Chapter 4 Assessing Strengths and Weaknesses: Doing An Internal Analysis

Strategic Management in Action, 6e (Coulter)
Chapter 4 Assessing Strengths and Weaknesses: Doing an Internal Analysis
1) An organization's tangible and intangible resources can be a source of competitive advantage

and these resources play an important role in determining an organization's capabilities and
competencies.
Answer: TRUE
Diff: 2 Page Ref: 93
Topic: Describe What an Internal Analysis Is
AACSB: Analytical Skills
Objective: Describe tools and models for assessing a firm's internal environment
2) Organizational capabilities are the special and unique processes that distinguish the
organization from its competitors.
Answer: FALSE
3) Organizational capabilities are regular, predictable, and sequential patterns of work activity by
organizational members.
Answer: FALSE
4) Dynamic capabilities are an organization's ability to build, integrate, and reconfigure

capabilities to address rapidly changing environments.
Answer: TRUE
5) Core competencies are the organization's major value-creating skills and capabilities that are
essential to their business.
Answer: TRUE
Topic: From Capabilities to Core Competencies and Distinctive Capabilities
1
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
6) Distinctive organizational competencies are the common capabilities that do not distinguish an
organization from its competitors.
Answer: FALSE
7) Strengths are resources that the organization possesses and capabilities that the organization
has developed, both of which can be exploited and developed into a sustainable competitive
advantage.
Answer: TRUE
8) Weaknesses are resources and capabilities that are lacking or deficient and that prevent the
organization from developing a sustainable competitive advantage.
Answer: TRUE
9) Customer value arises from the similarity of products to others, the product is low priced, and
the ability of the organization to respond to customer needs.
Answer: FALSE
Topic: Explain How to Do an Internal Analysis
10) Value chain analysis is a systematic way of examining all the organization's functional
activities and how well they create customer value.
Answer: TRUE
2
11) An external audit is a thorough assessment of an organization's various internal functional
areas.
Answer: FALSE
12) An internal audit is similar to a financial audit, although it focuses on much more than just
the financial aspects.
Answer: TRUE
13) The first step in the capabilities assessment profile is to develop and leverage the
organization's distinctive capabilities.
Answer: FALSE
14) Preparing a current product-market profile emphasizes organization-customer interactions.

Answer: TRUE
15) When customers purchase a product, they are not purchasing a bundle of attributes that they
believe will satisfy their needs.
Answer: FALSE
16) Identifying and agreeing on the key competencies and capabilities is critical to managing
strategically for a sustainable competitive advantage.
Answer: TRUE
3
17) One criterion that could be used to determine whether resources and capabilities are strengths
or weaknesses is past performance trends.
Answer: TRUE
18) Every organization needs goals at all levels and in all functional areas that state what it hopes
to accomplish by when.
Answer: TRUE
19) Doing an internal analysis is needed for making good strategic decisions.
Answer: TRUE
Topic: Discuss Why an Internal Analysis is Important
20) An internal analysis involves an examination of

A) the organization's current vision.
B) the organization's mission.
C) the organization's strategic objectives.
D) the organization's strategies.
E) None of the above answer choices are true.
Answer: E
21) Factors like Coca-Cola's brand name "Coke" and Nike's "swoosh" symbol construct
________ resources for the organization.
A) physical
B) intangible
C) financial
D) invisible
E) human
Answer: B
4
22) The various organizational routines and processes that determine how efficiently and
effectively the organization transforms its inputs into outputs are called
A) strengths.
B) core competencies.
C) capabilities.
D) customer value.
E) operations.
Answer: C
23) Identifying distinctive organizational capabilities involves

A) preparing an historical product/market profile.
B) describing top management organizational capabilities and competencies.
C) sorting the core capabilities and competencies according to functional level priorities.
D) identifying the functional strategies.
E) None of the answer choices is correct.
Answer: E
24) One activity in organizational routines and processes is

