Chapter 5 Internal Scanning and Organizational Analysis Strategic Management & Business Policy, 13e (Wheelen/Hunger)

1) Resources are the organization's assets and are the basic building blocks of the organization.
Answer: TRUE
2) The resources of an organization include tangible assets, human assets, and intangible assets.
Answer: TRUE
3) Capabilities refer to a corporation's ability to exploit its resources.
Answer: TRUE
4) New product development would be a core competency if it goes beyond one division.
Answer: TRUE
5) General Electric is well known for its distinctive competency in management development.
Answer: TRUE
6) Core competencies may mature and become core deficiencies.
Answer: TRUE
7) An example of a cluster in the US is found in the Silicon Valley.
Answer: TRUE
8) Two characteristics that determine the sustainability of a firm's distinctive competency are durability and transparency.
Answer: FALSE
9) Durability is the rate at which a firm's underlying resources and capabilities (core competencies) can be duplicated by others.
Answer: FALSE
10) A core competency can be easily imitated to the extent that it is transparent, transferable, and replicable.
Answer: TRUE
11) Since competitors were not able to understand how Gillette's Mach 3 razor was produced, it was considered transparent.
Answer: FALSE
12) Transferability is the ability of competitors to use duplicated resources and capabilities to imitate the other firm's success.
Answer: FALSE
13) Tacit knowledge is knowledge that can be easily communicated or articulated and as result can be easily imitated.
Answer: FALSE
14) eBay and Amazon.com have successfully used the efficiency model by acting as an intermediary to connect multiple sellers to
multiple buyers.
Answer: FALSE
15) A value chain is a linked set of value-creating activities.
Answer: TRUE
16) A company's center of gravity is the part of the value chain that is most important to the company and the point where its greatest
expertise and core competencies lie.
Answer: TRUE
17) A company's center of gravity is usually the point at which the company started.
Answer: TRUE
18) According to Porter, a manufacturing firm's support activities usually begin with inbound logistics, go through an operations
process in which a product is manufactured, and continue on to outbound logistics and finally to service.
Answer: FALSE
19) When a company uses the same marketing channel for two separate products, this is an example of an economy of scope.
Answer: TRUE
20) A functional structure is appropriate for a medium sized firm with several product lines in one industry.
Answer: FALSE
21) A divisional structure has no functional or product categories and is appropriate for a small, entrepreneur-dominated company with
one or two product lines that operates in a reasonably small, easily identifiable market niche.
Answer: FALSE
22) Cultural integration is the degree to which members of a unit accept the norms, values, or other culture content associated with the
unit.
Answer: FALSE
23) When employees across the organization hold the same cultural values and norms, this demonstrates a high level of cultural
integration.
Answer: TRUE
24) The corporate culture generally reflects the values of the founder(s) and the mission of the firm.
Answer: TRUE
25) The marketing mix refers to the particular combination of key variables under the corporation's control that can be used to affect
demand and to gain competitive advantage.
Answer: TRUE
26) The product life cycle enables a marketing manager to examine the marketing mix of a particular product or group of products in
terms of its position in its life cycle.
Answer: TRUE
27) Research reveals a positive relationship between corporate reputation and financial performance.
 Answer: TRUE
28) Research indicates that greater financial leverage has a positive impact on performance for firms in dynamic environments.
Answer: FALSE
29) A good rule of thumb for R & D spending is that a corporation should spend at a "normal" rate for that particular industry unless
its strategic plan calls for unusual expenditures.
Answer: TRUE
30) A company's capability in product R & D can be measured by consistent reductions in unit manufacturing costs and by the number
of product defects.
Answer: FALSE
31) It is generally accepted that product R & D normally dominates the early stages of a product's life cycle, whereas process R & D
becomes especially important in the later stages.
Answer: TRUE
32) Historically, competitive leadership in a market changes hands as one technology nears the end of its S-curve.
Answer: TRUE
33) An example of an intermittent manufacturing system is an auto body repair shop.
Answer: TRUE
34) Intermittent manufacturing systems reap benefits from economies of scale.
Answer: FALSE
35) Flexible manufacturing permits the low-volume output of custom-tailored products at relatively low unit costs through economies
of scope.
