Mgt 450 Study Guide

____1.Capabilities refer to a company’s

·Skills at coordinating its resources and putting them to productive use.

____2.In a general sense, what are a company’s resources?

·Company’s resources can be divided into two types: tangible and intangible resources. oTangible resources: physical entities, such as land, buildings, plant, equipment, inventory, and money. oIntangible resources: nonphysical entities that are created by managers and other employees, such as brand names, the reputation of the company, the knowledge that employees have gained through experience, and the intellectual property of the company, including that protected through patents, copyrights, and trademarks.

____3.Competitive advantage is based on

·Distinctive competencies.oAre firm-specific strengths that allow a company to differentiate its products from those offered by rivals and/or achieve substantially lower costs than its rivals.

____4.Factors that help a company to build and sustain competitive advantage include

·Superior efficiency, Product quality, Innovation, and Customer responsiveness.

____5.Donna can make a chair for about $100, she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. Donna’s profit margin is


____6.Which primary activity in the value chain is concerned with the design of products and production processes?

·Research and development

____7.What are the characteristics of a company’s distinctive competencies?

____8.Donna can make a chair for about $100, she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. In this case, the consumer surplus is ·$75

____9.Ford Motors developed the Explorer sports utility vehicle, the number 1 selling sports utility vehicle in the United States, based on an extensive study of customer preferences. Which value chain activity of Ford conducted those studies?

·Research and development

____10.A company’s competitive advantage will not endure for long when that competitive advantage can be

·Quickly or easily duplicated by other companies.

____11.Which activity in the value chain refers to the companywide context within which all the other value creation activities take place?

·Company infrastructure

____12.Efficiency is

·Defined as the cost of inputs required to produce a given output.

____13.When a firm produces products that customers perceive as having higher utility than those of its rivals, this firm’s source of competitive advantage is

·superior quality.

____14.The term value chain refers to the idea that a company is

·a chain of activities that transforms inputs into outputs that customers value.

____15.Which factors determine the durability of a company’s competitive advantage?

·Barriers to imitation, the capability of competitors, and the general dynamism of the industry environment.

____16.Innovation refers to the act of

·Creating new products and processes.

____17.When companies find