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CHAPTER 05
INTERNAL SCANNING: ORGANIZATIONAL ANALYSYS
True/False
1.
A resource is an asset, competency, process, skill, or knowledge controlled by the corporation.
Answer: T
(p.81)
2.
There are only two key resources of a firm: value and rareness.
Answer: F
(p.81)
3.
Corporate capabilities are the things that a corporation can do exceedingly well.
Answer: T
(p.82)
4.
Durability is the rate at which a firms underlying resources and capabilities (core competencies)
can be duplicated by others.
Answer: F
Transparency is the speed at which other firms can understand the relationship of resources and
capabilities supporting a successful firms strategy.
Answer: T
(p.82)
5.
(p.82)
6.
The center of gravity is the part of the chain that is most important to the company and the point
where its greatest expertise and capabilities lie.
Answer: T
(p.82)
7.
Linkages are the connections between the way one value activity is performed and the cost of
performance of another activity.
Answer: T
(p.85)
8.
9.
A medium sized firm with several product lines in one industry should use a functional structure.
Answer: F
Cultural integration is the degree to which members of a unit accept the norms, values, or other
culture content associated with the unit.
Answer: F
(p.86)
(p.87)
10.
Cultural integration is the extent to which units throughout an organization share a common
culture.
Answer: T
(p.89)
11.
Economies of scope result when unit costs are reduced by making large numbers of the same
product.
Answer: F
(p.89)
12.
The marketing mix refers to the particular combination of key variables under the corporations
control that can be used to affect demand and to gain competitive advantage.
Answer: T
(p.97)
13.
14.
One of the price marketing mix variables is location.
Answer: F
148
(p.90)
(p.90)
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15.
Financial leverage is the ratio of total debt to total assets.
Answer: T
(p.92)
16.
R&D intensity is a principal means of decreasing marketing share in global competition.
Answer: F
(p.92)
17.
(p.93)
(p.97)
19.
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 companys management is
responding to these specific factors in light of the perceived importance of these factors to the
company.
Answer: F
(p.97)
20.
Multiple Choice
21.
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
a.
b.
c.
d.
e.
22.
23.
24.
(p.82)
value.
rareness.
imitability.
organization.
durability.
When a company determines a resources competitive advantage, Barney refers to this issue as
a.
b.
(p.82)
durability
organization
rareness
value
imitability
According to Barneys VRIO framework, the question of the resource being costly for other
competitors to imitate relates to the concept of
a.
b.
c.
d.
e.
(p.81)
SWOT.
competitive forces.
internal strategic factors.
quality accounting.
factor analysis.
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.
b.
c.
d.
e.
(p.101)
value.
rareness.
149
(p.81)
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c.
d.
e.
25.
According to Barneys VRIO framework, the exploitation of a resource pertains to the _____ of the resource.
a.
b.
c.
d.
e.
26.
b.
c.
d.
e.
29.
30.
(p.82)
resources.
distinctive competencies.
core competencies.
critical success factors.
key performance factors.
(p.82)
resources.
distinctive competencies.
core competencies.
critical success factors.
key performance factors.
When a companys capabilities or competencies are superior to those of competitors, these are
known as
a.
b.
c.
d.
e.
(p.81)
(p.81)
if it is significantly different from its own past, its key competitors, or the industry
average.
if it is the basis for the firm's founding.
if it is a variable to which top management allocates a large proportion of the
organization's resources.
if it is directly affected by the national economic outlook.
if legislation is enacted which requires the organization to concentrate.
An asset, competency, process, skill, or knowledge controlled by the corporation is called a(n)
a.
b.
c.
d.
e.
28.
value
rareness
imitability
organization
durability
An internal variable can be considered a strategic factor and should be considered in strategic
decisions
a.
27.
imitability.
organization.
durability.
corporate capabilities.
distinctive competencies.
core competencies.
critical success factors.
key performance factors.
150
(p.82)
(p.82
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31.
The rate at which a firm's underlying resources and capabilities depreciate or become obsolete is
called
a.
b.
c.
d.
e.