A) obtaining needed raw materials.
B) establishing various product pricing structures.
C) generating end-of-quarter financial reports.
D) generating operational statistical reports.
E) All of the answer choices are correct.
Answer: E
5
25) ________ are the regular, predictable, and sequential patterns of work activities performed
by organizational members.
A) Organizational capabilities
B) Accumulated knowledge
C) Actual work activities
D) Organizational routines and processes
Answer: D
26) Characteristics of dynamic capabilities include all of the following except

A) timely responsiveness.
B) reactive responsiveness.
C) rapid and flexible product innovation.
D) coordinating and deploying organizational resources and capabilities.
Answer: B
27) Southwest's capability of quick gate turnaround time and exceptional employee-customer
interactions is known as
A) a distinctive organizational capability.
B) an exceptional opportunity.
C) a superior customer value.
D) a distinguished service.
Answer: A
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28) The ability of Hampton Inn to provide customers moderately-priced accommodation with all
the amenities and conveniences travelers want is an example of
A) contributing to superior customer value.
B) a second-to-market philosophy.
C) operating under a benchmarking philosophy.
D) providing a system that is easily duplicated.
Answer: A
29) Special and unique capabilities that distinguish the organization from its competitors are
called
A) distinguished organizational capabilities.
B) distinctive organizational capabilities.
C) demonstrated organizational capabilities.
D) denoted organizational capabilities.
E) delineated organizational capabilities.
Answer: B
30) The ability of Honda to use its fuel-efficient and reliable engines in automobiles,
motorcycles, and power generators is an example of
A) contributing to superior customer value.
B) creating a product that is difficult for competitors to imitate.
C) developing an innovation that can be used in a number of ways.
D) simulating an effective system developed by a competitor.
E) making a product with a low amount of financial capital.
Answer: C
7
31) The organization's major value-creating skills and capabilities that are shared across multiple
product lines or multiple businesses are called
A) distinctive organizational capabilities.
B) competitive intelligence.
C) core weaknesses.
D) core competencies.
E) core opportunities.
Answer: D
32) Core competencies cannot be a source of ________, but can contribute to the development of
________.
A) organizational goals; competitive advantage
B) dynamic capabilities; internal analysis.
C) competitive advantage; distinctive capabilities.
D) distinctive capabilities; organizational goals
Answer: C
33) Resources that the organization possesses and capabilities that the organization has
developed, both of which can be developed into a sustainable competitive advantage, are known
as
A) weaknesses.
B) strengths.
C) opportunities.
D) threats.
Answer: B
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34) Resources that are lacking or deficient and that prevent the organization from developing a
sustainable competitive advantage, are known as
A) weaknesses.
B) strengths.
C) opportunities.
D) threats.
Answer: A
35) A systematic way of examining all of the organization's functional activities and how well
they create customer value is
A) core competency development.
B) value chain analysis.
C) organizational goal analysis.
D) organizational change.
Answer: B
36) Customer value is determined by

A) a unique and different product.
B) a low-priced product.
C) the ability to respond to specific or distinct customer needs.
D) All of the answer choices are correct.
Answer: D
9
37) Which of the following are considered to be primary activities in a value chain analysis as
outlined by Porter?
A) Inbound logistics
B) Procurement
C) Human resource management
D) Firm's infrastructure
E) None of the answer choices is correct
Answer: A
38) The concept of the value chain was developed by

A) Milton Friedman.
B) Peter Drucker.
C) Alfred Chandler.
D) Tom Peters.
E) Michael Porter.
Answer: E
39) All of the following constitute primary activities except

