GLOBAL 2nd Edition Mike Peng Test Bank 1

Solution Manual for GLOBAL 2nd Edition by Mike Peng
ISBN 1111821755 9781111821753

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mike-peng-isbn-1111821755-9781111821753/
Chapter 4—Leveraging Resources & Capabilities
TRUE/FALSE
1. The insight that competitors do not share certain resources and capabilities specific to one's firm is also
known as the resource-based view.
ANS: T PTS: 1 DIF: Easy REF: p. 50

OBJ: Intro NAT: AACSB: Tier 1 Communication | Tier 2 Creation of Value
2. In global business, the institution-based view deals with internal strengths and weaknesses
ANS: F PTS: 1 DIF: Moderate REF: p. 50

OBJ: Intro NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value
3. A firm's resources and capabilities are tangible assets a firm uses to choose and implement its
strategies.
ANS: F PTS: 1 DIF: Difficult REF: p. 51

OBJ: 4.1 NAT: AACSB: Tier 1 Communication | Tier 2 Creation of Value
4. Tangible resources and capabilities are assets easily observable and quantified.
ANS: T PTS: 1 DIF: Moderate REF: p. 51

5. Intangible resources and capabilities are hard to observe and difficult to quantify.

6. Financial, physical, and technological resources and capabilities are all tangible assets.

OBJ: 4.1 NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value
7. Human resources, innovation, and reputational resources and capabilities are all intangible assets.
OBJ: 4.1 NAT: AACSB: Tier 1 Technology | Tier 2 Information Technology
8. The value chain is a chain of horizontal activities used in the production of goods and services that
may or may not add value.
ANS: F PTS: 1 DIF: Easy REF: p. 52

9. Benchmarking is an assessment as to whether a firm has resources and capabilities to perform a

particular activity in a manner superior to competitors.

10. Commoditization is the point at which an industry specific activity becomes common across
industries, after which the need to keep it proprietary no longer exists.

OBJ: 4.2 NAT: AACSB: Tier 1 Diversity | Tier 2 Operations Management
11. Outsourcing is the process of turning over an organizational activity to an outside supplier, located in a
foreign country, which will perform it on behalf of the local firm.

12. Onshoring is the opposite to offshoring, meaning outsourcing to a domestic company.

OBJ: 4.3 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Operations Management
13. Offshoring means outsourcing to an international or foreign firm.

OBJ: 4.3 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Operations Management
14. Setting up subsidiaries abroad so the work can be performed in-house but in the foreign location is also
called captive sourcing.

15. The resource-based view focuses on the value, return on investment, imitability, and operations.

16. The difficulty of identifying the causal determinants of successful firm performance is best described
in two words: causal ambiguity.

OBJ: 4.4 NAT: AACSB: Tier 1 Diversity | Tier 2 Group Dynamics
17. Overall, valuable, rare, but imitable resources and capabilities may give firms some temporary
competitive advantage.
ANS: T PTS: 1 DIF: Difficult REF: p. 56

OBJ: 4.5 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Creation of Value
18. The combination of resources and assets that enable a firm to gain a competitive advantage is also
called combination assets.
ANS: F PTS: 1 DIF: Moderate REF: p. 56

OBJ: 4.5 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Creation of Value
19. According to a McKinsey study, US firms save 58 cents on every dollar invested in offshoring to
India.

OBJ: Debate NAT: AACSB: Tier 1 Technology | Tier 2 Creation of Value
20. Social complexity refers to the socially complex ways of organizing typical of many firms.

