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MCQs on Resource audit – Resources and capabilities

A Resource Audit identifies the resources available to an organisation. By determining what resources, they already have, organisations can identify

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MCQs on Resource audit

A Resource Audit identifies the resources available to an organisation. By determining what resources, they already have, organisations can identify what additional resources are required to pursue their chosen strategy. Here on MCQs.CLUB we have prepared helpful Multiple-Choice Questions on Resource audit and resources and capabilities of an organization that fully cover Practice Questions on human resource audit, hrm audit, hr audit, its meaning, types and with examples. These MCQs are general guidelines and a resource audit tools and these mcq on human resource audit are also useful for professional accountancy exams, business management exams and competitive exams.

Position Audit is ‘part of the planning process which examines the current state of the entity in respect of:

1. Resources of tangible and intangible assets and finance
2. Products, brands and markets
3. Operating systems such as production and distribution
4. Internal organization
5. Current results
6. Returns to stockholders’

1. (I) (III) and (VI) only
2. (II) (IV) and (VI) only
3. All of the above
4. None

The elements of the position audit are:

1. Resource audit
2. Analysis of limiting factors
3. Identification of threshold resources/competences
4. Identification of unique resources/core competences
5. All of the above

A “Resource Audit” identifies the resources available to an organisation. By determining what resources, they already have, organisations can identify what additional resources are required to pursue their chosen strategy.

1. The above statement is correct
2. The above statement is incorrect

Which of the following is correct?

1. An organisation’s ability to survive and prosper, and to deliver future value, depends on its strategic capability.
2. Strategic capability.can be defined as the adequacy and suitability of the resources and competences the organisation has, and which are necessary for its future success.
3. Both A&B
4. None

When evaluating an organisation’s strategic capability, which of the following questions are important:

1. Does the organisation have a suitable business model to deliver future success, based on an understanding of the sources of competitive advantage that contribute to profitability and growth across the value system of the organisation?
2. Does it have the people, processes and resources it needs to be able to deliver this success?
3. Both A&B
4. None

Companies often need to acquire assets or competences from outside their own controllable resources and competence-building activities in order to enhance the value they create. The ‘external’ resources can include:

1. Integrated supply chains
2. Networks of firms
3. Longer-term alliances
4. Acquisition of, or merger with, another company
5. All of the above

The ability to achieve new forms of competitive advantage, by developing and changing competences to meet the needs of rapidly changing environments is known as dynamic capability.

1. True
2. False

A Limiting Factor or key factor is ‘anything which limits the activity of an entity. An entity seeks to optimise the benefit it obtains from the limiting factor.

1. True
2. False

Examples of limiting factors are:

1. Inadequate research design resources to develop new products or services
2. A limited number of key personnel, such as salespeople with technical knowledge
3. A lack of adequately trained staff
4. All of the above

Once the limiting factor has been identified, the planners should:

1. In the short term, make best use of the resources available
2. Try to reduce the limitation in the long term
3. Both A&B
4. None

Which of the following is correct?

1. Resource use is both the efficiency with which resources are used, and the effectiveness of their use in achieving the planning objectives of the business.
2. Resources can be a source of competitive advantage when used efficiently and effectively.
3. Both A&B
4. None

Which of the following is correct?

1. Limiting factors are anything which limit the activity of an entity.
2. Resources should be used as effectively and efficiently as possible in order to make the best use of them.
3. Firms should aim to reduce the limitation in the long run.
4. All of the above

Value drivers are factors which affect the value of a business, and so organisations need to identify their key value drivers and then put strategies in place to try to maximise the value of the organisation.

1. The above statement is correct
2. The above statement is incorrect

Which of the following is correct?

1. Value drivers are the crucial organisational capabilities which create value (revenues, profits) for an organisation and help it generate competitive advantage.
2. An organisation will need to identify its value drivers, and then put strategies in place for each of them, to help ensure that it creates, or sustains, its competitive advantage.
3. Both A&B
4. None

Rappaport identified seven value drivers that are link to factors that create value for shareholders. These value drivers are:

1. Increase sales growth, Increase operating profit margin
2. Reduce cash tax rate, Reduce incremental investment in capital expenditure
3. Reduce investment in working capital, increase time period of competitive advantage and Reduce cost of capital
4. All of the above

A number of the drivers which can create value for an organisation are intangible. For example:

1. Employees’ skills and knowledge
2. Brand and reputation
3. Quality management
4. All of the above

Value drivers are the key elements of a business which generate value and underpin its competitive advantage.