32.
33.
35.
36.
(p.83)
tacit knowledge.
explicit knowledge.
imitable knowledge.
transferable knowledge.
durable knowledge.
_____ is more valuable because it provides companies with a sustainable competitive advantage
that is harder for competitors to imitate.
a.
b.
c.
d.
e.
(p.83)
imitability.
reverse engineering.
transferability.
transparency.
durability.
(p.82)
durability.
replicability.
reverse engineering.
transparency.
transferability.
The speed with which other firms can understand the relationship of resources and capabilities
supporting a successful firms strategy is called
a.
b.
c.
d.
e.
(p.83)
imitability.
durability.
transferability.
transparency.
replicability.
When a company takes apart a competitors product in order to find out how it works, this process
is known as
a.
b.
c.
d.
e.
34.
replicability.
transparency.
imitability.
durability.
transferability.
The ability of competitors to use duplicated resources and capabilities to imitate the other firm's
success is called
a.
b.
c.
d.
e.
(p.82)
Tacit knowledge
Explicit knowledge
Imitable knowledge
Transferable knowledge
Durable knowledge
151
(p.83)
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37.
Knowledge that is not easily communicated because it is deeply rooted in employee experience or
in a corporations culture is called
a.
b.
c.
d.
e.
38.
39.
41.
42.
(p.84)
The approach to internal scanning and organizational analysis which examines the nature and
extent of the synergies that do or do not exist between the internal activities of a corporation is
called
a.
b.
c.
d.
e.
(p.85)
functional crossroads.
center of gravity.
dynamic equilibrium.
R&D intensity.
economy of scope.
The two segments of the value chain of most industries are called
a.
b.
c.
d.
e.
(p.84)
value chain.
continuum of sustainability.
strategic capability.
fully integrated activity set.
a strategic group.
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
a.
b.
c.
d.
e.
(p.83)
continuum of sustainability.
board of directors continuum.
multidomestic-global continuum.
integration continuum.
gravity continuum.
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.
b.
c.
d.
e.
40.
tacit knowledge.
explicit knowledge.
imitable knowledge.
transferable knowledge.
durable knowledge.
An organization's resources and capabilities can be placed on a continuum to the extent they are
durable and can't be imitated by another firm. This continuum is called the
a.
b.
c.
d.
e.
(p.83)
PIMS.
S.W.O.T..
functional analysis.
7-S framework.
corporate value chain analysis.
152
(p.84)
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43.
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?
a.
b.
c.
d.
e.
44.
45.
47.
48.
(p.87)
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.
b.
c.
d.
e.
(p.86)
(p.86)
procurement process
human resources
technology development
logistics
infrastructure of planning, accounting, and finance
(p.86)
inbound logistics.
marketing and sales.
installation.
technology development.
warehousing.
Which of the following is NOT one of the four support activities considered when examining the
value-added chain of a particular product or service?
a.
b.
c.
d.
e.
46.
operations
inbound and outbound logistics
auditing and accounting
marketing and sales
customer service
(p.85)
economies of scope.
economies of scale.
economies of integration.
economies of learning.
outsourcing.
153
(p.87)
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49.
The structure of a corporation is often defined in terms of communication, authority, and work
flow. Which of the following describes a typical functional structure?
a.
b.
c.
d.
e.
50.
51.
(p.87)
c.
d.
e.
52.
Work is divided into subunits on the basis of areas like manufacturing, marketing,
and finance.
Most appropriate for large corporations with many product lines in several related
industries, with employees acting as specialists attempting to gain synergy among
divisional activities.
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.
Employees having two or more superiors, a project manager and a functional manager.
Most appropriate for large corporations with many product lines in several unrelated
industries, with employees acting as specialists but with no attempt at gaining synergy
among the divisions.
An organization's structure is
a.
b.
c.
d.
e.
b.
c.
d.
e.
(p.87)
(p.87)
154
(p.87)
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53.
c.
d.
e.
54.
55.
b.
c.
d.
e.
57.
(p.89)
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?
a.
b.
c.
d.
e.
