Homework Lance
MULTIPLE CHOICE
1. The basis for competitive advantage of a technology focused firm ____.
a.
is difficult to identify
b.
is the capabilities of the firm
c.
will be changed every year
d.
can not be overcome due to patents held by the firm
e.
is a daily struggle for the firm to maintain
ANS: B PTS: 1
2. All of the following are strategic capabilities that a firm needs for success except ____.
a.
leadership
b.
a culture of support
c.
appropriate industry structure
d.
an organizational structure that fits with goals
e.
skills necessary to implement given strategy
ANS: C PTS: 1
3. When a company is developing its capabilities, it should do all of the following except:
a.
Develop a clear strategic logic for processing information and sharing knowledge
b.
Put into place the appropriate structures and processes for technical and nontechnical activities
c.
Motivate employees to take advantage of capabilities
d.
Make sure the structure of the organization is hierarchical and well-defined
e.
Allow resources to be captured by the right people at the right place at the right time to make a competitive difference
ANS: D PTS: 1
4. For technology and innovation focused firms their competitive advantage is a function of all of the following except ____.
a.
technological complexity
b.
capabilities of the organization such as human skill
c.
capabilities of the organization such as knowledge
d.
the location of the firm in a cluster of excellence
e.
ability of the firm to learn from its activities
ANS: D PTS: 1
5. Which of the following industries is described in the text as hypercompetitive?
a.
Cell phones
b.
Ulcer medications
c.
Wood processing machinery
d.
Heart medications
e.
Automobiles
ANS: A PTS: 1
6. To increase the capabilities of the firm:
a.
The lessons for the future must be captured and documented
b.
Human skill and knowledge must be more closely linked to technological complexity
c.
Managers of the firm must make the decision to increase capabilities
d.
There must be an “ah-ha” moment of discovery
e.
Increasing capabilities is difficult to do and no one knows how that can be accomplished
ANS: B PTS: 1
7. The characteristics of hypercompetition include all of the following except:
a.
flexible, aggressive, innovative competitors moving into existing markets
b.
constant disequilibrium and change
c.
increased uncertainty, dynamism, and heterogeneity of players
d.
hostility in the competitive marketplace
e.
slow cycle changes in technology
ANS: E PTS: 1
8. If the environment of a firm is described as fast cycle the key to success for a firm would be:
a.
adequate financing to overcome competitive pressures
b.
marketing capability to explain differences in the firm’s product
c.
high levels of investment in capital assets in order to control output
d.
continuous improvement in the firm
e.
patent protection to prevent copying of their ideas by others
ANS: D PTS: 1
9. The competitive pressures in a standard cycle environment are typically focused on ____.
a.
competitive imitation
b.
radical innovation
c.
efficiency
d.
hypercompetition
e.
disruptive technology
ANS: A PTS: 1
10. The key to building a competitive advantage with either a low-cost or differentiation strategy is:
a.
the external environment accepts the firm’s choice of strategy
b.
the strategy chosen is the standard for the industry
c.
that the various strategic capabilities of the firm are consistent with the strategy
d.
that process innovation be applied throughout the firm to increase efficiency
e.
cutting-edge products become the norm
ANS: C PTS: 1
11. A firm like General Electric with a very large number of different businesses in a corporation would be expected to have a(n) ____ organizational structure.
a.
simple
b.
functional
c.
divisional
d.
matrix
e.
SBU
ANS: E PTS: 1
12. The least complex implementation of external sources of technology and innovation is associated with ____.
a.
informal contracts
b.
licensing
c.
franchising
d.
joint venture
e.
merger/acquisition
ANS: A PTS: 1
13. The key sustainable competitive advantages for a firm using an internal innovation strategy include:
a.
improved process control, broader portfolio possibilities, and higher value-added products
b.
improved process control, higher value-added products, and better proprietary positioning
c.
reduced time to market, broader portfolio possibilities, faster decisions
d.
faster decisions, higher value-added products, larger structures
e.
better product understanding, faster decisions about market entry, larger firms
ANS: B PTS: 1
14. The result of a competitive advantage should focus on ____.
a.
obtaining excessive rewards from market
b.
creation of value for firm
c.
creation of value for consumers
d.
obtaining profits
e.
expanded job opportunities
ANS: B PTS: 1
15. The creation of value at the firm level is ____.
a.
development of innovation capacity and exploitation of that capacity to introduce new products and services
b.
