:

A. whether it helps differentiate a company's product offering from the product offerings
of rival firms.

B. how hard it is to copy and how easily it can be trumped by substitute resource
strengths and competitive capabilities of rivals.

C. whether customers are aware of the competence and view the competence positively
enough to boost the company's brand-name reputation.

D. whether the competence is one of the industry's key success factors.

E. whether the competence is technology-based or based on superior marketing know-

how.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-114
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
64. A company resource weakness or competitive deficiency:

A. represents a problem that needs to be turned into a strength because weaknesses

prevent a firm from being a winner in the marketplace.

B. causes the company to fall into a lower strategic group than it otherwise could
compete in.

C. prevents a company from having a distinctive competence.

D. usually stems from having a missing link or links in the industry value chain.

E. are shortcomings that constitute competitive liabilities.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

65. A company's resource weaknesses can relate to:

A. inferior or unproven skills, expertise, or intellectual capital in competitively important

parts of the business.

B. something that it lacks or does poorly in comparison to rivals.

C. deficiencies in competitively important physical, organizational, or intangible assets.

D. missing or competitively inferior capabilities in key areas.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-115
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
66. Sizing up a company's complement of resource strengths and weaknesses:

A. is akin to constructing a "strategic balance sheet" where strengths represent

competitive assets and weaknesses represent competitive liabilities.

B. is called benchmarking.

C. is called competitive strength assessment.

D. is focused squarely on ascertaining whether the company has more/less resource

strengths than weaknesses.

E. is called company resource mapping.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-116
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
67. The external market opportunities which are MOST relevant to a company are the ones
that:

A. can increase market share.

B. are reinforced by the overall business strategy and where the business model is
appropriate.

C. match up well with the firm's competitive assets, offer the best prospects for growth
and profitability, and present the most potential for competitive advantage.

D. qualify to correct its internal weaknesses and resource deficiencies.

E. are relevant for defending against the external threats to its well-being.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

68. The market opportunities most relevant to a particular company are those that:

A. offer the best prospects for growth and profitability.

B. provide a strong defense against threats to the company's profitability.

C. embrace the most potential for product innovation.

D. provide avenues for taking market share away from close rivals.

E. hold the most potential to reduce costs.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-117
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
69. Which of the following BEST describes the market opportunities that tend to be most
relevant to a particular company?

A. Those market opportunities that provide avenues for taking market share away from
close rivals and enhance a company's image as a leader in product innovation and
product quality

B. Those market opportunities that offer the company a chance to raise entry barriers

C. Those market opportunities that help promote greater diversification of revenues and
profits

D. Those market opportunities that match up well with the firm's competitive assets, offer
the best prospect for growth and profitability, and present the most potential for
competitive advantage

E. Those market opportunities that help correct a company's biggest weaknesses and
competitive deficiencies

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-118
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
70. Companies that seize opportunities in the marketplace are usually those that have been:

A. actively waiting, staying alert with diligent market reconnaissance and preparing
internally to capitalize on potential opportunities.

B. the market winners in the past, because they have a proven record and are the best
competitively.

C. adopting every opportunity for understanding that not all opportunities will be
successful and rewarded commensurately.

D. first movers willing to accept business risk.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-119
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
71. Which of the following is NOT an example of an external threat to a company's future
profitability?

A. The lack of a distinctive competence

B. New legislation that entails burdensome and costly government regulations

C. Slowdowns in market growth

D. More intense competitive pressures

E. The introduction of restrictive trade policies in countries where the company does
business

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-120
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
72. Which of the following is NOT an example of a threat to a company's future profitability
and well-being?

A. The likely entry of potent new competitors

B. The lack of a well-known brand name with which to attract new customers and help
retain existing customers

C. Shifts in buyer needs and tastes away from the industry's product

D. Costly new regulatory requirements

E. Growing bargaining power on the part of the company's major customers and major
suppliers

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

73. External threats may pose various degrees of adversity upon the company and can surface
from many sources and examples, EXCEPT for:

A. the surfacing of cheaper or better technologies.

B. the entry of lower-cost foreign competitors and restrictive foreign trade policies.

C. new burdensome regulations.

D. demographic shifts that can curtail product innovation.

E. rising prices on key inputs (such as energy costs).

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-121
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
74. SWOT analysis:

A. provides a measure of the relative strength of resources in the company's value chain
in relation to rivals positioning.

B. is a tool for benchmarking whether a firm's strategy is closely matched to industry key
success factors.

C. reveals whether a company is competitively stronger than its closest rivals.

D. provides a good overview and conclusions about the company's overall situation.

E. identifies the reasons why a company's strategy is or is not working very well.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

4-122
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
75. In order to gain value from the SWOT analysis, it is important that the company address
the two most important parts of a SWOT analysis, which are:

A. identifying the resource strengths and resource weaknesses.

B. understanding the relationship between the strengths, weaknesses, opportunities, and

threats and establishing criteria for remedying the company's shortfalls.

C. drawing conclusions from the SWOT listings about the company's overall situation and
translating these conclusions into strategic actions.