1. True
2. False

The value chain models all the activities of a business and the linkages between them. It shows:

1. how value is created
2. how costs are caused
3. how competitive advantage can be gained
4. All of the above

The Value Chain is the ‘sequence of business activities by which, in the perspective of the end-user, value is added to the products or services produced by an entity’.

1. True
2. False

Using the value chain, a firm can secure competitive advantage by:

1. Inventing new or better ways to perform activities
2. Combining activities in new or better ways
3. Managing linkages in its own value chain to increase efficiency and reduce cost
4. All of the above

The value chain is an important analytical tool because it helps management to:

1. See the business as a whole
2. Identify potential sources of competitive advantage
3. Suggest strategies
4. Analyse competitors
5. All of the above

Limitations of the value chain are:

1. It was originally designed for use in a manufacturing context, so can be difficult to apply to service businesses.
2. The costs of the analysis may exceed the potential benefits.
3. The value system is difficult to apply to network organisations.
4. All of the above

Value shop – The value shop model is based on the idea that an organisation needs to use its resources to address customers’ issues or to solve their problems, so it can perhaps 24. be seen most clearly in relation to a professional practice such as a firm of accountants or lawyers, or in medical services.

1. The above statement is correct
2. The above statement is incorrect

An organisation which can be viewed as a value shop will:

1. Use a variety of skills, expertise, disciplines and specialties
2. Be able to cope with unique situations
3. Co-ordinate across different activities
4. Rely on reputation-based referrals
5. All of the above

Which of the following is correct?

1. Strategic value analysis (SVA) highlights the need to analyse business issues and opportunities across the entire value chain for an industry.
2. Strategic value analysis is critical for multi-stage industries because change in one stage will almost inevitably have an impact on other businesses all along the chain.
3. Both A&B
4. None

SVA is particularly relevant to vertically integrated companies, because it encourages them to consider whether it would be more profitable for them to outsource certain functions or activities rather than continuing to perform them all in-house.

1. The above statement is correct
2. The above statement is incorrect

Which of the following is correct?

1. The Supply Chain is the network of organisations involved in the different activities required to transform raw materials into finished goods and services in order to satisfy the requirements of the end customer.
2. Supply chain management focuses on the interaction and collaborations required throughout the supply chain in order to ensure that the customers’ requirements are satisfied adequately.
3. Both A&B
4. None

The main themes to supply chains and supply chain management are:

1. Responsiveness
2. Reliability
3. Relationships
4. All of the above

All the processes in a supply chain can be classified into:

1. pull processes
2. push processes
3. Both A or B
4. None

Which of the following is correct?

1. Pull processes are carried out in response to a customer order.
2. Push processes are carried out in advance of a customer order.
3. Push processes operate in a context of uncertainty.
4. Pull processes operate in an environment in which customer demand is known.
5. All of the above

Features of a push system are:

1. Forecasts of sales drive production and replenishment
2. Inventory pushed to next channel level, often with the aid of trade promotions
3. Excessive inventory and low service levels
4. All of the above

Features of a pull system are:

1. Centralisation of demand information and of replenishment decision making
2. Expanded ability to meet changing demand patterns
3. Lower inventories and higher service levels
4. All of the above

Supply Chain Management –

1. The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities.
2. It includes co- ordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers and customers.
3. Both A&B
4. None

Supply chain management is a means by which the firm aims to manage the chain from input resources to the consumer. It involves:

1. Reduction in customers served, in some cases, to focus on customers of high potential value.
2. Early supplier involvement in product development and component design.
3. Joint problem solving
4. All of the above

Problems with the partnership approach to supply chain management are that:

1. Each partner needs to remain competitive in the long term
2. There is a possible loss of flexibility
3. The relative bargaining power may make partnership unnecessary
4. Arguments about sharing profits may arise
5. All of the above

A supply chain is dynamic and involves the constant flow of information, product and funds between different stages.

1. True
2. False

An organisation’s choice of supplier should take account of factors such as:

1. Whether the supplier has the capacity to deliver the required quantity of product.
2. How reliable the supplier is at fulfilling orders; on time, in the correct quantity, and to the desired standard of quality.
3. The price the supplier is charging (relative to other potential suppliers).
4. All of the above

When choosing suppliers, an organisation should try to select suppliers with distinctive competences that are similar to its own.