development of innovation capacity and exploitation of that capacity to make above par profits
c.
development of innovation capacity and exploitation of that capacity to overcome hypercompetition in that domain
d.
development of innovation capacity and the selling of that capacity to others so that the firm develops a competitive advantage
e.
development of the industry structure and the exploitation of the resulting industry position so that above par profitability results
ANS: A PTS: 1
16. For technology oriented firms, it is important for managers to understand that value must be:
a.
the result of customer expectations
b.
customer driven
c.
added to the product through any means possible
d.
closely tied to profitability
e.
maintained by the employees
ANS: B PTS: 1
17. The ____ view of the firm argues that industry structure is the principal determinant of profitability.
a.
resource
b.
industrial organization
c.
agency
d.
hypercompetition
e.
re-engineering
ANS: B PTS: 1
18. All of the following would be intangible resources except ____.
a.
brand recognition
b.
perception of quality
c.
culture
d.
innovation
e.
financing
ANS: E PTS: 1
19. The most common sources of competitive advantage would be ____.
a.
intangible resources
b.
tangible resources
c.
either intangible or tangible
d.
the equipment that advances the ability to produce quality
e.
the CEO
ANS: A PTS: 1
20. Each of the following is a step in the value creation process except ____.
a.
develop capabilities/investments that increase innovation
b.
recognize and deploy innovation by increasing product activity or the number of products introduced
c.
exploit innovation through sales growth
d.
expand the market size through creative marketing
e.
continue to improvement through investment in support capabilities and/or improvements in efficiency and productivity
ANS: D PTS: 1
21. Value creation in a firm is something that ____.
a.
is achieved only late in its life cycle
b.
is a goal but not a necessity
c.
is a mindset
d.
is achieved only after moving to a functional structure
e.
is progression throughout the firm
ANS: C PTS: 1
22. Each of the following is a key resource for intrapreneurship except ____.
a.
entrepreneurial mindset
b.
hypercompetitive environment
c.
external network
d.
human resources
e.
economic goals
ANS: B PTS: 1
23. Which types of firms would be expected to have the fewest slack resources?
a.
mature firms
b.
large firms
c.
startup firms
d.
mezzanine firms
e.
buyout firms
ANS: C PTS: 1
24. The employment at most Fortune 500 firms is ____.
a.
expanding rapidly
b.
expanding slowly
c.
neutral
d.
declining
e.
not clear at this time
ANS: D PTS: 1
25. Entrepreneurial firms that have high capital needs typically obtain those funds from ____.
a.
friends
b.
family
c.
banks
d.
savings & loan
e.
venture capital funds
ANS: E PTS: 1
26. The funds for venture capital typically come from ____.
a.
banks
b.
insurance firms and pension funds
c.
mutual funds
d.
small investors making investments
e.
stock brokerage firms
ANS: B PTS: 1
27. Interest carried refers to ____.
a.
the interest rate charged by a bank for a loan
b.
the rate of return provided by venture capital
c.
the percent which a venture capitalist will get from the venture capital fund
d.
the percent investment an individual makes in a new venture
e.
the amount of money an individual has to invest to participate in a venture capital fund
ANS: C PTS: 1
28. The return on venture capital is typically ____.
a.
lower than public equities
b.
the same as public equities
c.
slightly higher than public equities
d.
much higher than public equities
e.
not comparable to public equities
ANS: D PTS: 1
29. Industry standards for technology are usually established through:
a.
professional groups or industry-related decisions
b.
the marketplace and competitive activities
c.
management decisions about external activities
d.
the inventors of the product
e.
professional/official industry groups or the marketplace
ANS: E PTS: 1
30. Benchmarking is used most often in:
a.
value creation
b.
value appropriation
c.
value protection
d.
value destruction
e.
it depends on the industry environment
ANS: B PTS: 1
31. The operating measures of value destruction include ____.
a.
investment, new markets
b.
product and geographical extensions
c.
market share, efficiency
d.
lost share, dramatic action
e.
imitation, reassign/acquire resources
ANS: D PTS: 1
32. The driving force in the appropriation value process include ____.
a.
imitate, reassign/acquire resources
b.
innovations, new venture
c.
barriers, market power
d.
competition, divestiture
e.
investment, new markets
ANS: A PTS: 1
33. Turnaround means ____.
a.
the firm is successful in introducing a new product
b.
the firm moves up the industry rankings
c.