D. clarifying the firm's current position and ensuring the SWOT listings are complete.

E. establishing a game plan to capitalize on the company's strengths and leverage the
weaknesses in light of the available opportunities.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
76. The key questions stemming from the SWOT listings that can reveal relevant substance
about the company's overall situation are as follows, except for:

A. Are the company's internal strengths and competitive assets sufficiently strong to
enable it to compete successfully?

B. Does the company have attractive market opportunities that are well suited to its
strengths?

C. Does the company have threats that are overpowering the firm's competitive assets?

D. Are the company's activities and dynamic capabilities adequate for capitalizing on the
opportunities?

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
77. A company's internal strengths should always serve as the basis of strategy because:

A. placing heavy reliance on the company's best competitive assets is the soundest route
to attracting customers and competing successfully against rivals.

B. they represent what the company considers relevant despite the prevailing
opportunities.

C. they can overpower the impact of important external threats.

D. they form the foundation of the firm's position in the marketplace.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

78. How much attention a company should devote to defending against external threats
hinges on primarily on:

A. whether offensive moves are feasible, cost-effective, and represent the best use of
company resources.

B. how serious, relevant, and timely the threats are to the company.

C. the degree of vulnerability the company has to the threat.

D. the compatibility of the pending threats to the company's competitive assets.

E. None of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
79. The payoff of doing a thorough SWOT analysis is:

A. identifying whether the company's value chain is cost-effective vis-à-vis the value
chains of rivals.

B. helping strategy-makers benchmark the company's resource strengths against industry

key success factors.

C. enabling a company to assess its overall competitive position relative to its key rivals.

D. revealing whether a company's market share, measures of profitability, and sales

compare favorably or unfavorably vis-à-vis key competitors.

E. assisting strategy-makers in crafting a strategy that is well-matched to the company's

resources and capabilities, its market opportunities, and the external threats to its
future well-being.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
80. In doing SWOT analysis, which one of the following is NOT an example of a potential
resource weakness or competitive deficiency that a company may have?

A. Less productive R&D efforts than rivals

B. Having a single, unified functional strategy instead of several distinct functional

strategies

C. Lack of a strong brand image and reputation (as compared to rivals)

D. Higher overall unit costs relative to rivals

E. Too narrow a product line relative to rivals

AACSB: Reflective Thinking

Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: SWOT Analysis

81. In doing SWOT analysis and trying to identify a company's market opportunities, which of
the following is NOT an example of a potential market opportunity that a company may
have?

A. Serving additional customer groups or market segments

B. Growing buyer preferences for substitutes for the industry's product

C. Acquiring rival firms or companies with attractive technological expertise or capabilities

D. Expanding into new geographic markets

E. Openings to win market share away from rivals

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: SWOT Analysis

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
82. The primary lesson stemming from a SWOT analysis is that a company's strategy should:

A. leverage resource strengths, capitalize on market opportunities, overcome important

weaknesses, and defend against external threats.

B. be aimed at opportunities that offer the best potential for improved profitability.

C. seek aggressively to defend against those threats to the company's immediate

profitability.

D. be designed to place heavy demands on areas where the company has proven
competencies to meet the threats head-on.

E. concentrate on making the SWOT's four lists relevant for strategic discussion and
planning.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
83. Which one of the following is NOT part of conducting a SWOT analysis?

A. Identifying a company's resource strengths and competitive assets

B. Benchmarking the company's resource strengths and competitive capabilities against

industry key success factors

C. Identifying a company's market opportunities

D. Drawing conclusions about the company's overall business situation—what is

attractive and what is unattractive about the company's circumstances

E. Translating the results of the analysis into actions for improving the company's
strategy and market position

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
84. Two important parts of SWOT analysis are:

A. pinpointing the company's competitive assets and pinpointing its competitive liabilities.

B. identifying the company's resource strengths and identifying the company's best
market opportunities.

C. identifying the external threats to a company's future profitability and pinpointing how
many market opportunities it has.

D. drawing conclusions from the SWOT listings about the company's overall situation and
translating these into strategic actions to better match the company's strategy to its
resource strengths and market opportunities, to correct the important weaknesses, and
to defend against external threats.

E. making accurate lists of the company's strengths, weaknesses, opportunities, and

threats, and then using these lists as a basis for ascertaining how well the company's
strategy is working.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
85. The steps of SWOT analysis are:

A. identifying the company's resource strengths and weaknesses and its opportunities
and threats, drawing conclusions about the company's overall situation, and translating
the conclusions into strategic actions to improve the company's strategy.

B. pinpointing the company's competitive assets, pinpointing its competitive deficiencies,

and determining whether it enjoys a competitive advantage.

C. determining whether the company has more competitive assets than competitive
liabilities, determining whether the company has good market opportunities, and
evaluating the seriousness of the threats to the company's future profitability.

D. matching the company's strategy to its resource strengths, correcting the company's
important resource weaknesses, and identifying the company's best market
opportunities.

E. benchmarking the company's strengths and weaknesses against those of key rivals,
identifying its market opportunities and the external threats it faces, and determining
the company's potential for establishing a competitive advantage over rivals.

AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
86. Which one of the following is NOT something that can be gleaned from a company's
SWOT?

A. How to improve a company's strategy by using company strengths and capabilities as

cornerstones for its strategy

B. Which market opportunities are best suited to a company's strengths and capabilities

C. Which resource weaknesses and deficiencies need to be corrected so as to better

enable the pursuit of important market opportunities and to better defend against
certain external threats

D. How to turn a core competence into a distinctive competence

E. Whether any of the company's resource strengths can be used to help lessen the
impact of external threats

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
87. The higher a company's costs are above those of close rivals, the more:

A. competitively vulnerable the company becomes.

B. a net profit margin analysis becomes vital.

C. its value proposition remains attractive.

D. important cost-tracking becomes.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

88. One of the most telling signs of whether a company's market position is strong or
precarious is:

A. whether its product is strongly or weakly differentiated from rivals.

B. whether its prices and costs are competitive with those of key rivals.

C. whether it has a lower stock price than key rivals.

D. the opinions of buyers regarding which seller has the best product quality and
customer service.

E. whether it is in a bigger or smaller strategic group than its closest rivals.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
89. A company is less competitively vulnerable when:

A. the company has well-known profit levels.

B. the company's stock price is the highest.

C. the company's management is recognized as being strategic thinkers.

D. the company can offer a greater amount of customer value profitability relative to close
rivals.

E. the company has less financial risk than rivals.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

90. Two analytical tools useful in determining whether a company's prices and costs are
competitive are:

A. SWOT analysis and key success factor analysis.

B. SWOT analysis and benchmarking.

C. value chain analysis and benchmarking.

D. competitive position assessment and competitive strength assessment.

E. driving forces analysis and SWOT analysis.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
91. A company's value chain identifies:

A. the steps it goes through to convert its net income into value for shareholders.

B. the primary activities and related support activities it performs in creating customer
value.

C. the series of steps it takes to get a product from the raw materials stage into the hands
of end users.

D. the activities it performs in transforming its competencies into distinctive

competencies.

E. the competencies and competitive capabilities that underpin its efforts to create value
for customers and shareholders.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
92. A company's value chain consists of two broad categories of activities:

A. consists of the primary activities that it performs in seeking to deliver value to

shareholders in the form of higher dividends and a higher stock price.

B. depicts the internally performed activities associated with creating and enhancing the
company's competitive assets.

C. consists of two broad categories of activities: the primary activities that create
customer value and the requisite support activities that facilitate and enhance the
performance of the primary activities.

D. concerns the basic process the company goes through in performing R&D and
developing new products.

E. consists of the series of steps a company goes through to develop a new product, get it
produced and distributed into the marketplace, and then start collecting revenues and
earning a profit.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
93. With its focus on value-creating activities, the value chain:

A. is an ideal tool for examining how a company delivers on its customer value
proposition.

B. preserves cost structure advantages.

C. provides identification of customer differentiation shortfalls.

D. is a recognized method for classifying the relevant support activities that are relevant
to operations tasks.

E. is crucial in understanding cost disadvantages and economies of scale and scope

shortfalls.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
94. The primary purpose of value chain analysis is to:

A. segregate the company's operations into different types of functions.

B. facilitate a comparison activity-by-activity of how effectively and efficiently a company

delivers value to its customers, relative to its competitors.

C. eliminate unproductive and obsolete functionality in the firm's operating strategy.

D. compare cost structure efficiency with the operating effectiveness of rivals to

determine the strategy content of rival firms.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
95. Identifying the primary activities and support activities that comprise a company's value
chain:

A. indicates whether a company's resource strengths will ultimately translate into greater
value for shareholders.

B. reveals whether a company's resource strengths are well-matched to the industry's key
success factors.

C. is the first step in understanding a company's internal cost structure since each activity
in the value chain gives rise to costs.

D. is called benchmarking.

E. is called resource value analysis.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
96. The value chains of rival companies:

A. tend to be essentially the same—any differences are typically minor.

B. can differ substantially, reflecting differences in the evolution of each company's own
particular business, differences in strategy, and differences in the approaches being
used to execute strategy.

C. are fairly similar or fairly different, depending on how many activities are performed
internally and how many are outsourced.

D. can be either fairly similar or fairly different, depending on the extent to which each
company's primary and support activities are comprised of fixed-cost activities and
variable cost activities.

E. are fairly similar except when rival companies have quite different product designs.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
97. The three main areas in the value chain where significant differences in the costs of
competing firms can occur include:

A. age of plants and equipment, number of employees, and advertising costs.

B. operating-level activities, functional area activities, and line of business activities.

C. the nature and makeup of their own internal operations, the activities performed by
suppliers, and the activities performed by wholesale distribution and retailing allies.

D. human resource activities (particularly labor costs), vertical integration activities, and
strategic partnership activities.

E. variable cost activities, fixed cost activities, and administrative activities.

AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
98. Activity-based costing is used to evaluate a company's cost-competitiveness and:

A. determine whether the value chains of rival companies are similar or different.

B. benchmark the costs of primary value chain activities against the costs of the support
value chain activities.

C. determine the costs of each primary and support activity comprising a company's value
chain and thereby reveal the nature and makeup of a company's internal cost structure.

