Strategic Management Concepts Quiz

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Questions and Answers

Which criterion assesses whether a resource is accessible to competitors in an industry?

Relevance

Scarcity (correct)

Strategic Value

Durability

What is a critical characteristic of intangible resources that enhances their durability?

Limited accessibility

Physical presence in the market

Simultaneous usage for different functions (correct)

Depreciation over time

What factor is essential for a resource or capability to sustain a competitive advantage over time?

Durability (correct)

Strategic Value

Immobility

Relevance

Which of the following statements best represents a requirement for a resource to provide a competitive advantage?

It must comply with both scarcity and relevance. Signup and view all the answers

What is a distinctive feature of strategic resources in maintaining competitive advantage?

They can generate and sustain benefits over time. Signup and view all the answers

What is one primary purpose of conducting an internal analysis of a firm?

To identify a firm’s strengths and weaknesses for competitive performance Signup and view all the answers

Which of the following metrics would likely be used to measure a firm's size?

Turnover, total assets, and headcount Signup and view all the answers

What does the geographical scope of a firm refer to?

The extent of the geographical area it serves and interactions Signup and view all the answers

Which statement best defines the term 'scope of the firm'?

The combination of products and markets a firm is dedicated to Signup and view all the answers

Which characteristic is NOT typically analyzed to understand a firm's nature?

The personal backgrounds of all employees Signup and view all the answers

What is the primary goal of a firm's resources and capabilities?

To create a competitive advantage and sustain it over time Signup and view all the answers

Which of the following best describes tangible resources?

They are recorded on a firm's balance sheet and are easier to quantify. Signup and view all the answers

How do intangible resources differ fundamentally from tangible resources?

Intangible resources are based on information and knowledge, rather than physical existence. Signup and view all the answers

What is a significant challenge associated with the valuation of tangible resources in strategic management?

Their valuation in accounting may not reflect their strategic relevance. Signup and view all the answers

What is the typical duration needed to change the production process for tangible resources?

Within 1 to 2 years depending on complexity Signup and view all the answers

Study Notes

Internal Analysis of a Firm

A firm's ability to compete depends more on internal factors (efficient operations, technology, brands, distribution) than external ones.
Internal analysis identifies a firm's strengths and weaknesses for competitive performance.
A competitive analysis helps determine how a firm can improve compared to competitors to maintain its market position.
Key steps in internal analysis:
- Determining the firm's characteristics.
- Identifying key variables for analysis.
- Measuring metrics to understand the firm (e.g., number of clients, revenue).
- Evaluating how the firm is perceived compared to competitors (especially in tech companies).

Firm's Identity

Defining a firm's identity and purpose.
Determining fundamental firm characteristics.
Analyzing traits defining the firm to provide supplementary information for a more thorough analysis.
Age (start-up, adolescent, mature, etc.) and size (small, medium, large) are indicators of resources and sector comparison.
Scope of the firm's operations (products, markets, needs served).
Customer targets and technologies used.
Ownership type (Public or private companies with family ownership, concentrated shareholders, or diffuse ownership).

Firm's Functional Analysis and Strategic Profile

Internal analysis of different aspects of a firm's activities (production, marketing, finance, etc.).
Strategic profile identifies the firm's strengths and weaknesses through analyzing functional areas.

Drafting the Profile and Variables

Core aspects and factors affecting firm's objectives are key variables.
These variables are grouped into functional areas.
Firms' variables depend on industry, type, and competition methods.
Evaluating variables uses a 5-point Likert scale.
Evaluation is conducted by top managers to understand perceptions about the firm.
The evaluation's graphic portrayal indicates strengths and weaknesses.

Value Chain

A value chain breaks down a firm into key actions needed to sell a product or service.
Each activity adds to the product's value and forms part of its costs.
When a product's selling price exceeds its production cost, a firm generates profit.
Value system: The value chain is part of a broader system, including supplier and customer values.
Value chain analysis identifies competitive advantages (what parts of a firm add most value).
Primary activities: Core operating activities like inbound logistics, operations, outbound logistics, marketing & sales, and after-sales service.
Support activities: Activities that support primary business functions (procurement, technology development, HR, firm infrastructure).

Analysis of Resources and Capabilities

Analyzing resources and capabilities is central when dealing with changing environments.
Firms should base strategies on internal factors, especially as external environments become more turbulent.
Resource-Based View assesses a firm's potential.
- Firms are different due to unique resource combinations.
- These combinations are not equally distributed across all competitors.
Stages of Resource and Capability Analysis:
- Identifying and measuring initial firm resources and capabilities.
- Strategically evaluating if resources are useful, valuable, and sustainable.
- Analyzing how a firm can obtain necessary resources to support its strategies.

Identifying Resources

Tangible resources, easily identified and measured (financial, physical).
Intangible resources, difficult to measure, often related to knowledge, expertise, reputation.

Identifying Capabilities

Skills of the firm in performing activities (organizational routines, competences, group skills).
Capabilities and organizational structures.

Dynamic Capabilities

Ability to integrate, build, renew, reconfigure, adapt internal competencies to address rapidly changing environments.

Evaluating Resources and Capabilities

Resources and capabilities that are valuable, rare, inimitable, and organized for a firm are crucial to competitive advantage.

Criteria for Obtaining a Competitive Advantage

Scarcity or relevance: Resources and capabilities are not widely available to all competitors.
Durability: Resources and capabilities must be continuously maintained for sustainable competitive advantage.
Transferability: Difficult to transfer or imitate.
Complementar: Resources and capabilities complement each other.
Appropriability: Firm must be able to benefit from its investments.

Managing Resources and Capabilities

Enhancing and Improving existing resources and capabilities, including bringing new ones in and adapting existing capabilities.
Exploiting resources and capabilities more strategically in support of the firm's chosen strategies.
Ways to manage resources and capabilities
- Improving provision: Developing new internal resources, enhancing existing ones, acquiring from external sources.
- Strategic exploitation: Efficient use to support company strategies, finding new uses for existing resources.
- External acquisition or alliances.

SWOT Analysis

Overview of internal and external factors (Strengths, Weaknesses, Opportunities, Threats).
A SWOT analysis can be used at the beginning or end of a strategic analysis process.
Used to summarise the internal and external analysis.

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Description

Test your knowledge on key concepts in strategic management, such as competitive advantage, resource analysis, and firm scope. This quiz covers various characteristics that define the resources and capabilities essential for sustaining a competitive edge. Challenge yourself and deepen your understanding of these topics!