the firm develops a knowledge base
d.
the firm is now able to compete in a hypercompetive market
e.
the reversal of a pattern of decline
ANS: E PTS: 1
34. Retrenchment is associated with the ____.
a.
the ability to cut the operating costs of a firm
b.
the ability to develop a new knowledge base
c.
the ability reverse the innovation lead of a competitor
d.
the benchmarking of activities of competitors in the same industry
e.
the benchmarking of activities of leaders in different processes
ANS: A PTS: 1
35. Organizational revival through turnaround is accomplished through:
a.
retrenchment, speed of response, leadership and type of turnaround strategies
b.
reorganization, layoffs, leadership change, and strategic redirection
c.
layoffs, downsizing, outsourcing, and change in leadership
d.
speed of response, decisiveness of top managers, organizational level, and layoffs
e.
downsizing, outsourcing, speed of response and retrenchment
ANS: A PTS: 1
TRUE/FALSE
1. Products that are put on deep discount at an electronics retailer often reflect some failure in human skills and capabilities since there is no demand for the product.
ANS: T PTS: 1
2. In a hypercompetitive environment a competitive advantage is easier to maintain because industry growth is so fast.
ANS: F PTS: 1
3. The key to building a competitive advantage with either a low cost or differentiation strategy is that various strategic capabilities of the firm are consistent with the strategy.
ANS: T PTS: 1
4. The most complex implementation for internal efforts to develop a new technology or innovation involves tweaking.
ANS: F PTS: 1
5. The more complex the implementation the easier it is to connect the activities of the firm since there are more potential means to organize the various activities.
ANS: F PTS: 1
6. The result of a competitive advantage is intended to be profits.
ANS: F PTS: 1
7. The measure of value creation of a firm is its profitability.
ANS: F PTS: 1
8. Industry structure and internal resources are two distinct views of what generates the creation of value for a firm.
ANS: T PTS: 1
9. A major form of tangible resources is the culture of the firm.
ANS: F PTS: 1
10. Individuals must pick either a resource view or an industrial organization view to understand the creation of value in a firm since the views are not compatible with each other.
ANS: F PTS: 1
11. The creation of value requires commitment by the firm and must be customer driven.
ANS: T PTS: 1
12. Startup firms typically do not have slack resources.
ANS: T PTS: 1
13. In venture capital typically all of the parties involved have money at risk.
ANS: T PTS: 1
14. The success rate of venture capital backed entrepreneurial firms is 80 percent.
ANS: T PTS: 1
15. Speed is important to the ability to successfully turn a firm around.
ANS: T PTS: 1
SHORT ANSWER
1. Discuss how technology and innovation focused firms gain competitive advantage.
ANS:
·
technological complexity
·
capabilities of the organization such as human skill
·
capabilities of the organization such as knowledge
·
ability of the firm to learn from its activities
PTS: 1
2. What are the strategic capabilities that a firm needs to meet its goals and objectives as well as maintain competitive viability?
ANS:
·
Leadership
·
Culture of support for innovation
·
A structure that fits
·
The skills necessary to implement the strategy
PTS: 1
3. Describe the characteristics that a resource must have to create value.
ANS:
·
nonreplicable
·
unique
·
rare
PTS: 1
4. Contrast the resource view of competitive success and the industrial organization view.
ANS:
·
industrial view was presented in the five forces model
·
the industrial view argues that industry structure is primary source of competitive advantage
·
resource view argues that the internal resources of firm are primary source of competitive advantage and creation of value
·
resources can be tangible or intangible
PTS: 1
5. Discuss the stages of the value creation process.
ANS:
·
develop capabilities/investments that increase innovation
·
recognize and deploy innovation by increasing product activity or the number of products introduced
·
exploit innovation through sales growth
·
continue to improvement through investment in support capabilities and/or improvements in efficiency and productivity
PTS: 1
6. What four resources are needed for corporate venturing?
ANS:
·
entrepreneurial resources – knowledge and experience in innovation and managing new products
·
human resources – makeup of workforce including technical knowledge
·
external network resources – existing and potential linkages to outside resources
·
economic resources – profitability and marketability of technology being developed
PTS: 1
7. What are the ways and means for setting industry standards?
ANS:
·
industry standards may be set by industry related professional group or a governmental group
·
industry standards may be set by the marketplace
·
industry standards are impacted by the interconnections between firms
PTS: 1
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