D. determine the costs of each strategic action a company initiates.

E. None of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
99. Activity-based cost accounting aims at:

A. making cross-company comparisons of the costs of each value chain activity.

B. dividing all company expenses into two categories: activities whose costs are variable
and activities whose costs are fixed.

C. determining the costs of each activity comprising a company's value chain by

establishing expense categories for specific value chain activities and assigning costs
to the activity responsible for creating the cost.

D. determining the costs of each strategic action a company initiates.

E. None of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
100. Activity-based costing:

A. is an accounting system that assigns a company's expenses to whichever activity in a

company's value chain is responsible for creating the cost.

B. involves using benchmarking techniques to develop cost estimates for the value chain
activities of each major rival.

C. is a powerful tool for identifying the different pieces of a company's value chain and
classifying them as primary activities and support activities.

D. involves determining which value chain activities represent variable costs and which
represent fixed costs.

E. is a tool for identifying the activities that cause a company's product to be strongly
differentiated from the products of rivals.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
101. Costs and price differences among competing companies can have origins in activities
performed by:

A. the company's internally performed activities (its own value chain) compared to the
cost structure of the internally performed activities of rival companies.

B. value chains of the company's suppliers.

C. value chains of a company's distributors and retail dealers and forward channel allies.

D. the company's internally performed activities (its own value chain), but also on costs in
the value chain of its suppliers and distribution channel allies.

E. whether the company has a longer or shorter value chain than its close rivals.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
102. The value chains of company distribution channel partners are relevant because:

A. their costs and margins are part of the price the ultimate consumer pays.

B. the activities they perform affect sales volumes and customer satisfaction.

C. they have a competitive interest in promoting higher sales volumes and customer
satisfaction.

D. they perform primary and support activities that are related to the entire value chain
system.

E. All of these apply.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
103. Determining whether a company's overall prices and costs are competitive requires an
entire value chain analysis, which typically demands:

A. looking at the costs of a company's competitively relevant suppliers and forward

channel allies (distributors/dealers).

B. considering the costs of a company's internally performed activities.

C. the use of benchmarking the costs in a company's value chain system (the costs of its
suppliers, its internally performed activities, the costs of its distributors/dealers)
against the costs of the value chain systems employed by rival firms.

D. the use of activity-based cost accounting.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
104. Benchmarking involves:

A. comparing how different companies perform various value chain activities and then
making cross-company comparisons of the costs and effectiveness of these activities.

B. checking whether a company has achieved more of its financial and strategic
objectives over the past five years relative to the other firms it is in direct competition
with.

C. studying whether a company's resource strengths are more/less powerful than the
resource strengths of rival companies.

D. studying how a company's competitive capabilities stack up against the competitive

capabilities of selected companies known to have world-class competitive capabilities.

E. comparing the best practices in one industry against the best practices in another
industry.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
105. A much-used and potent managerial tool for determining whether a company performs
particular functions or activities in a manner that represents "the best practice" when both
cost and effectiveness are taken into account is:

A. competitive strength analysis.

B. activity-based costing.

C. resource cost mapping.

D. SWOT analysis.

E. benchmarking.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
106. Which of the following is NOT one of the objectives of benchmarking?

A. To identify the best practices in performing various value chain activities

B. To learn how best practice companies achieve lower costs or better results in
performing benchmarked activities

C. To help construct a company value chain and identify which activities are primary and
which are support activities

D. To develop cross-company comparisons of the costs of performing specific value chain

activities

E. To take actions to improve a company's cost competitiveness when benchmarking

reveals that its costs and results of performing an activity are not as good as what
other companies have achieved

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
107. Benchmarking provides a company with which of the following?

A. Hard evidence of cost competitiveness

B. Proof of resource availability

C. A company strategy

D. Verification of total cost ownership

E. Improvements to internal processes

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

108. The most difficult part of benchmarking is:

A. the decision of whether to do it at all.

B. how to gain access to information regarding rivals' practices and costs.

C. when to initiate the process.

D. what information to utilize in the analysis process.

E. when to stop the process and move forward with strategy.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-151
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
109. Obtaining cost information is a primary difficulty associated with benchmarking. The
following are typical sources for collecting information, except:

A. from published reports, industry research firms, and trade groups.

B. from talking to knowledgeable industry leaders.

C. from field trips to the facilities of competitors or non-competing firms.

D. from independent firms and consulting firms to gather best practices and comparative
cost data without identifying competing firms.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-152
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
110. Which of the following areas within a company's total value chain system can managers
use to improve efficiency and effectiveness?

A. A company's own internal activity segments, the suppliers' part, and the forward
(distribution) channel portion of the value chain system

B. A company's reinforced activities identified as efficiency measures for improved

effectiveness

C. A company's comparative disadvantages schedule identified with benchmarking

practices

D. None of these.

E. All of these.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-153
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
111. An option for NOT remedying an internal cost disadvantage includes:

A. investing in productivity-enhancing, cost-saving technological improvements.

B. redesigning the product or some of its components to facilitate speedier and more
economical manufacture or assembly.

C. implementing the use of best practices throughout the company, particularly for high-
cost activities.

D. eliminating some cost-producing activities altogether by revamping the value chain.

E. investing in best practices.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-154
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
112. Which of the following is NOT a good option for trying to remedy high internal costs vis-à-
vis rivals' firms?

