Global Business International Edition 2nd Edition by Mike Peng - Test Bank

Global Business International Edition 2nd Edition by Mike Peng – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Chapter 4—Leveraging 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               OBJ:   4.1

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        OBJ:   4.1

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

 

3. A SWOT analysis deals with the external S (strength) and W (weakness), and internal O (opportunities) and T (threats).

 

ANS:  F                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

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

 

4. A firm’s resources and capabilities are tangible assets a firm uses to choose and implement its strategies.

 

ANS:  F                    PTS:   1                    DIF:    Difficult         OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

5. Tangible resources and capabilities are assets easily observable and quantified.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

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

 

ANS:  T                    PTS:   1                    DIF:    Easy               OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

7. Physical, financial, technological, and organizational resources and capabilities are all tangible assets.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

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

 

8. Human resources, innovation, and reputational resources and capabilities are all intangible assets.

 

ANS:  T                    PTS:   1                    DIF:    Easy               OBJ:   4.1

NAT:  AACSB: Tier 1 Technology; Tier 2 Information Technologies

 

9. 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               OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

10. The value chain consists of primary and support activities.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

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

 

11. Benchmarking is an assessment as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

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

 

12. 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.

 

ANS:  T                    PTS:   1                    DIF:    Easy               OBJ:   4.2

NAT:  AACSB: Tier 1 Diversity; Tier 2 Operations Management

 

13. Outsourcing is the process of turning over an organizational activity to an outside supplier, located in foreign country, which will perform it on behalf of the local firm.

 

ANS:  F                    PTS:   1                    DIF:    Easy               OBJ:   4.2

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

14. Inshoring is the term opposite to offshoring, meaning returning production back to the home company.

 

ANS:  T                    PTS:   1                    DIF:    Easy               OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Operations Management

 

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

 

ANS:  T                    PTS:   1                    DIF:    Easy               OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Operations Management

 

16. Captive sourcing is also known as foreign direct investment.

 

ANS:  T                    PTS:   1                    DIF:    Easy               OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Operations Management

 

17. Offshoring and captive sourcing are the same.

 

ANS:  F                    PTS:   1                    DIF:    Easy               OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Operations Management

 

18. Setting up subsidiaries abroad so the work can be performed in-house but in the foreign location is also called captive sourcing.

 

ANS:  T                    PTS:   1                    DIF:    Easy               OBJ:   4.2

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

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

 

ANS:  F                    PTS:   1                    DIF:    Easy               OBJ:   4.3

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

 

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

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.3

NAT:  AACSB: Tier 1 Diversity; Tier 2 Group Dynamics

 

21. Overall, valuable, rare, but imitable resources and capabilities may give firms some temporary competitive advantage.

 

ANS:  T                    PTS:   1                    DIF:    Difficult         OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Creation of Value

 

22. Only valuable, rare, and hard-to-imitate resources and capabilities that are organizationally embedded and exploited can possibly lead to persistently above average performance.

 

ANS:  T                    PTS:   1                    DIF:    Difficult         OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Creation of Value

 

23. Valuable but not rare resources that are organizationally embedded and exploited can lead to competitive parity.

 

ANS:  T                    PTS:   1                    DIF:    Difficult         OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Creation of Value

 

24. Valuable but not rare resources that are organizationally embedded and exploited can lead to above average firm performance.

 

ANS:  F                    PTS:   1                    DIF:    Difficult         OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Creation of Value

 

25. 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        OBJ:   4.3

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Creation of Value

 

26. Social complexity refers to the socially complex ways of organizing typical of many firms.

 

ANS:  T                    PTS:   1                    DIF:    Easy               OBJ:   4.3

NAT:  AACSB: Tier 1 Diversity; Tier 2 Ethical Responsibilities

 

27. According to a McKinsey study, US firms save 58 cents on every dollar invested in offshoring to India.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.4

NAT:  AACSB: Tier 1 Technology; Tier 2 Creation of Value

 

28. Original equipment manufacturers are firms that capture some of the design work of the original firm.

 

ANS:  F                    PTS:   1                    DIF:    Moderate        OBJ:   4.4