A) procurement.
B) marketing and sales.
C) outbound logistics.
D) operations.
E) customer service.
Answer: A
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40) All of the following constitute support activities except
A) technological development.
B) firm's infrastructure.
C) operations.
D) human resource management.
E) procurement.
Answer: C
41) Performance of ________ activities would not be possible without ________ activities.
A) core; support
B) primary; support
C) support; primary
D) strategic; support
E) support; core
Answer: B
42) According to the value chain analysis, the process connected to the acquisition and utilization
of resources is known as
A) managing human resources.
B) technological development.
C) firm infrastructure.
D) purchasing.
Answer: D
11
43) The internal audit answers the questions of
A) Do the various functions have the needed resources to perform their assigned work activities?
B) How well do they perform these assigned work activities?
C) What are the organization's primary opportunities and threats?
D) possessing the needed resources and then performing assigned work activities.
Answer: D
44) Which of the following is one of the basic organizational functions managers should examine
during an internal audit?
A) Production-operations
B) Marketing
C) Financial-accounting
D) Information systems
E) All of the answer choices are correct
Answer: E
AACSB: Use of Information Technology
45) Which of the following is not an organizational function that internal audit looks at?
A) Production-operations
B) Marketing
C) Research and development
D) Financial-accounting
Answer: E
12
46) The internal audit concentrates on the availability or lack of critical ________ and the level
of ________.
A) capital; skills
B) resources; capabilities
C) financial resources; management
D) skills; resources.
Answer: B
47) The key to using an ________ is to determine how well or poorly organizational functions
are being performed.
A) internal audit
B) capabilities assessment profile
C) strategic audit
D) resource audit
E) core competency audit
Answer: A
48) All of the following reflect questions asked of the management function during the internal
audit except
A) Are jobs effectively designed?
B) What is the level of employee turnover?
C) Is the organization able to raise long-term capital?
D) How does the organization treat its employees?
E) Does the organization effectively use work teams?
Answer: C
13
49) After a current product-market profile has been assessed, the next step is to
A) identify sources of competitive advantage and the disadvantage in the main product-market
segments.
B) emphasize the interactions between the organization and customers.
C) conduct an external assessment of competitors.
D) All of the answer choices are correct.
E) None of the answer choices are correct.
Answer: A
50) The second step in identifying distinctive organizational capabilities through a capabilities
assessment profile is
A) describe all the organizational capabilities and competencies.
B) identify and agree on the key capabilities and competencies.
C) identify sources of competitive advantage and disadvantage in the main product-market
segments.
D) prepare a current product-market profile.
E) sort the core capabilities and competencies according to strategic importance.
Answer: C
51) The question, "Does the capability provide tangible customer benefits?" occurs under what
step of the capabilities assessment profile which identifies distinctive organizational capabilities?
A) Sort the core capabilities and competencies according to strategic importance.
B) Identify and agree on the key capabilities and competencies.
C) Describe all the organizational capabilities and competencies.
D) Prepare current product-market profile.
Answer: A
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52) Which of the following is not a criterion mentioned in the text for determining whether or
not resources and capabilities are strengths or weaknesses?
A) Comparison against competitors
B) Current performance
C) Trends in market share
D) Financial ratios
Answer: B
53) One criterion used to judge organizational strengths and weaknesses is

A) past performance trends.
B) comparison against competitors.
C) specific goals or targets.
D) personal opinions of strategic decision makers or consultants.
Answer: E
54) Statements of desired outcomes are known as