A. Finding ways to detour around activities or items where costs are high

B. Redesigning the product or some of its components to permit more economical

manufacture or assembly

C. Implementing aggressive strategic resource mapping to permit across-the-board cost

reduction

D. Outsourcing high-cost activities to vendors or contractors who can perform them more
economically

E. Relocating high-cost activities (like manufacturing) to geographic areas (like China or

Latin America or Eastern Europe) where they can be performed more cheaply

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-155
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
113. A company's strategic options for remedying cost disadvantages in internally performed
value chain activities do not include:

A. revamping its value chain to eliminate or bypass some cost-producing activities

(particularly low value-added activities).

B. implementing the use of best practices, particularly for high-cost activities.

C. investing in productivity-enhancing, cost-saving technological improvements.

D. switching to activity-based costing.

E. outsourcing the performance of high-cost activities to vendors that can perform them
more cheaply.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-156
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
114. To improve the effectiveness of its value proposition and enhance differentiation, firms
must adopt certain approaches except:

A. implement the use of best practices for quality improvement, especially high-value
activities important to the customer

B. adopt best practices and technologies that spur innovation

C. reallocate resources to activities that address buyers' most important purchase criteria

D. adopt best practices for marketing, brand management, and enhancing customer
perceptions

E. adopt outsourcing capabilities to add value to the high-cost activities

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

115. The options for remedying a supplier-related cost disadvantage include:

A. pressuring suppliers for more favorable prices, switching to lower-priced substitute

inputs, and collaborating closely to identify mutual cost-saving opportunities.

B. instituting forward vertical integration.

C. shifting into the production of substitute products.

D. shifting from a low-cost leadership strategy to a differentiation or focus strategy.

E. cutting selling prices and trying to win a bigger market share.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-157
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
116. Which of the following is NOT an option for remedying a supplier-related cost
disadvantage?

A. Integrate backward into the business of high-cost suppliers in an effort to reduce the
costs of the items being purchased.

B. Negotiate more favorable prices with suppliers.

C. Collaborate closely with suppliers to identify mutual cost-saving opportunities.

D. Switch to lower-priced substitute inputs.

E. Persuade forward channel allies to implement best practices.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-158
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
117. Which of the following is NOT an option for remedying a cost disadvantage associated
with activities performed by forward channel allies (wholesale distributors and retail
dealers)?

A. Change to a more economical distribution strategy such as putting more emphasis on

cheaper distribution channels (perhaps direct sales via the Internet) or perhaps
integrating forward into company-owned retail outlets

B. Enhance differentiation through activities such as cooperative advertising) at the

forward end of the value chain

C. Pressure distributors/dealers and other forward-channel allies to reduce their costs

and markups

D. Insisting on across-the-board cost cuts in all value chain activities—those performed

by suppliers, those performed in-house, and those performed by distributors/dealers

E. Collaborate with forward channel allies to identify win-win opportunities to reduce

costs

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-159
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
118. The means to enhance differentiation through activities at the forward end of the value
chain system include:

A. Engaging in cooperative advertising and promotions

B. Creating exclusive arrangements with downstream sellers or other mechanisms that

increase their incentives for enhanced-delivery customer value

C. Creating and enforcing standards for downstream activities

D. Assisting in training channel partners in business practices

E. Enhancing cost-reducing activities with defensive functionality designed to create

incentives

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

119. A company that does a first-rate job of managing its value chain activities relative to
competitors:

A. is likely to have more distinctive competencies than rivals.

B. stands a good chance of profiting from its competitive advantage.

C. is almost certainly going to have a longer and more profitable value chain.

D. usually has strong proficiencies in activity-based costing and benchmarking.

E. usually has the fewest primary activities and the lowest costs in the industry.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-160
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
120. Value chain analysis and benchmarking in comparison to that of rivals:

A. is one of the most useful ways a company can uncover and strengthen competitive
advantages.

B. allows a company to drive the impact of the five competitive forces.

C. is one of the best ways for a company to avoid being impacted by the industry's driving
forces.

D. allows a company to move into a higher strategic group.

E. helps neutralize external threats to a company's future business prospects.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

121. A company's value-creating activities can offer a competitive advantage in one of two
ways:

A. contribute greater efficiency and lower costs and provide a basis for differentiation.

B. contribute expense savings and enhance product exclusivity.

C. reduce cost disadvantages and market price anomalies.

D. contribute customer experience value and conserve operating functionality.

E. contribute to competitive assets and continue distinctive competencies.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-161
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
122. For a company to translate its performance of value chain activities into competitive
advantage, it must:

A. undertake ongoing and persistent efforts to be cost-efficient and develop

differentiation advantages.