(p.89)
(p.87)
distinctive capabilities
control of its business functions
a unique mission
identifiable competitors
an external market focus
According to the text, which one of the following is NOT descriptive of a corporation's culture?
a.
56.
(p.88)
integration
strength
intensity
coordination
unity
155
(p.89)
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58.
What is the attribute of corporate culture that is the extent to which units within an organization
share a common culture?
a.
b.
c.
d.
e.
59.
60.
62.
63.
(p.90)
marketing position.
product life cycle.
market segmentation.
marketing mix.
marketing leverage.
(p.90)
market position.
product life cycle.
market segmentation.
marketing mix.
marketing leverage.
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
a.
b.
c.
d.
e.
(p.89)
cultural integration.
cultural diversification.
cultural intensity.
cultural strategy.
cultural prerogative.
The selection of a specific area for marketing concentration in terms of product and geographical
location is called the
a.
b.
c.
d.
e.
(p.89)
61.
integration
strength
intensity
coordination
unity
(p.89)
marketing position.
product life cycle.
market segmentation.
marketing mix.
marketing leverage.
156
(p.90)
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64.
65.
66.
68.
69.
As compared to a firm with low financial leverage, a firm with a high amount of financial
leverage in an expanding market should have
70.
(p.92)
(p.92)
financial leverage.
investment evaluation.
strategic study.
break-even analysis.
capital budgeting.
When the debt level from the sale of bonds is raised, there is an increase in the
a.
b.
c.
(p.90)
lower profits.
higher profits
higher earnings per share.
lower earnings per share.
higher sales revenue.
The analysis and ranking of possible investments in terms of additional outlays and additional
needed receipts is called
a.
b.
c.
d.
e.
(p.91)
publicity.
payment period.
credit term.
transport.
features.
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
a.
marketing position.
b.
product life cycle.
c.
market segmentation.
d.
marketing mix.
e.
marketing leverage.
a.
b.
c.
d.
e.
(p.91)
sales promotion.
transport.
packaging.
discount.
style.
67.
advertising.
discounts
location.
services.
quality.
(p.91)
revenues generated.
net profit.
break-even point.
157
(p.92)
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d.
e.
71.
72.
c.
d.
e.
74.
75.
(p.92)
11.5%, 1%
12.5%, 1%
1%, 12.5%
1%, 11.5%
14.5%, 1%
The ability of a corporation to effectively and efficiently manage its research and development
effort is referred to as
a.
b.
c.
d.
e.
(p.92)
According to the text, the U.S. computer software company spends an average of _____ of its
sales dollars for R&D, whereas the paper and forest products industry spends _____.
a.
b.
c.
d.
e.
(p.92)
budgeting leverage.
capital finance.
capital budgeting.
financial leverage.
financial budgeting.
Which of the following is NOT descriptive of the function of the research and development
department?
a.
b.
73.
total assets.
stock price.
(p.92)
The process of taking a new technology from the laboratory to the marketplace is called
(p.92)
a.
b.
c.
d.
e.
76.
When laboratories are developed to focus on theoretical problem areas, scientists are conducting
a.
b.
c.
d.
basic R&D.
product R&D.
engineering R&D.
process R&D.
158
(p.93)
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e.
77.
78.
80.
81.
b.
c.
d.
e.
82.
(p.94)
The proposition that silicon chips double in complexity every 18 months is referred to as
a.
b.
c.
d.
e.
(p.94)
(p.93)
basic R&D.
product R&D.
engineering R&D.
process R&D.
R&D mix.
The displacement of one technology by another, as shown by two S-shaped curves on a graph, is
referred to as
a.
b.
c.
d.
e.
(p.93)
basic R&D.
product R&D.
engineering R&D.
process R&D.
R&D mix.
(p.93)
basic R&D.
product R&D.
engineering R&D.
process R&D.
R&D mix.
When scientists concentrate on quality control and the development of design specifications, this
is referred to as
a.
b.
c.
d.
e.
79.
R&D mix.
Ohms Law.