1. True
2. False

E-procurement –

1. E-procurement is the purchase of supplies and services through the internet and other information and networking systems, such as Electronic Data Interchange (EDI).
2. It is typically operated through a secure website, possibly using a paperless system based around a purchasing card.
3. E-procurement is a simple process, from identifying a requirement to purchase something, to placing an electronic purchase order with a supplier, and then paying for the order through an electronic bank payment system such as BACS.
4. All of the above

The complete purchasing mix, or the ‘five rights of purchasing’, which are that goods and services must be delivered are – at the right time, at the right price, in the right quantity, from the right vendor, at the right quality.

1. The above statement is correct
2. The above statement is incorrect

Benefits of e-procurement include:

1. Cost reduction, Reduced inventory levels
2. Quicker ordering, Intangible benefits
3. Both A&B
4. None

Risks of e-procurement include –

1. Control – If anyone can order goods from anywhere, there is a risk that unauthorised purchases will be made.
2. Organisational risk – In moving to an e-procurement tool, an adopting company will make a substantial investment in the software, but for any number of reasons the implementation may never be successful.
3. Data security – Putting a company’s spending online means dealing with the security issues that come with any internet-related deployment.
4. All of the above

Which of the following is correct?

1. By establishing closer links with companies in the supply chain, firms can obtain best value for money and reduce inventory holdings.
2. Supply chain management is a means by which firms aim to manage the chain from input resources through to the final customer.
3. Both A&B
4. None

The product life cycle –

1. The product life cycle concept holds that products have a life cycle, and that a product demonstrates different characteristics of profit and investment at each stage in its life cycle.
2. The life cycle concept is a model, not a prediction. It enables a firm to examine its portfolio of goods and services as a whole.
3. The product life cycle is an attempt to recognise distinct stages in a product’s sales history.
4. All of the above

In reviewing outputs, planners should assess products in several ways in order to determine an appropriate strategy, such as:

1. The stage of its life cycle that any product has reached.
2. The product’s remaining life, i.e. how much longer it will contribute to profits.
3. How urgent is the need to innovate, to develop new and improved products?
4. All of the above

Difficulties of the product life cycle concept include:

1. Not always true – Some products have no maturity phase, and go straight from growth to decline. Some never decline if marketed competitively.
2. Changeable – Strategic decisions can change or extend a product’s life cycle.
3. Recognition – How can managers recognise where a product is in its life cycle?
4. All of the above

Which of the following is correct?

1. Portfolio analysis examines the current status of the organisation’s products and their markets.
2. Portfolio analysis is the first stage of portfolio planning, which aims to create a balance among the organisation’s market offerings in order to maximise competitive advantage.
3. Both A&B
4. None

The major strategies can be pursued with respect to products, market segments and, indeed, SBUs are:

1. Build – A build strategy forgoes short-term earnings and profits in order to increase market share.
2. Hold – A hold strategy seeks to maintain the current position, defending it from the threat of would- be ‘attackers’ as necessary.
3. Harvest – A harvesting strategy seeks short-term earning and profits at the expense of long-term development.
4. Divest – Disposal of a poorly performing business unit or product.
5. All of the above

The Boston classification (BCG matrix) –

1. The Boston classification (BCG matrix) classifies products or business units in terms of their capacity for growth within the market and the market’s capacity for growth as a whole.
2. BCG matrix assesses a company’s products in terms of potential cash generation and cash expenditure requirements. Products or SBUs are categorised in terms of market growth rate and a firm’s relative market share.
3. Both A&B
4. None

The General Electric Business Screen (GEBS) –

1. The GEBS includes a broader range of company and market factors. This matrix classifies products (or businesses) according to industry attractiveness and company strengths.
2. The approach aims to consider a variety of factors which contribute to both these variables.
3. The GE matrix attempts to match competences within the company to conditions within the marketplace.
4. All of the above

Problems with portfolio planning include:

1. Its recommendations are over-simplistic and ignore innovation and links between products.
2. It considers the position of the market leader but ignores other rivals that may be growing more effectively.
3. It gives no guidance on how the market position of the products should be improved – i.e. how much extra or less market share to go for.
4. All of the above

Direct product profitability is a technique to analyse the profit on each individual product line, to arrive at relative profitability of different products.