B. have more core competencies than rivals.

C. have at least three distinctive competencies.

D. have competencies that allow it to produce the highest-quality product in the industry.

E. have more competitive assets than competitive liabilities.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-162
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
123. To build a competitive advantage by out-managing rivals in performing value chain
activities, a company must:

A. position itself in the industry's more favorably situated strategic group.

B. develop resource strengths that will enable it to pursue the industry's most attractive
opportunities.

C. develop core competencies and maybe a distinctive competence that rivals don't have
or can't quite match and that are instrumental in helping it deliver attractive value to
customers or else be more cost-efficient in how it performs value chain activities such
that it has a low-cost advantage.

D. outsource all of its value chain activities to world-class vendors and suppliers.

E. eliminate its resource weaknesses.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-163
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
124. Resource analysis is a tool:

A. based on cross-department combinations of intellectual capital and expertise.

B. for identifying a company's superior resources and capabilities, and such value can
only be assessed objectively after they are employed.

C. based on a standalone resource strength such as technological expertise.

D. for analyzing a company's most efficiently executed value-chain activity.

E. for identifying industry key success factors that can provide a company with a core
competence that rivals cannot effectively imitate.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-164
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
125. When companies engage in value-creating activities, they do so by:

A. focusing on exploiting a company's best-executed operating strategy.

B. concentrating on efficient performance of the company's primary value chain activities.

C. concentrating on minimizing the costs associated with the design of a product or

service.

D. drawing on specific company resources and capabilities that underlie and enable the
activity.

E. focusing on working with forward-channel allies to develop capabilities to outmatch

the capabilities of rivals.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

126. The road to competitive advantage begins with management's efforts:

A. to build organizational expertise in performing certain competitively important value

chain activities.

B. to understand the value chain activities providing opportunity for growth.

C. to build value-creating activities all along the value chain.

D. to give superiority over rivals in performing tasks and activities extremely well.

E. All of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

4-165
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
127. The value of doing competitive strength assessment is to:

A. determine how competitively powerful the company's core competencies are.

B. learn if the company's market opportunities are better than those of its rivals.

C. learn whether a company has a distinctive competence.

D. learn how the company ranks relative to rivals on each of the important factors that
determine market success and ascertain whether the company has a net competitive
advantage or disadvantage vis-à-vis key rivals.

E. determine whether a company's resource strengths are sufficient to allow it to earn

bigger profits than rivals.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

4-166
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
128. Understanding where the company is competitive requires:

A. determining whether a company has a cost-effective value chain.

B. developing quantitative strength ratings for the company and key rivals on each
industry key success factor and each pivotal resource, capability, and value chain
activity.

C. identifying a company's core competencies and distinctive competencies (if any).

D. analyzing whether a company is well positioned to gain market share and be the
industry's profit leader.

E. developing quantitative measures of a company's chances for future profitability.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

4-167
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
129. Assigning a weight to each measure of competitive strength assessment is generally
analytically superior because:

A. a weighted ranking identifies which competitive advantages are most powerful.

B. an unweighted ranking doesn't discriminate between companies with high and low
market shares.

C. it singles out which competitor has the most competitively potent core competencies.

D. weighting each company's overall competitive strength by its percentage share of total
industry profits produces a more accurate measure of its true competitive strength.

E. all of the various measures of competitive strength are not equally important.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

4-168
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
130. Competitive strength can be determined by assigning measures based on perceived
importance because:

A. it provides a more accurate assessment of the strength of competitive forces.

B. it eliminates the bias introduced for those firms having large market shares.

C. the different measures of competitive strength are unlikely to be equally important.

D. the results provide a more reliable measure of what competitive moves rivals are likely
to make next.

E. weighting each company's overall competitive strength by the size of its market share
produces a more accurate measure of its true competitive strength.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

131. In a weighted competitive strength assessment, the sum of the weights should add up to:

A. 100%.

B. 1.0

C. 10.

D. 100.

E. None of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
132. In a weighted competitive strength analysis, each strength measure is assigned a weight
based on:

A. its percentage share of total industry revenues.

B. the importance of each competitive strength measure in building a sustainable

competitive advantage.

C. its perceived importance in determining a company's competitive success in the

marketplace.

D. its percentage share of total industry profits.

E. what it takes to provide better analytical balance between the companies with high
ratings and the companies with low ratings and thus get the sum of the weights to add
up to 1.0.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

4-170
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
133. A higher company's overall weighted strength rating does not signal:

A. greater implied net competitive advantage

B. stronger overall competitiveness versus rivals.

C. weaker overall competitiveness versus rivals.

D. the possession of a competitive advantage.

E. None of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

4-171
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
134. Calculating competitive strength ratings for a company and its rivals using the industry's
most telling measures of competitive strength or weakness:

A. is a way of determining which competitor has the highest overall competitive

advantage in the marketplace and which competitor is faced with the lowest overall
competitive disadvantage.

