BUSI 4940 EXAM 1 REVIEW (K. CORY) QUESTIONS
AND ANSWERS
Globalization - Answers - the increasing economic interdependence among countries
and their organizations as reflected in the flow of products, financial capital, and
knowledge across country borders
Technology diffusion - Answers - the proliferation of technology once it is developed.
The speed at which new tech is available AND when people choose to adopt it
Perpetual innovation - Answers - how rapidly and consistently new, information-
intensive technologies replace older ones. IT focused
Disruptive technologies - Answers - technologies that destroy the value of an existing
technology and create new markets
Ex: slide rule vs. Calculator
Buggy whips vs. Cars
Strategic flexibility - Answers - a set of capabilities used to respond to various demands
and opportunities existing in a dynamic and uncertain competitive environment
What are the two main drivers of hypercompetition? - Answers - the emergence of the
global economy (globalization) and technology
Hypercompetition: condition where competitors engage in intense rivalry, markets
change quickly and often, and entry barriers are low.
I/O model - Answers - helps explain the dominant influence of the external environment
(industry) on a firm's strategic actions and performance
The logic of the I/O model - Answers - a set of industry characteristics, including
economies of scale, barriers to market entry, diversification, product differentiation, the
degree of concentration of firms in the industry, and market frictions, determine the
profitability potential of an industry or a segment of it as well as the actions firms should
take to operate profitably
What are the basic assumptions regarding companies and assets of the I/O economics
model? - Answers - there are four main, basic assumptions:
1. The external environment imposes pressures and constraints that determine the
strategies that would result in above-average returns
, 2. Most firms competing within an industry or within a segment of that industry are
assumed to control similar strategically relevant resources and to pursue similar
strategies in light of those resources
3. Firms assume that their resources are highly mobile, meaning that any resource
differences that might develop between firms will be short-lived
4. The model assumes that organizational decision makers are rational individuals who
are committed to acting in the firm's best interests, as shown by their profit-maximizing
behaviors
Who is the primary scholar associated with I/O economics from a strategy perspective?
- Answers - michael porter
Resource-based theory - Answers - what is it about a company that makes it successful
Contends that the possession of strategic resources provides an organization with a
golden opportunity to develop competitive advantages over its rivals
What are the basic assumptions regarding companies and assets of the resource-based
theory? - Answers - there are two main, basic assumptions:
1. Each organization is a collection of unique resources and capabilities
2. Firms acquire different resources and develop unique capabilities based on how the
combine and use the resources
(based on UNIQUENESS and DIFFERENCES)
Who is the primary scholar associated with the resource based model? - Answers - jay
barney
What are resources, capabilities, and competencies - and the sequence they usually
follow before enabling competitive advantages? - Answers - resources: inputs into a
firm's production process, such as capital equipment, the skills of individual employees,
patents, finances, and talented managers
Capabilities: the capacity for a set of resources to perform task or an activity in an
integrative manner
Core competencies: capabilities that serve as a source of competitive advantage for a
firm over its rivals
(in that order)
What are tangible resources? - Answers - assets that can be observed and quantified.
Resources that can be touched (buildings, equipment, etc.)
AND ANSWERS
Globalization - Answers - the increasing economic interdependence among countries
and their organizations as reflected in the flow of products, financial capital, and
knowledge across country borders
Technology diffusion - Answers - the proliferation of technology once it is developed.
The speed at which new tech is available AND when people choose to adopt it
Perpetual innovation - Answers - how rapidly and consistently new, information-
intensive technologies replace older ones. IT focused
Disruptive technologies - Answers - technologies that destroy the value of an existing
technology and create new markets
Ex: slide rule vs. Calculator
Buggy whips vs. Cars
Strategic flexibility - Answers - a set of capabilities used to respond to various demands
and opportunities existing in a dynamic and uncertain competitive environment
What are the two main drivers of hypercompetition? - Answers - the emergence of the
global economy (globalization) and technology
Hypercompetition: condition where competitors engage in intense rivalry, markets
change quickly and often, and entry barriers are low.
I/O model - Answers - helps explain the dominant influence of the external environment
(industry) on a firm's strategic actions and performance
The logic of the I/O model - Answers - a set of industry characteristics, including
economies of scale, barriers to market entry, diversification, product differentiation, the
degree of concentration of firms in the industry, and market frictions, determine the
profitability potential of an industry or a segment of it as well as the actions firms should
take to operate profitably
What are the basic assumptions regarding companies and assets of the I/O economics
model? - Answers - there are four main, basic assumptions:
1. The external environment imposes pressures and constraints that determine the
strategies that would result in above-average returns
, 2. Most firms competing within an industry or within a segment of that industry are
assumed to control similar strategically relevant resources and to pursue similar
strategies in light of those resources
3. Firms assume that their resources are highly mobile, meaning that any resource
differences that might develop between firms will be short-lived
4. The model assumes that organizational decision makers are rational individuals who
are committed to acting in the firm's best interests, as shown by their profit-maximizing
behaviors
Who is the primary scholar associated with I/O economics from a strategy perspective?
- Answers - michael porter
Resource-based theory - Answers - what is it about a company that makes it successful
Contends that the possession of strategic resources provides an organization with a
golden opportunity to develop competitive advantages over its rivals
What are the basic assumptions regarding companies and assets of the resource-based
theory? - Answers - there are two main, basic assumptions:
1. Each organization is a collection of unique resources and capabilities
2. Firms acquire different resources and develop unique capabilities based on how the
combine and use the resources
(based on UNIQUENESS and DIFFERENCES)
Who is the primary scholar associated with the resource based model? - Answers - jay
barney
What are resources, capabilities, and competencies - and the sequence they usually
follow before enabling competitive advantages? - Answers - resources: inputs into a
firm's production process, such as capital equipment, the skills of individual employees,
patents, finances, and talented managers
Capabilities: the capacity for a set of resources to perform task or an activity in an
integrative manner
Core competencies: capabilities that serve as a source of competitive advantage for a
firm over its rivals
(in that order)
What are tangible resources? - Answers - assets that can be observed and quantified.
Resources that can be touched (buildings, equipment, etc.)