NAT:  AACSB: Tier 1 Technology; Tier 2 Operations Management

 

29. Original design manufacturers are firms that execute the design blueprints provided by Western firms.

 

ANS:  F                    PTS:   1                    DIF:    Moderate        OBJ:   4.4

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

30. Original equipment manufacturers cover more value chain activities than original design manufacturers.

 

ANS:  F                    PTS:   1                    DIF:    Moderate        OBJ:   4.4

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

31. Original brand manufacturers are firms that combine low-cost and high-quality manufacturing to completely bypass the work of Western firms.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.5

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

32. Original brand manufacturers cover more value chain activities than original equipment manufactures.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.5

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

33. Relentless imitation or benchmarking, while important, is not likely to be a successful strategy.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.5

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

34. At present, as much as 75% of the value of publicly traded corporations in the US comes from intangible, knowledge-based economy.

 

ANS:  T                    PTS:   1                    DIF:    Moderate        OBJ:   4.5

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

35. In the early 1980s, the value of publicly traded corporations in the US from a knowledge-based economy was the same as it is today.

 

ANS:  F                    PTS:   1                    DIF:    Moderate        OBJ:   4.5

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

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        OBJ:   4.1

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        OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

3. The institution-based view deals with the ____ in the SWOT analysis.

a.	Strength and weakness
b.	Weakness and opportunity
c.	Opportunities and threats
d.	Strength and threats

 

 

ANS:  C                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

4. The resource-based view builds on the SWOT analysis and concentrates on the ____ to identify and leverage sustainable competitive advantage.

a.	Strength and weakness
b.	Weakness and opportunity
c.	Opportunities and threats
d.	Strength and threats

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

5. The ability to generate internal funds is an example of:

a.	Physical resources
b.	Financial resources
c.	Intangible resources
d.	Technological resources

 

 

ANS:  B                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

NAT:  AACSB: Tier 1 Analytic; Tier 2 Group Dynamics

 

6. Observable and easily quantified assets are:

a.	Resources and capabilities
b.	Core competencies
c.	Tangible assets
d.	Intangible assets

 

 

ANS:  C                    PTS:   1                    DIF:    Difficult         OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

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

a.	Resources and capabilities
b.	Core competences
c.	Tangible assets
d.	Intangible assets

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

NAT:  AACSB: Tier 1 Analytic; Tier 2 Environmental Influence

 

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

a.	Financial resources and capabilities
b.	Physical resources and capabilities
c.	Innovation resources and capabilities
d.	Organizational resources and capabilities

 

 

ANS:  C                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

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

 

9. 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

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

NAT:  AACSB: Tier 1 Analytic; Tier 2 Environmental Influence

 

10. Managerial talents are examples of :

a.	Human resources
b.	Tangible resources
c.	Financial resources
d.	Physical resources.

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.1

NAT:  AACSB: Tier 1 Analytic; Tier 2 Environmental Influence

 

11. A chain of vertical activities used in the production of goods and services that add value is a(an):

a.	Value chain
b.	Vertical chain
c.	Activity chain
d.	None of these answers

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

12. The value chain consists of two areas:

a.	Components and final assembly
b.	Research and final assembly
c.	Infrastructure and logistics
d.	Primary activities and support activities.

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

13. An examination as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors is:

a.	Resources and capabilities test
b.	Performance test
c.	Asset appraisal
d.	Benchmarking

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

14. 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
b.	Specification
c.	Break even point
d.	Pinnacle

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Communication; Tier 2 Legal Responsibilities

 

15. 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
b.	Inshoring
c.	Offshoring
d.	Outsourcing

 

 

ANS:  D                    PTS:   1                    DIF:    Easy               OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Group Dynamics

 

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

a.	Captive sourcing
b.	Inshoring
c.	Off-shoring
d.	Outsourcing

 

 

ANS:  C                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Reflective Thinking; Tier 2 Group Dynamics

 

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

a.	Captive sourcing
b.	Inshoring
c.	Offshoring
d.	Outsourcing

 

 

ANS:  B                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

18. Setting up subsidiaries abroad when the work is done in-house only at the foreign location is also called:

a.	Captive sourcing
b.	Inshoring
c.	Offshoring
d.	Outsourcing

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Diversity; Tier 2 Creation of Value