B. is the most reliable indicator of which industry member has the highest overall product
quality.

C. is a powerful way of revealing which competitors are in the best and worst strategic
groups.

D. is the most reliable indicator of which industry member has the lowest overall costs
and is the low-cost leader.

E. pinpoints which industry rivals are most insulated from the industry's driving forces.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
135. Quantitative measures of a company's competitive strength:

A. signal which competitor has the most distinctive competencies and which competitor
has the fewest.

B. provide useful indicators of how a company compares against key rivals, factor by
factor and capability by capability—thus indicating whether the company has a net
overall competitive advantage or disadvantage against each rival.

C. reveal which competitors are in the best and worst strategic groups.

D. show which industry rival has the best overall market opportunities and which
competitor has the poorest market opportunities.

E. pinpoint which industry rival is subject to the least amount of competitive pressures
from the five competitive forces.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

4-173
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
136. Which one of the following is an accurate interpretation of the scores that result from
doing a competitive strength assessment?

A. High scores signal a strong competitive position and possession of a competitive

advantage over companies with lower scores.

B. High scores indicate that a company is a power-user of best practices, while low
scores signal minimal or ineffective adoption of best practices.

C. The company with the lowest score has the lowest-cost value chain.

D. The company with the lowest score has the strongest net competitive advantage over
its rivals.

E. High scores indicate which rivals are most vulnerable to competitive attack.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

4-174
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
137. Which one of the following is NOT something that can be learned from doing a competitive
strength assessment?

A. The factors on which a company is competitively strongest and weakest vis-à-vis key
rivals

B. Whether a company should correct its weaknesses by adopting best practices and
revamping the makeup of its value chain

C. Which of the rated companies is competitively strongest and what size competitive
advantage it enjoys

D. Whether a company has a net competitive advantage or a net competitive

disadvantage relative to key rivals (with the size of the advantage/disadvantage being
indicated by the differences among the companies' competitive strength scores)

E. Which rival company is competitively weakest and the areas where it is most
vulnerable to competitive attack

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
138. The company with the highest rating on a given measure has an implied competitive edge
on that specific measure, with the size of its edge:

A. providing the company with an overall net competitive score that is reduced by the
weighted measure.

B. signaling a weak position and competitive disadvantage.

C. reflecting the difference between its weighted rating and rivals' weighted ratings.

D. reflecting an area of potential improvement in order to achieve a sustainable

competitive advantage.

E. requiring reevaluation of the weighted measure.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
139. Calculating competitive strength ratings for a company and comparing them against
strength ratings for its key competitors helps indicate:

A. which weaknesses and vulnerabilities of competitors the company might be able to

attack successfully.

B. which competitors are in profitable strategic groups and which competitors are in
unprofitable strategic groups.

C. which competitors are employing offensive strategies and which competitors are
employing defensive strategies.

D. which competitors are likely to make money and which are likely to lose money in the
years ahead.

E. what the industry's key success factors are.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
140. A company's competitive strength scores pinpoint its strengths and weaknesses against
rivals and:

A. suggest the company use its strengths to exploit its own competitive liabilities.

B. point directly to the kinds of offensive/defensive actions it can use to exploit its
competitive strengths and reduce its competitive liabilities.

C. point directly to the company to use its weaknesses as offensive moves to challenge
rivals' weaknesses.

D. suggest receptivity for astute companies to drive their operating practices if the
strength scores are very low.

E. point directly to accepting the competitive strength scores on face value.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
141. Identifying the strategic issues a company faces and compiling a "worry list" of problems
and roadblocks is an important component of company situation analysis because:

A. without a precise fix on what problems/issues a company confronts, managers cannot

know what the industry's key success factors are.

B. the "worry list" sets the management agenda for taking actions to improve the
company's performance and business outlook.

C. without a precise fix on what problems/roadblocks a company confronts, managers are

less clear about what value chain activities to benchmark.

D. the "worry list" helps company managers clarify their thinking about how best to modify
the company's value chain.

E. these issues and obstacles must be cleared before management can focus clearly on
what is the best strategy for the company to pursue.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 6: What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
142. Identifying the strategy-related issues and problems that company managers need to
address and resolve for the company to be more financially and competitively successful
entails all of the following EXCEPT:

A. drawing on the results of both industry analysis and the evaluations of the company's
own competitiveness.

B. drawing on the evaluations of the company's own resources, internal circumstances,

and competitiveness.

C. locking in on what challenges/obstacles/roadblocks the company has to overcome in

order to be financially and competitively successful in the years ahead.

D. developing a "worry list" of "how to…," "whether to…," and "what to do about…"

E. developing a competitive strength assessment that details the strategic moves and
countermoves necessary for ensuring the company's financial future.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 6: What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
143. Identifying the strategic issues and problems that merit front-burner managerial
attention:

A. is accomplished solely by analyzing the company's internal working environment.

B. helps set management's agenda for taking actions to improve the company's
performance and business outlook.

C. is done solely by evaluating the company's own internal situation—its resources and
competitive position—to help come up with a "worry list" of "how to…," "whether to…,"
and "what to do about…"

D. is done solely as a basis for drawing conclusions about whether to stick with a
company's present strategy or to modify it.

E. None of these.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 6: What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
144. Which of the following is NOT part of the task of identifying the strategic issues and
problems that merit front-burner managerial attention?

