Questions on Internal Assessment (Class on September 30, 2020)

Multiple Choice Questions Guidelines for Analyzing and Writing Cases (UM Learn)

1. How many strengths, weaknesses, distinctive competencies, and distinctive competencies are
we expecting you to present in total in the text part of internal assessment section? a. None
b. Three
c. Six
d. Twelve
e. All

2. How many strengths, weaknesses, distinctive competencies, and distinctive competencies are
we expecting you to present in total in the exhibit part of internal assessment section? a. None
b. Three
c. Six
d. Twelve
e. All

3. Where are you expected to provide the rationale for each of the four questions of the VRIO
analysis?
a. In the text
b. In the exhibit
c. Both in the text and in the exhibit
d. Neither in the text nor in the exhibit
e. Just think of the rationale in your mind

4. In the VRIO analysis, which of the following are you expected to discuss?
a. Resources and capabilities
b. Strategies
c. Performance
d. All of the above
e. None of the above

. . . Continued on next page

Short-answer and Essay-type Questions Analyzing Strengths and Weaknesses by Bruno
Dyck and colleagues (Class Readings File at UM Learn)

1. a. Match the three perspectives of FBL, TBL, and SET with various types of resource-based
views (RBV)—conventional RBV, radical RBV, and natural RBV:
a. FBL aligns with ……?
b. TBL aligns with ……?
c. SET aligns with …….?

b. Discuss how the FBL, TBL, and SET approaches assess valuable, rare, and inimitable resources.
Be sure to provide examples of resources and organizations to illustrate your points.

Looking Inside for Competitive Advantage by Jay Barney (Class Readings at UM Learn)

2. Explain each of the four questions to evaluate an organization’s resources and capabilities.
a The Question of Value
i It asking if a firm’s resources and capabilities add value by enabling it to
exploit opportunities and/or neutralize threats.
ii Sonny has experience in designing, manufacturing, and selling miniaturized
electronic technology so they used these resources to exploit numerous
market opportunities, including portable devices
iii Some other firms who can’t/don’t respond to fundamental changes in their
respected industry would not be able to recognize new opportunities and
threats
iv Although a firm’s resources and capabilities may have added value in the
past, changes in customer tastes, industry structure, or technology ca render
them less valuable in the future. It is important to for strategic managers to
constantly evaluate whether or not their firm’s resources and capabilities
continue to add value, despite changes in the competitive environment
v Changes in a firm’s environment may increase or reduce the value of a
firm’s resources in their current use, while leaving the value of those
resources in other uses unchanged. Ways to weather theses environmental
shifts is by finding new ways to apply the firm’s traditional strengths.
vi By answering the question of value, managers link the analysis of internal
resources and capabilities with the analysis of environmental opportunities
and threats. Firm resources are not valuable in a vacuum, but rather valuable
only when they exploit opportunities and/or neutralize threats

b The Question of Rareness

i It is asking how many competing firms already possess these valuable
resources and capabilities
ii A firm’s resources and capabilities are valuable, is an important first
consideration in understanding internal sources of competitive advantage. A
resource is unlikely to be a source of competitive advantage if a particular
resource and capability is controlled by numerous competing firms.
Competitive parity is when firms have valuable but common (i.e., not rare)
resources and capabilities, this is not a competitive advantage.
iii Having a valuable and rare resources may enable a firm to gain at least a
temporary competitive advantage.
c The Question of Imitability
i It is asking if competing firms without valuable and rare resource/capability
are facing a cost disadvantage in obtaining it compared to firms that already
possess it
ii Imitations critical to understanding the ability of resources and capabilities
to generate sustained competitive advantages. Imitation can occur in at least
two ways: duplication and substitution.
1 Duplication occurs when an imitating firm builds the same kinds of
resources as the firm it is imitating
2 Substitution occurs when firms tries to substitute some resources for
other resources. If these substitute resources have the same strategic
implications and are o more costly to develop, then imitation through
substitution will lead to competitive parity in the long run
iii Three main reasons why a firm may be at a cost disadvantage in imitating
another firm’s resources and capabilities
1 The importance of history in creating firm resources
a As firms evolve, they pick of pick skills, abilities, and
resources that are unique to them, reflecting their particular
path through history. These resources and capabilities reflect
the unique personalities, experiences, and relationships that
exist in only a single firm.
i The best way to go about this is not to duplicate the
resources but to substitute it by exploiting your own
unique resources because you may not have the same
support as the firm you are trying to duplicate
2 The importance of numerous “small decisions” in developing,
nurturing, and exploiting resources
a From the point of view of sustaining a competitive advantage,
“small decisions” have some advantages over “big decisions.”
b Small decisions are essentially invisible to firms seeking to
imitate a successful firm’s resources and capabilities. While
big decisions are obvious, easier to describe, and perhaps,
easier to imitate. It is easy to observe the consequences of
numerous small decisions but it is difficult to understand the
sources of the advantages of small decisions
3 The importance of socially complex resources
a It is easy to imitate physical resources but it is difficult to
imitate socially complex resources and capabilities like
reputation, trust, friendship, teamwork and culture.
iv When a firm’s resources and capabilities are valuable, rare, and socially
complex, these resources are likely to be sources of sustained competitive
advantage
 d The Question of Organization
i To fully realize a firm’s competitive advantage potential, a firm must also be
organized to exploit its resources and capabilities.
ii Formal reporting structure, its explicit management control systems, and its
compensation policies are relevant when answering the question of a firm’s
organization. These components are referred to as complementary resources
because they have limited ability to generate competitive advantage in
isolation. However, in combination with other resources and capabilities,
they can enable a firm to realize its full competitive advantage
iii Firms organization have to be ready to quickly implement and take
advantage of valuable and rare resources and capabilities in order to sustain
competitive advantage

