Chapter 3

Question 1

External Analysis Outcomes

Answer 1

opportunities and threats; firms identify what they MIGHT choose to do

Question 2

Internal Analysis Outcomes

Answer 2

unique resources, capabilities, and competencies; firms identify what they CAN do

Question 3

Competitive Advantage Key Points

Answer 3

1. tends to disappear over time

2. innovation and human capital are critical resources

Question 4

Sustainability of a competitive advantage is a function of:

Answer 4

1. the rate of core competence obsolescence due to external and internal environmental changes
2. the availability of substitutes for the core competence
3. the imitability of the core competence

Question 5

Analysis outcome of internal analysis should be:

Answer 5

understanding how to leverage the firm’s bundle of heterogeneous resources and capabilities

Question 6

Goal of the internal organization

Answer 6

creating value

Question 7

Strategic Decisions

Answer 7

1. are non-routine
2. have ethical implications
3. significantly influence the firm’s ability to earn above-average returns

Question 8

Intraorganizational conflict

Answer 8

results from decisions about core competencies and how to develop them

Question 9

2 challenges managers face

Answer 9

uncertainty and complexity

Question 10

Challenge of analyzing the internal organization

Answer 10

1. learning - making and correcting mistakes

2. judgement - taking intelligent risks and strategic competitiveness

Question 11

Resources

Answer 11

source of a firm’s capabilities, broad in scope, cover a spectrum; tangible and intangible

Question 12

Tangible Resources

Answer 12

assets that can be seen, touched, and quantified

Question 13

Intangible Resources

Answer 13

assets rooted deeply in the firm’s history, accumulated over time, can’t be seen or touched

Question 14

Categories of Tangible Resources

Answer 14

1. financial
2. organizational
3. physical
4. technological

Question 15

Categories of Intangible Resources

Answer 15

1. human resources
2. innovation
3. reputational

Question 16

Capabilities

Answer 16

emerge over time through complex interactions among tangible and intangible resources

Question 17

Two tools firms use to identify and build core competencies

Answer 17

1. four specific criteria of sustainable competitive advantage
2. value chain analysis

Question 18

Four Criteria of Sustainable Competitive Advantage

Answer 18

1. valuable
2. rare
3. costly-to-imitate
4. nonsubstitutable capabilities

Question 19

Valuable Capabilities

Answer 19

help a firm to neutralize threats or exploit opportunities

Question 20

Rare Capabilities

Answer 20

are not possessed by many others

Question 21

Costly-to-imitate

Answer 21

1. historical
2. ambiguous cause
3. social complexity

Question 22

Nonsubstitutable

Answer 22

no strategic equivalent, firm-specific knowledge, org structure

Question 23

Parity

Answer 23

average returns

Question 24

Value Chain Analysis

Answer 24

allows the firm to understand the parts of its operations that create value and those that do not

Question 25

Use of the Value Chain

Answer 25

1. understand their cost position 2. facilitate the implementation of a chosen business-level strategy 3. perform an activity in a manner that provides superior value 4. perform a value-creating activity that competitors cannot perform

Question 26

2 Types of Activities

Answer 26

1. Primary: activities required to product products | 2. Support: activities that support the work being done

Question 27

Other Aspects of Value

Answer 27

1. social capital 2. trust 3. judgement

Question 28

Outsourcing

Answer 28

purchase of a value-creating activity or support function from an external supplier

Question 29

Core Rigidities

Answer 29

former core competencies that now generate inertia and stifle innovation