 

19. Which of the following activities is performed in a domestic location?

a.	Inshoring
b.	Offshoring
c.	Captive sourcing
d.	FDI

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Diversity; Tier 2 Creation of Value

 

20. Which of the following activities is an outsourcing activity?

a.	Captive sourcing
b.	Domestic in-house
c.	FDI
d.	Inshoring

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.2

NAT:  AACSB: Tier 1 Diversity; Tier 2 Creation of Value

 

21. 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

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.3

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

 

22. Overall, valuable, rare, but imitable resources and capabilities that are exploited by the organization may give firms some:

a.	Temporary competitive advantage
b.	Competitive parity
c.	Sustained competitive advantage
d.	Competitive disadvantage

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.3

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

 

23. A firm with valuable, rare, but imitable resources and capabilities will have a(an):

a.	Below average
b.	Average
c.	Above average
d.	Poor

 

 

ANS:  C                    PTS:   1                    DIF:    Moderate        OBJ:   4.3

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

 

24. Overall, valuable, rare, inimitable resources and capabilities that are exploited by the organization may give firms:

a.	Temporary competitive advantage
b.	Competitive parity
c.	Sustained competitive advantage
d.	Competitive disadvantage

 

 

ANS:  C                    PTS:   1                    DIF:    Moderate        OBJ:   4.3

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

 

25. The difficulty of identifying the causal determinants of successful firm performance is also called:

a.	Causal identification
b.	Ambiguity
c.	Performance indicator
d.	Causal ambiguity

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.3

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

 

26. The combination of resources and assets that enables a firm to gain a competitive advantage is also called:

a.	Core assets
b.	Competitive assets
c.	Resource assets
d.	Complementary assets

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.3

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

 

27. Socially intricate and interdependent ways firms are typically organized may be called:

a.	Social typicality
b.	Social complexity
c.	Organized typicality
d.	Complex organization

 

 

ANS:  B                    PTS:   1                    DIF:    Moderate        OBJ:   4.3

NAT:  AACSB: Tier 1 Diversity; Tier 2 Group Dynamics

 

28. Which of the following is the example of a successful domestic firm that has been just as successful internationally?

a.	Wal-Mart
b.	Toyota
c.	Pepsi
d.	Pizza Hut

 

 

ANS:  B                    PTS:   1                    DIF:    Moderate        OBJ:   4.4

NAT:  AACSB: Tier 1 Diversity; Tier 2 Creation of Value

 

29. When US firms offshore to India, how much do they save on each dollar invested?

a.	58%
b.	10%
c.	80%
d.	45%

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.4

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

30. Firms that execute the design blueprints provided by Western firms are also known as:

a.	Original Equipment Manufacturers
b.	Blueprint Designing Firms
c.	Executive Designers
d.	None of these answers

 

 

ANS:  A                    PTS:   1                    DIF:    Moderate        OBJ:   4.4

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

 

31. Firms that capture some of the design work of the original firm are called:

a.	Original Design Manufacturers
b.	Original Equipment Manufacturers
c.	Design Capturing Firms
d.	None of these answers

 

 

ANS:  A                    PTS:   1                    DIF:    Difficult         OBJ:   4.4

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

 

32. Firms that combine low-cost and high-quality manufacturing to completely bypass the work of Western firms are also called:

a.	Original Design Manufacturers
b.	Original Equipment Manufacturers
c.	Original Brand Manufacturers
d.	None of these answers

 

 

ANS:  C                    PTS:   1                    DIF:    Moderate        OBJ:   4.5

NAT:  AACSB: Tier 1 Technology; Tier 2 Information Technologies

 

33. Which part of value chain activities does an original equipment manufacturer cover?

a.	Research
b.	Development
c.	Final assembly
d.	Marketing

 

 

ANS:  C                    PTS:   1                    DIF:    Moderate        OBJ:   4.5

NAT:  AACSB: Tier 1 Technology; Tier 2 Information Technologies

 

34. Which of the following value chain activities is not covered by the original design manufacturers?

a.	Research and development
b.	Components
c.	Final assembly
d.	Marketing

 

 

ANS:  D                    PTS:   1                    DIF:    Moderate        OBJ:   4.5

NAT:  AACSB: Tier 1 Technology; Tier 2 Information Technologies

 

35. 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        OBJ:   4.5

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

ESSAY

 

1. Identify the four categories of tangible resources, and provide an example of a company for each category.

 

ANS:

Answers will vary.