OBJ: 4.5 NAT: AACSB: Tier 1 Diversity | Tier 2 Ethical Responsibilities
MULTIPLE CHOICE
1. The view in global business which deals with external opportunity threats is also called:
a. Global-business external view
b. Resource-based view
c. Institution-based view
d. Global-business internal view
ANS: C PTS: 1 DIF: Moderate REF: p. 50
OBJ: Intro NAT: AACSB: Tier 1 Analytic | Tier 2 Strategy
2. A global business perspective that deals with internal strengths and weaknesses is also called:
a. Global-business external view
b. Resource-based view
c. Institution-based view
d. Global-business internal view
ANS: B PTS: 1 DIF: Moderate REF: p. 50
OBJ: Intro NAT: AACSB: Tier 1 Communication | Tier 2 Creation of Value
3. Observable and easily quantified assets are:

a. Resources and capabilities c. Tangible assets
b. Core competencies d. Intangible assets
ANS: C PTS: 1 DIF: Difficult REF: p. 51
4. Assets hard to observe and difficult to quantify are:

a. Resources and capabilities c. Tangible assets
b. Core competences d. Intangible assets
ANS: D PTS: 1 DIF: Moderate REF: p. 51
OBJ: 4.1 NAT: AACSB: Tier 1 Analytic | Tier 2 Environmental Influences
5. Which of the following is NOT a tangible asset?

a. Financial resources and capabilities
b. Physical resources and capabilities
c. Human resources and capabilities
d. Technological resources and capabilities
6. Which of the following is NOT an intangible asset?

a. Human resources and capabilities
b. Reputational resources and capabilities
c. Innovation resources and capabilities
d. All of these are intangible assets
OBJ: 4.1 NAT: AACSB: Tier 1 Analytic | Tier 2 Environmental Influences
7. A chain of activities used in the production of goods and services that add value is a(n):
a. Value chain
b. Vertical chain
c. Activity chain
d. None of these answers
ANS: A PTS: 1 DIF: Moderate REF: p. 52
8. An examination as to whether a firm has the resources and capabilities to perform a particular activity
in a manner superior to competitors is:
a. Resources and capabilities test c. Asset appraisal
b. Performance test d. Benchmarking
9. Turning over an organizational activity to an outside supplier that will perform it on behalf of the local
firm is also called:
a. Captive sourcing c. Offshoring
b. Inshoring d. Outsourcing
ANS: D PTS: 1 DIF: Easy REF: p. 53
OBJ: 4.3 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Group Dynamics
10. The point at which an industry-specific activity becomes common across industries and the need to
keep it proprietary no longer exists is also called:
a. Commoditization c. Break even point
b. Specification d. Pinnacle
OBJ: 4.2 NAT: AACSB: Tier 1 Communication | Tier 2 Legal Responsibilities
11. Turning over an organizational activity to an international firm is also called:

OBJ: 4.3 NAT: AACSB: Tier 1 Reflective Thinking | Tier 2 Group Dynamics
12. Turning over an organizational activity to a domestic firm is also called:

13. Setting up subsidiaries abroad when the work is done in-house only at the foreign location is also
called:
OBJ: 4.3 NAT: AACSB: Tier 1 Diversity | Tier 2 Creation of Value
14. Which of the following are the four focal points of the resource-based view?
a. Value, return on investment, imitability, organizational aspects of resources and
capabilities
b. Validity, return on investment, imitability, organizational aspects of resources and
capabilities
c. Value, rarity, imitability, operation
d. Value, rarity, imitability, organizational aspects of resources and capabilities
15. The difficulty of identifying the causal determinants of successful firm performance is also called:
a. Causal identification c. Performance indicator
b. Ambiguity d. Causal ambiguity
16. The combination of resources and assets that enables a firm to gain a competitive advantage is also
called:
a. Core assets c. Resource assets
b. Competitive assets d. Complementary assets
17. When US firms offshore to India, how much do they save on each dollar invested?
a. 58% c. 80%
b. 10% d. 45%
OBJ: Debate NAT: AACSB: Tier 1 Communication | Tier 2 Creation of Value
18. The socially intricate and interdependent ways that firms are typically organized may be called:
a. Social typicality
b. Social complexity
c. Organized typicality
d. Complex organization
OBJ: 4.5 NAT: AACSB: Tier 1 Diversity | Tier 2 Group Dynamics
19. Which of the following is the implication for action based on the information in this chapter?
a. Managers need to build firm strengths based on the VRIO framework
b. Relentless imitation or benchmarking, while important, is not likely to be a successful
strategy
c. Managers need to build up resources and capabilities for future competition
d. All of these answers
ANS: D PTS: 1 DIF: Moderate REF: pp. 58-59
ESSAY
1. Identify the three categories of tangible resources, and provide an example for each category.
ANS:
The first category is financial resources and capabilities, meaning the depth of a firm's financial
pockets. The capabilities include abilities to generate internal funds and raise external capital.
Example: Saturna’s ability to tap into the pool of funds from Islamic investors.
The second is physical resources and capabilities, such as plants, offices, and equipment, their
geographic locations, and access to raw materials and distribution channels. Amazon and the growth of
the largest physical brick-and-mortar book warehouses in key geographic locations is an excellent
example.
Technological resources and capabilities, the third category, include skills and assets that generate
leading edge products and services supported by patents, trademarks, copyrights, and trade secrets.
Example: over 60% of Canon's products have been introduced since 2005.
PTS: 1 DIF: Moderate REF: p. 51 OBJ: 4.1