1. True
2. False

Direct product profitability (DPP) is calculated by determining the sales revenue from a product and then deducting the costs incurred by stocking that product. These costs will be:

1. The purchase price charged by the supplier (less any discounts)
2. The costs of ordering the product
3. The costs of storing the product
4. Transport costs incurred in getting the product to its point of sale
5. All of the above

Problems with DPP include:

1. Brand expenditure can be spread over a number of different products, making accurate allocation difficult.
2. DPP focuses internally on product characteristics, but in doing so ignores the needs of the customers.
3. Both A&B
4. None

Innovation can be a major source of competitive advantage but brings a burden of cost and uncertainty. To avoid waste, there should be a programme of assessment for major product development.

1. True
2. False

Product innovation and being the first mover may be a major source of competitive advantage for many organisations. Which of the following is correct?

1. Customers may find they are locked in to innovative suppliers by unacceptable costs of switching to competitors.
2. Legal protection, such as patents, for intellectual property may bring important revenue advantages.
3. A price skimming strategy can bring early profits that will be denied to later entrants.
4. All of the above

The first mover has particular problems including:

1. Gaining regulatory approval where required
2. Uncertain demand
3. High levels of R&D costs and Lower cost imitators
4. Costs of introduction such as training sales staff and educating customers
5. All of the above

The development of new products might be considered an important aspect of a firm’s competitive and marketing strategies. Which of the following is correct?

1. New and innovative products can lower entry barriers to existing industries and markets, if new technology is involved.
2. The interests of the company are best met with a balanced product portfolio. Managers must plan when to introduce new products, how best to extend the life of mature ones and when to abandon those in decline.
3. Both A&B
4. None

Research may be ____________. It may be intended to improve products or processes.

1. Pure
2. Applied
3. Development
4. All of the above

The two categories of R&D are Product Research and Process Research. Which of the following is correct?

1. Product Research is based on creating new products and developing existing ones.
2. Process Research is based on improving the way, or efficiency with which, those products or services are made or delivered.
3. Both A&B
4. None

Idea generation and strategy formulation are important features of new product development. To be effective, idea generation requires a system to promote, and reward creativity and innovative ideas. Cooper suggests a four-point plan including:

1. Nominate one manager to be the focal point for ideas
2. That manager establishes where ideas may arise
3. Those sources are encouraged
4. The ideas they produce are captured
5. All of the above

Process research looks at how the goods/services are produced and has aspects such as:

1. Processes are crucial in-service industries (e.g. fast food), where processes are part of the services sold.
2. Productivity – Efficient processes save money and time.
3. Planning – If you know how long certain stages in a project are likely to take, you can plan the most efficient sequence.
4. Quality management for enhanced quality.
5. All of the above

Which of the following is correct regarding “Benchmarking”?

1. Benchmarking enables a firm to meet industry standards by copying others, but it is perhaps less valuable as a source of innovation.
2. Benchmarking is the ‘establishment, through data gathering, of targets and comparators, through whose use relative levels of performance can be identified. By the adoption of identified best practices it is hoped that performance will improve.
3. Both A&B
4. None

Types of benchmarking are:

1. Internal benchmarking
2. Competitive benchmarking
3. Functional benchmarking
4. Process (or activity) benchmarking
5. All of the above

Stages of Benchmarking include:

1. Obtain management support
2. Determine the areas to be benchmarked and set objectives
3. Understand processes and identify key performance measures
4. Choose organisations to benchmark against
5. Measure own and others’ performance
6. Compare performance and discuss results
7. Design and implement improvement programmes
8. Monitor improvements

1. (I) (III) (VI) and (VIII) only
2. (II) (V) (VII) and (VIII) only
3. Both A&B
4. None

Advantages of benchmarking include:

1. Benchmarking focuses on improvement and sets targets which are challenging but achievable.
2. Benchmarking can provide an organisation with an early warning if its performance begins to slip compared with the organisations against which it is being benchmarked.
3. The result should be improved performance, particularly in cost control and delivering value.
4. All of the above

Dangers of benchmarking include:

1. The benchmark may be yesterday’s solution to tomorrow’s problem.
2. It is a catching-up exercise rather than the development of anything distinctive. After the benchmarking exercise, the competitor might improve performance in a different way.
3. It depends on accurate information about comparator companies.
4. All of the above

Benchmarking enables a firm to identify relative levels of performance and best practice. Performance levels can then be improved by implementing the best practice identified by the benchmarking process.

1. The above statement is correct
2. The above statement is incorrect

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MCQs on Resource audit – Resources and capabilities

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MCQs on Resource audit