 

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: Hainan’s ability to raise capital through tapping into Soro’s pool of funds.

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 warehouse in key geographic location.

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. Over 60% of Canon’s products have been introduced since 2005.

Organizational resources and capabilities, or a firm’s planning, command and control systems and structures, are the last category. Younger firms tend to rely more on the visions of managers, often founders. More established firms usually have more formal systems and structures. In early days, Hainan Airlines in China relied on hunches for new initiatives. Today, it uses a more elaborate set of formal evaluation procedures.

 

PTS:   1                    DIF:    Moderate       OBJ:   4.1

NAT:  AACSB: Tier 1 Communication; Tier 2 Creation of Value

 

2. Identify three examples of intangible assets.

 

ANS:

Answers will vary.

 

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. Hainan Airlines’ top managers are well known for their youth, competitive orientation, and Western training.

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. Some firms such as Sony are renowned for innovations and pioneering new products, such as the Walkman, etc.

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. Examples include L’Oreal’s acquisition of the Body Shop to leverage brand reputation, or Toyota, Honda, and Nissan’s launch of their luxury car lines, Lexus, Acura, and Infiniti.

 

PTS:   1                    DIF:    Moderate       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 4.1) indicates that most goods and services are produced through a chain of vertical 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       OBJ:   4.2

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

 

4. What is your 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 outsourced manufacturing to suppliers in low-cost countries. Recently, services are now being outsourced, including tax return preparation, logistics, and human resources. Outside suppliers provide 80% of Boeing’s new 787 Dreamliner. For client firms, outsourcing results in “leaner and meaner” organizations, enabling the firms to better focus on core competencies.

 

PTS:   1                    DIF:    Difficult         OBJ:   4.2

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. Nonvalue 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 was transformed from a computer hardware focus to a more lucrative software and services technological company. It has developed new value added capabilities, aiming to become and on-demand computing service for corporations.

 

PTS:   1                    DIF:    Easy               OBJ:   4.3

NAT:  AACSB: Tier 1 Technology; Tier 2 Creation of Value

 

6. Are domestic firms successfully positioned to go global? Support your answer with an example.

 

ANS:

Answers will vary.

 

If you ask managers at The Limited Brands, their answer is no. The Limited has an empire of 4,000 stores throughout the U.S. Yet, it has refused to compete internationally, not even in Canada. On the other hand, companies such as Gucci and United Colors of Benetton with stores in major cities across the world suggest the answer is yes. This debate is an extension of a larger debate, which challenges the issue of, “Is international business different than domestic business?” The question is very important for companies and business schools. There is no wrong or right answer. It is important to heed the advice “think global, act local.”

 

PTS:   1                    DIF:    Moderate       OBJ:   4.4

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

 

7. 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:

The answer is straightforward. 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 which is an analysis of the strengths, weaknesses, threats, and opportunities a firm uses as an assessment tool.

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         OBJ:   4.5

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

 

8. Is offshoring beneficial for firms?

 

ANS:

Proponents argue that offshoring creates enormous value for firms and economies. Western firms are able to tap into low cost yet high quality labor, translating into significant cost savings. Firms can also focus on their core capabilities, which may add more value than dealing with noncore (and often uncompetitive) activities. Offshoring can be conceptualized as the latest incarnation of international trade (in tradable services), which theoretically will bring mutual gains to all involved countries.

Critics of offshoring argue that offshoring nurtures rivals, destroys jobs at home, and tends to ignore corporate social responsibility.

The debate often becomes political and emotional. It is hard to say that offshoring is definitely good or bad for firms. There are both benefits and disadvantages for firms that offshore their activities.

 

PTS:   1                    DIF:    Difficult         OBJ:   4.5

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