Answer: TRUE
36) Using concurrent engineering, Chrysler Corporation was able to reduce its product development cycle from 60 to 36 months.
Answer: TRUE
37) To increase flexibility, avoid layoffs, and reduce labor costs, corporations are using more contingent workers.
Answer: TRUE
38) A current trend in corporate information systems is the increasing use of the Internet for marketing, intranets for internal
communication, and extranets for logistics and distribution.
Answer: TRUE
39) The EFAS Table is one way to organize the internal factors into generally accepted categories of strengths and weaknesses as well
as to analyze how well a particular company's management is responding to these specific factors in light of the perceived importance
of these factors to the company.
Answer: FALSE
40) Those critical strengths and weaknesses that are likely to determine if a firm will be able to take advantage of opportunities while
avoiding threats are called
C) internal strategic factors. Approach to Organizational Analysis
41) Which of the following is NOT one of the four question areas Barney proposes in his VRIO framework used to evaluate a firm's
key resources?
A) durability
42) When a company determines a competency's competitive advantage, Barney refers to this issue as
A) value.
43) According to Barney's VRIO framework, the exploitation of a resource pertains to the ________ of the resource.
D) organization
44) A corporation's ability to exploit its resources is referred to as its
B) capabilities.
45) Things that a corporation can do exceedingly well across the corporation are called
C) core competencies.
46) When a company's core competencies are superior to those of competitors, these are known as
B) distinctive competencies.
47) Which of the following statements is true concerning clusters?
A) The desire to build or upgrade a core competency is one reason why entrepreneurial and other fast-growing firms often
tend to locate close to their competitors.
B) Clusters are geographic concentrations of interconnected companies and industries.
C) An example of a cluster in the U.S. is California's Silicon Valley.
D) According to Porter, clusters provide access to employees, suppliers, specialized information, and complementary
products.
E) all of the above
48) The rate at which a firm's underlying resources and capabilities depreciate or become obsolete is called
D) durability.
49) The rate at which a firm's underlying resources, capabilities, or core competencies can be duplicated by others is called
C) imitability.
50) When a company takes apart a competitor's product in order to find out how it works, this process is known C) reverse
engineering.
51) The speed with which other firms can understand the relationship of resources and capabilities supporting a successful firm's
strategy is called
D) transparency.
52) The ability of competitors to use duplicated resources and capabilities to imitate the other firm's success is called
E) replicability.
53) Knowledge that can be easily articulated and communicated is known as
B) explicit knowledge.
54) ________ is more valuable because it can provide companies with a sustainable competitive advantage that is harder for
competitors to imitate.
A) Tacit knowledge
55) Knowledge that is not easily communicated because it is deeply rooted in employee experience or in a corporation's culture is
called
A) tacit knowledge.
56) On the continuum of resource sustainability, where would Sony's Walkman be placed?
D) fast-cycle resources
57) The business model used by IBM to make money not selling IBM products, but by selling its expertise to improve their customers
operations is the
C) customer solutions model.
58) The business model used by HP in selling printers and printer cartridges is the
E) multi-component system/installed base model.
59) A linked set of value-creating activities beginning with basic materials provided by suppliers and ending with distributors getting
the final product into the hands of the ultimate consumer is called a(n)
A) value chain.
60) The part of an industry's value chain that is most important to a company and the point where its greatest expertise and capabilities
lie is called the company's
B) center of gravity.
61) Which of the following is NOT a primary activity of the value chain?
D) purchasing
62) Which of the following is NOT a support activity of the value chain?
D) marketing and sales
63) When examining the corporate value chain of a particular product or service, which one of the following is NOT one of the
PRIMARY activities that usually occur?
C) auditing and accounting
64) The second step when analyzing the value-added chain is to
B) examine the linkages among the product's or service's value activities.
65) When the value chains of two separate products or services share activities, such as the same marketing channels, in order to
reduce costs, this is an example of
A) economies of scope.
66) Which of the following describes a typical functional structure?
A) Employees tend to be specialists in the business functions important to that industry such as manufacturing,
marketing, finance, and human resources.
67) Which of the following best describes a simple structure?
C) This is most appropriate for small, entrepreneur-dominated companies with one or two product lines that operate
in a small niche market, with employees acting as jack-of-all trades.