Porters Five Forces Model.
Moores Law.
Mintzbergs Rule.
Keynesians Theory.
159
(p.94)
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83.
84.
85.
c.
d.
e.
87.
88.
(p.96)
continuous system
debt capacity
chronological processing
operating leverage
intermittent system
The impact of a specific change in sales volume on net operating income is referred to as the
a.
b.
c.
d.
e.
(p.95)
continuous system
debt capacity
chronological processing
operating leverage
intermittent system
Which of the following terms best describes a system in which parts or steps have a specific order
in which to be assembled or processed?
a.
b.
c.
d.
e.
(p.95)
make sure all the products or services are producing maximum revenue.
develop and operate a system that will produce the required number of products or
services, at a given cost, within an allotted time.
make sure the process has a high quality control.
ensure that the process is manufactured or delivered as efficiently as possible.
interface with the other functional departments to coordinate their operations in avoiding
duplication of effort.
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?
a.
b.
c.
d.
e.
(p.95)
return of investment.
net present value.
cost reduction.
total operating expenses.
time spent during technology implementation.
According to the text, the primary task of the manufacturing or service manager is to
a.
b.
86.
1981.
1970.
1994.
1965.
2000.
In Christensens book, The Innovators Dilemma, managers remain with certain technologies
based on
a.
b.
c.
d.
e.
(p.94)
continuous system.
chronological processing.
operating leverage.
debt capacity.
intermittent system.
160
(p.96)
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89.
The concept that refers to a manufacturing facility's ability to reduce unit production costs of a
new product by some fixed percentage as production increases is referred to as
a.
b.
c.
d.
e.
90.
b.
c.
d.
e.
91.
c.
d.
e.
93.
(p.97)
The low cost product of individually customized goods and services is called
a.
b.
c.
d.
e.
c.
d.
e.
(p.97)
mass customization.
technological discontinuity.
operating leverage.
operating revenue.
economies of scope.
(p.96)
It is very useful because it is consistent within the industry for all involved
organizations over time.
Used to estimate the production cost of a product produced by newly introduced
techniques or processes.
Used to estimate the production costs of a product never before made with the present
techniques and process.
Simply a line showing the relationship between unit production costs and the number of
consecutive units of production.
Shows that production costs decline by some fixed percentage as production in units
doubles.
92.
(p.96)
Their job is to improve the match between individuals and the job.
Human resource managers are concerned with wage and salary administration, labor
negotiation, job design, and employee morale.
Human relations are a peripheral factor in the internal strategy of most
corporations.
Human resources managers are concerned with the selection and training of new
employees, performance appraisals, and promotion potential.
Human resources managers are concerned about recruitment and personnel planning for
the future.
161
(p.97)
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94.
95.
96.
98.
99.
(p.98)
The term that describes the degree to which members of a work organization are able to satisfy
important personal needs through their experiences in the organization is called
a.
b.
c.
d.
e.
(p.98)
Human resource departments have found that to reduce employee dissatisfaction and unionization
efforts, they must
a.
b.
c.
d.
e.
(p.97)
simultaneous strategy.
participatory planning.
jointly-designed objectives.
concurrent engineering.
cooperative design.
(p.97)
concurrent engineering.
cross-functional work teams.
advisory committees.
task forces.
continuous engineering.
The term that describes putting once isolated specialists together to work and compare notes in a
collective product design effort is called
a.
b.
c.
d.
e.
97.
In order to move through a products development stage, companies like Motorola and Chrysler
are using
a.
b.
c.
d.
e.
(p.97)
collective bargaining.
codetermination.
quality of work life.
employee involvement.
participatory practices.
162
(p.98)
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100.
Which one of the following is NOT one of the four methods to improve the corporation's quality
of work life?
a.
b.
c.
d.
e.
101.
e.
102.
(p.99)
The technique recommended by the text to summarize an analysis of internal strategic factors is
called
a.
b.
c.
d.
e.
(p.98)
IFAS.
EFAS.
SFAS.
S.W.O.T..
the issues priority matrix.
163
(p.101)