NAT: AACSB: Tier 1 Communication | Tier 2 Creation of Value
2. Identify the three categories of intangible assets, and provide an example for each category.
ANS:
Human resources and capabilities: This represents the knowledge, trust, and talents embedded within a
firm that are not captured by its formal tangible systems and structures. For example, the Dallas-based
Southwest Airlines’ dedicated employees are widely noted as a leading force behind its enviable
performance.
Innovation resources and capabilities: A firm's assets and skills to (1) research new products and
services, and (2) innovate and change ways of organizing. Apple, for instance, is renowned for its cool
innovations.
Reputational resources and capabilities: A firm's ability to develop and leverage its reputation as a
solid provider of goods/services, an attractive employer, and/or socially responsible corporate citizen.
South-Western Cengage Learning’s market-leading “global” books—Global Business, Global
Strategy, and GLOBAL (this book)—enjoy a great reputation around the world and are studied by
students in over 30 countries.
PTS: 1 DIF: Moderate REF: p. 51 OBJ: 4.1

NAT: AACSB: Tier 1 Communication | Tier 2 Creation of Value
3. If a firm is a bundle of resources and capabilities, how do they come together to add value?
ANS:
A value chain (shown in Figure 4.2) indicates that most goods and services are produced through a
chain of activities from upstream to downstream. The value chain typically consists of two areas:
primary and support activities. Each activity requires a number of resources and capabilities.
Value chain analysis forces managers to examine a firm's resources and capabilities at a very micro
activity-based level. The key is to examine whether a firm has the resources and capabilities to
perform a particular activity in a manner superior to competitors, a process known as benchmarking in
SWOT analysis.
PTS: 1 DIF: Moderate REF: pp. 52-53 OBJ: 4.2

NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value
4. What is the definition of outsourcing? Provide an example.
ANS:
Answers will vary.
Outsourcing is defined as turning over an organizational activity to an outside supplier that will
perform the tasks on behalf of a local firm. For example, many consumer products companies, which
possess strong capabilities in upstream activities (such as design) and downstream activities (such as
marketing), have offshored manufacturing to suppliers in low-cost countries. Appalachian, Great
Plains, and southern regions of the United States have emerged as new hotbeds for inshoring. In job-
starved regions such as Michigan, high-quality IT workers may accept wages 35% lower than at
headquarters and government incentives are available.
PTS: 1 DIF: Difficult REF: pp. 53-54 OBJ: 4.3