68) Which one of the following best describes a divisional structure?
B) This is most appropriate for large corporations with many product lines in several related industries, with
employees acting as functional specialists attempting to gain synergy among divisional activities.
69) Which one of the following best describes a conglomerate structure?
E) This is most appropriate for large corporations with many product lines in several unrelated industries;
unrelatedness prevents any attempt at gaining synergy among the divisions.
70) According to the text, which one of the following is NOT descriptive of a corporation's culture?
B) Corporate cultures are only temporary and can be easily changed.
71) What are the two distinct attributes of corporate culture?
D) intensity and integration
72) What is the attribute of corporate culture that is the degree to which members of a unit accept the norms, values, or other culture
content associated with the unit?
C) intensity
73) Which of the following is a function of corporate culture?
C) It conveys a sense of identity for employees. Scanning Functional Resources and Capabilities
74) Which of the following is NOT a function of corporate culture?
D) keeps people guessing about what to do next
75) The breadth of an organization's culture is also known as
 A) cultural integration.
76) Through market research, corporations can target their various products or services so that management can discover what niches
to seek or develop, and how to minimize competitive pressure. This is descriptive of
C) market segmentation.
77) The particular combination of product, place, promotion, and price is called
D) marketing mix.
78) An example of the promotion variable of the marketing mix is
A) advertising.
79) A graph showing time plotted against the dollar sales of a product as it moves from introduction through growth and maturity to
decline is called the
B) product life cycle.
80) Which of the following statements is true concerning a corporate reputation?
A) It is a widely held perception of a company by the general public.
B) A good corporate reputation can be a strategic resource.
C) There is a positive relationship between corporate reputation and financial performance.
D) Reputation tends to be long-lasting and hard for others to duplicate.
E) all of the above
81) As compared to a firm with low financial leverage, a firm with a high amount of financial leverage in an expanding market should
have
C) higher earnings per share.
82) The ratio of total debt to total assets is known as
D) financial leverage.
83) Which of the following is NOT a responsibility of a research and development manager?
D) Taking the design and operationalizing the plan into mass production.
84) The process of taking a new technology from the laboratory to the marketplace is called
E) technology transfer.
85) When scientists concentrate on quality control and the development of design specifications, this is referred
C) engineering R&D.
86) The displacement of one technology by another, as shown by two S-shaped curves on a graph, is referred to
D) technological discontinuity.
87) The proposition that silicon chips double in complexity every 18 months is referred to as
C) Moore's Law.
88) In Christensen's book, The Innovator's Dilemma, he explains that managers remain with certain technologies based on
A) return of investment.
89) According to the text, the primary task of the operations manager is to
B) develop and operate a system that will produce the required number of products or services with a certain quality,
at a given cost, within an allotted time.
90) Which of the following terms best describes a system in which items are normally processed sequentially, but the work and
sequence of the process vary?
E) intermittent system
91) An automobile assembly line is an example of which approach to manufacturing?
A) continuous system
92) The impact of a specific change in sales volume on net operating income is referred to as the
C) operating leverage.
93) The concept that suggests that unit production costs decline by some fixed percent each time the total accumulated volume of
production in units doubles is referred to as
B) the experience curve.
94) Which one of the following is NOT descriptive of the experience curve?
A) It is very useful because it is consistent within the industry for all involved organizations over
95) Flexible manufacturing emphasizes
D) economies of scope over economies of scale.
96) Strategic managers must be concerned with human resource management because
D) workers are more likely to go on strike if management attempts to cross them.
97) In order to move more quickly through a product's development stage, companies like Motorola and Chrysler are using
B) cross-functional work teams.
98) The term that describes putting once isolated specialists together to work and compare notes in a collective product design effort is called
D) concurrent engineering.
99) Human resource departments have found that to reduce employee dissatisfaction and unionization efforts, they must
E) consider the quality of work life in the design of jobs.
100) Which one of the following is NOT one of the four methods to improve the corporation's quality of work life?
C) More responsive management
101) The mix in the workplace of people from different races, cultures, and backgrounds is referred to as
B) human diversity.
102) The PRIMARY task of the manager of information systems is to D) design and manage the flow of information in a corporation to improve.