A) core competencies.
B) organizational goals.
C) distinctive competencies.
D) management vision.
E) directed action.
Answer: B
15
55) Why is an internal analysis important?
A) It is the only way to identify an organization's strengths and weaknesses.
B) It is needed for making good strategic decisions.
C) It establishes organizational goals.
D) It identifies strengths and weaknesses and it assists in decision making.
E) Answers B and D are correct.
Answer: E
Topic: Discuss Why an Internal Analysis is Important
Nikki Krisak, a talented, well-established interior designer in the Pacific Northwest, has decided
to do an internal analysis of her company, Northland Designs. You have been asked to advise Ms.
Krisak in analyzing her company's strengths and weaknesses.
56) Northland Designs' ability to stay on the cutting edge of home interior trends throughout the
company is called
A) a distinctive organizational capability.
B) a competitive intelligence.
C) a core weakness.
D) a core competency.
E) a core opportunity.
Answer: D
57) Northland Designs always seems to combine styles in compelling ways that distinguishes
this company from its competitors. This ability is called
A) a distinguished organizational capability.
B) a distinctive organizational capability.
C) a demonstrated organizational capability.
D) a denoted organizational capability.
E) a delineated organizational capability.
Answer: B
16
58) Ms. Krisak studies the internal audit to determine the availability or lack of critical ________
and the level of ________.
A) capital; skills
B) resources; capabilities
C) financial resources; management
D) skills; resources.
Answer: B
59) Ms. Krisak asks the question, "Does the ability to stay on the cutting edge of home interior
trends provide our customer tangible benefits?" Under which step of the capabilities assessment
profile are distinctive organizational capabilities identified?
A) Sort the core capabilities and competencies according to strategic importance.
B) Identify and agree on the key capabilities and competencies.
C) Describe all the organizational capabilities and competencies.
D) Prepare current product-market profile.
Answer: A
60) Explain the characteristics of distinctive organizational capabilities.

Answer:
∙ The characteristic should contribute to superior customer value. The factor should offer some
real benefit to customers.
∙ The distinctive organizational capability can also be used in a variety of ways. What works in
one area should be transferred to other areas of the organization.
∙ The final characteristic of the distinctive capability is difficult for competitors to imitate.
AACSB: Reflective Thinking
17
61) What are core competencies?
Answer: Core competencies are the organization's major value-creating skills and capabilities
that are shared across multiple product lines or businesses. This process of sharing what an
organization does best across various organizational units and developing other outlets for
creating value out of these core skills and capabilities is what distinguishes the concept of core
competencies from distinctive capabilities. Core competencies, however, cannot be a source of
competitive advantage, but can contribute to the development of distinctive capabilities.
62) List some of the questions in an internal audit as it relates to information systems.
Answer:
∙ Is information updated regularly?
∙ Are training workshops or seminars provided for users of the information system?
∙ Is the organization's information system secure?
∙ Is information distributed effectively and efficiently?
∙ Is the organization's information system user friendly?
63) Define the steps in the identification of distinctive organizational capabilities.

Answer:
∙ Prepare current product-market profile.
∙ Identify sources of competitive advantage and disadvantage in the main product-market
segments.
∙ Describe all the organizational capabilities and competencies.
∙ Sort the core capabilities and competencies according to strategic importance.
∙ Identify and agree on the key capabilities and competencies.
Diff: 3 Page Ref: 104-105
64) Describe the criteria involved in judging organizational strengths and weaknesses.
Answer:
∙ Past performance trends
∙ Comparison against competitors
∙ Specific goals or targets
∙ Personal opinions of strategic decision makers or consultants
18

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Chapter 4 Assessing Strengths and Weaknesses: Doing An Internal Analysis

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Strategic Management in Action, 6e (Coulter)

Chapter 4 Assessing Strengths and Weaknesses: Doing an Internal Analysis

1) An organization's tangible and intangible resources can be a source of competitive advantage

4) Dynamic capabilities are an organization's ability to build, integrate, and reconfigure

14) Preparing a current product-market profile emphasizes organization-customer interactions.

20) An internal analysis involves an examination of

23) Identifying distinctive organizational capabilities involves

24) One activity in organizational routines and processes is

26) Characteristics of dynamic capabilities include all of the following except

36) Customer value is determined by

38) The concept of the value chain was developed by

39) All of the following constitute primary activities except

53) One criterion used to judge organizational strengths and weaknesses is

54) Statements of desired outcomes are known as

60) Explain the characteristics of distinctive organizational capabilities.

63) Define the steps in the identification of distinctive organizational capabilities.

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