NAT: AACSB: Tier 1 Technology | Tier 2 Creation of Value
5. Do a firm's resources and capabilities add value? Explain with an example.
ANS:
Answers will vary.
The value chain suggests this is the most fundamental question. Only value-adding resources can
possibly lead to competitive advantage. Non-value-adding capabilities may lead to competitive
disadvantages.
As changes in the competitive landscape emerge, previously value-adding resources may become
obsolete. The evolution of IBM is a case in point. IBM historically excelled in making computer
hardware. Since the 1990s, IBM transformed from a hardware-producing company to become a more
lucrative software and technological services company. It has developed new value-added capabilities,
aiming to become an on-demand computing service for corporations.
PTS: 1 DIF: Easy REF: pp. 54-58 OBJ: 4.4 | 4.5
NAT: AACSB: Tier 1 Technology | Tier 2 Creation of Value
6. How does the resource-based view answer the big question in global business:
“What determines the success and failure of firms around the globe?”
ANS:
Successful firms that outperform others have developed valuable, rare, hard-to-imitate, organization-
embedded resources and capabilities that their competitors lack. The VRIO framework mirrors the
time honored SWOT analysis, which assesses the strengths, weaknesses, threats, and opportunities of a
firm.
Managers who utilize and employ the firm's resources and capabilities will continue to gain success. A
VRIO framework used as a tool in a firm's value chain analysis helps managers make decisions on
what capabilities to focus on in-house and what to outsource. What really matters is not tangible
resources that are easy to imitate but intangible capabilities that are more difficult for rivals to imitate.
PTS: 1 DIF: Difficult REF: pp. 58-59 OBJ: 4.6

NAT: AACSB: Tier 1 Analytic | Tier 2 Creation of Value

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Solution Manual for GLOBAL 2nd Edition by Mike Peng

ISBN 1111821755 9781111821753

Solution manual: https://testbankpack.com/p/solution-manual-for-global-2nd-

Test bank: https://testbankpack.com/p/test-bank-for-global-2nd-edition-by-

Chapter 4—Leveraging Resources & Capabilities

ANS: T PTS: 1 DIF: Easy REF: p. 50

ANS: F PTS: 1 DIF: Moderate REF: p. 50

ANS: F PTS: 1 DIF: Difficult REF: p. 51

ANS: T PTS: 1 DIF: Moderate REF: p. 51

ANS: T PTS: 1 DIF: Easy REF: p. 51

ANS: T PTS: 1 DIF: Moderate REF: p. 51

ANS: F PTS: 1 DIF: Easy REF: p. 52

9. Benchmarking is an assessment as to whether a firm has resources and capabilities to perform a

ANS: T PTS: 1 DIF: Moderate REF: p. 52

ANS: T PTS: 1 DIF: Easy REF: p. 53

ANS: F PTS: 1 DIF: Easy REF: p. 53

12. Onshoring is the opposite to offshoring, meaning outsourcing to a domestic company.

ANS: T PTS: 1 DIF: Easy REF: p. 54

13. Offshoring means outsourcing to an international or foreign firm.

ANS: T PTS: 1 DIF: Easy REF: p. 54

ANS: T PTS: 1 DIF: Easy REF: p. 54

ANS: F PTS: 1 DIF: Easy REF: p. 54

ANS: T PTS: 1 DIF: Moderate REF: p. 56

ANS: T PTS: 1 DIF: Difficult REF: p. 56

ANS: F PTS: 1 DIF: Moderate REF: p. 56

ANS: T PTS: 1 DIF: Moderate REF: p. 55

ANS: T PTS: 1 DIF: Easy REF: p. 58

3. Observable and easily quantified assets are:

4. Assets hard to observe and difficult to quantify are:

5. Which of the following is NOT a tangible asset?

6. Which of the following is NOT an intangible asset?

11. Turning over an organizational activity to an international firm is also called:

12. Turning over an organizational activity to a domestic firm is also called:

PTS: 1 DIF: Moderate REF: p. 51 OBJ: 4.1

PTS: 1 DIF: Moderate REF: p. 51 OBJ: 4.1

PTS: 1 DIF: Moderate REF: pp. 52-53 OBJ: 4.2

4. What is the definition of outsourcing? Provide an example.

PTS: 1 DIF: Difficult REF: pp. 53-54 OBJ: 4.3

5. Do a firm's resources and capabilities add value? Explain with an example.

PTS: 1 DIF: Difficult REF: pp. 58-59 OBJ: 4.6

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