A. Analyzing the company's external environment

B. Evaluating the company's own resources and competitive position

C. Surveying a company's board members, managers, select employees, and key investors
regarding what strategic issues they think the company faces

D. Developing a "worry list" of "how to…," "whether to…," and "what to do about…"

E. Assessing what challenges the company must overcome to be financially and

competitively successful in the years ahead

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 6: What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
145. Which of the following is NOT accurate as concerns the task of identifying the strategic
issues and problems that merit front-burner managerial attention?

A. It entails drawing upon the results and conclusions from analyzing the company's
external environment.

B. It entails drawing on the results and conclusions from evaluating the company's own
resources and competitive position.

C. It entails developing a "worry list" of "how to…," "whether to…," and "what to do
about…"

D. Identifying the strategic issues and problems that the company faces is the first thing
that company managers need to do before starting to analyze the company's internal
and external environment.

E. Developing a list of issues and problems that management need to address (and to
resolve) should always precede deciding upon a strategy and what actions to take to
improve the company's position and prospects.

AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 6: What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

Short Answer Questions

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
146. Identify and explain the six questions to consider in evaluating a company's ability to
compete successfully against market rivals.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

147. Identify at least three indicators of whether a company's present strategy is working well.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-01 Learn how to assess how well a company's strategy is working.
Topic: Question 1: How Well Is the Company's Present Strategy Working?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
148. Briefly discuss the meaning and significance of each of the following terms.

a. SWOT analysis
b. company value chain
c. industry value chain
d. activity-based costing
e. benchmarking

AACSB: Analytic
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

149. Explain the difference between a company activity, capability, competence, a core
competence, and a distinctive competence.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
150. A core competence represents a basis for competitive advantage. True or false? Explain
your answer.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

151. A distinctive competence represents competitively superior resource strength. True or

false? Explain your answer.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

152. A distinctive competence represents a basis for competitive advantage. True or false?
Explain your answer.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
153. Why do a company's core competencies matter in crafting strategy?

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

154. What are the four tests that should be used to measure the competitive power of a
company's resource strengths?

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

155. What test determines the power of a resource's competitive strength?

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
156. A company lacking stand-alone resource strength should focus on bundling several
resource strengths into a core competence. True or false? Explain and support your
answer.

AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

157. Instead of trying to match the resource strengths of rivals, what option(s) should a
company consider to enhance its competitive power in the marketplace?

AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 2: What Are the Company's Competitively Important Resources and Capabilities?

158. In conducting a SWOT analysis, is it enough to simply compile lists of the company's
strengths, weaknesses, opportunities, and threats? Why or why not?

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Discover how to assess the company's strengths and weaknesses in light of market
opportunities and external threats.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
159. What are the three parameters of conducting a SWOT analysis?

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-02 Understand why a company's resources and capabilities are central to its strategic approach
and how to evaluate their potential for giving the company a competitive edge over rivals.
Topic: Question 3: Is the Company Able to Seize Market Opportunities and Nullify External Threats?

160. The ability of a company to perform value chain activities more proficiently or more
cheaply than rivals is a potential source of competitive advantage. True or false? Explain
and defend your answer.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

161. Draw a typical company value chain and briefly explain why the proficiency with which a
firm performs the activities comprising its value chain matters.

AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
162. Why does it matter whether a company is able to perform value chain activities more
proficiently or more cheaply than rivals? Explain and support your answer.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

163. What is benchmarking and why is it a strategically important analytical tool?

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

164. What is meant by the term "best practices"? Why does it matter whether a company
utilizes "best practices" in performing the activities comprising its value chain?

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
165. Assume a firm is at a cost disadvantage with rivals because its internal costs are higher
than rivals. Identify five strategic moves that it can make to restore cost parity.

AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

166. Assume a firm is at a cost disadvantage with rivals because of higher supplier-related
costs than key rivals. Identify three strategic moves that it can make to restore cost parity.

AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

167. Assume a firm is at a cost disadvantage with rivals because of higher distributor/dealer
costs than rivals. Identify three strategic moves that it can make to restore cost parity.

AACSB: Analytic
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-04 Grasp how a company's value chain activities can affect the company's cost structure and
customer value proposition.
Topic: Question 4: Are the Company's Cost Structure and Customer Value Proposition Competitive?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
168. Explain why a weighted competitive strength assessment is important.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?
Topic: Question 6: What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

169. In determining the various strategic issues that a company needs to address, managers
need to consider BOTH the results of its analysis of the company's external environment
and the results of its evaluation of the company's resources and competitive position. True
or false? Explain and defend your answer.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
170. Why is it important for company managers to develop a "worry list" of strategic issues and
problems that they need to address and resolve? What should they consider to develop
this list?

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 5: Is the Company Competitively Stronger or Weaker than Key Rivals?

171. Explain why a good strategy must contain ways to deal with all the strategic issues and
obstacles that stand in the way of the company's financial and competitive success.

AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-05 Understand how a comprehensive evaluation of a company's competitive situation can assist
managers in making critical decisions about their next strategic moves.
Topic: Question 6: What Strategic Issues and Problems Merit Front-Burner Managerial Attention?

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.