Appendix: Value Chain Analysis and the Evaluation of Firm Strengths and Weaknesses
(Exhibit A of Guidelines for Case Analysis and Writing)

3. Apply VRIO analysis to Crown Cork and Seal (CC&S) company.

Tesla Case (Case Package from Ivey Publishing)

4. What does Tesla’s partnership strategy look like? Why has it developed in this fashion?

5. Take any one resource or capability of Tesla, and apply all the four steps of the VRIO
analysis to it and show whether it is likely to be a strength, weakness, distinctive
competence, or a sustainable distinctive competence in the future.

6. What should be Tesla’s future partnership strategy?

Chapter 3 of Hill and colleagues (text-book)

7. Explain the firm as a bundle of resources (see Figure 3.1 and its explanation in the
chapter in 12th and 13th edition of the book). (Pg. 83)
a This essentially means when a company transforms its inputs into outputs by
using its bundle of resources like labor, land, management, plants and equipment,
process knowledge, organizational architecture, and intellectual property.
b The efficiency and effectiveness with which a company performs this
transformation process depends critically upon the quality of its resources, and most
significantly, upon the quality of its advanced factors of production— process
knowledge, organizational architecture, and intellectual property.

OR
7. Explain the relationships of strategies, resources and capabilities (distinctive competencies),
value creation, and firm performance (see Figure 3.1 and its explanation in the chapter in
11th edition of the book).

8. Explain the VRIO framework. What is it useful for? (Pg 83-84)

a The VRIO stands for Value, Rarity, Inimitability, Organization. It represents a

useful way for managers to think about the quality of a company’s resources

9. What is a value chain? Please explain (see Figure 3.5 and its explanation in the chapter).
(Pg. 90-91)
a A value chain is the concept that a company consist of a chain of functional
activities that transforms inputs into outputs. The transformation process involves
both primary activities and support activities. Value is added to the product at each
stage in the chain. Valuable, rare, inimitable resources can be found within one or
more of a company’s value-chain activities.

10. What are the four building blocks of competitive advantage? Explain each of them. (Pg. 96-
100)
a Superior efficiency
i Quantity of inputs required to produce a given output. The more efficient a
company is, the fewer inputs it requires to produce a particular output, and
the lower its costs.
1 One common measure of efficiency is employee productivity which
refers to the output produced per employee.
2 Another measure of efficiency is capital productivity which refers to
the output produced by a dollar of capital invested in the business.
b Quality
i A product is said to have superior quality when customers perceive that its
attributes (form, features, performance, durability, reliability, style, and
design) provide them with higher utility than the attributes of products sold
by rivals
1 A common measurement of quality is the product’s excellence which
can be the product’s design and styling, its aesthetic appeal, its
features and functions, the level of service associated with delivery
of the product, and so on. When excellence is built into a product
offering, consumers must pay more to own or consume it.
2 Another common measurement of quality is the product’s reliability.
A product can be said to be reliable when it consistently performs the
function it was designed for, performs it well, and rarely, if ever,
breaks down. As with excellence, reliability increases the value
(utility) a consumer derives from a product, and thus affects the price
 the company can charge for that product and/or the demand for that
product.
c Innovation
i Product innovation is the development of products that are new to the
world or have superior attributes to existing products. Product innovation
generates value by creating new products, or enhanced versions of existing
products, that customers perceive as having more value, thus increasing the
company’s pricing options.
ii Process innovation is the development of a new process for producing and
delivering products to customers. Process innovation often allows a
company to create more value by lowering production costs.
d Customer responsiveness
i Identifying and satisfying customer’s needs compared to the firm’s
competitors which would lead to customers attributing more value to its
products, creating a competitive advantage based on differentiation
ii Another way to improve responsiveness to customers is the need to
customize goods and services to the unique demands of individuals or
groups.
iii Another way to improve responsiveness is customer response time which is
the time that it takes a good to be delivered or a service to be performed
e By performing value-chain activities to achieve superior efficiency, quality,
innovation, and customer responsive- ness, a company can (1) differentiate its
product offering, and hence offer more value to its customers, and (2) lower its cost
structure.

Westover Inn Case (A)

11. What do you think of projections made by Reg Jackson in the Westover Inn case for
calculating Net Present Value in Exhibit 14? Is he over-optimistic or over-pessimistic? Explain.