Answer & Question : Smell-O-Vision created an invention that would pump odors into movie theatres. It did not make it to market. This was an attempt to be an adaptive entry strategy.

21.

Smell-O-Vision created an invention that would pump odors into movie theatres. It did not make it to market. This was an attempt to be an adaptive entry strategy.

FALSE

An adaptive new entry approach does not involve reinventing the wheel nor is it merely imitative either. It involves taking an existing idea and adapting it to a particular situation. Smell-O-Vision created a new invention to meet customer needs and therefore was an attempted pioneering new entry strategy.

AACSB: Analytic
Blooms: Understand
Learning Objective: 08-02 Three types of entry strategies-pioneering; imitative; and adaptive-commonly used to launch a new venture.
Level of Difficulty: 2 Medium
Topic: Entrepreneurial Strategy

22.

Pandora, launched in 2000, radically changes the radio business with its Music Genome Project system that analyzes music for its underlying traits. This is an example of a pioneering new entry strategy.

TRUE

New entrants with a radical new product or highly innovative service may change the way business is conducted in an industry. This kind of breakthrough of creating new ways to solve old problems or meeting customer needs in a unique new way is referred to as a pioneering new entry. If the product or service is unique enough, a pioneering new entrant may actually have little direct competition.

23.

The success of an adaptive new entrant can be limited, if the value proposition is perceived as being unique.

FALSE

There are several pitfalls that might limit the success of an adaptive new entrant. First, the value proposition must be perceived as unique. Unless potential customers believe a new product or service does a superior job of meeting their needs, they will have little motivation to try it.

24.

Once an adaptive entrant has achieved initial success, the company is safe from copycat competition.

FALSE

Once an adaptive entrant achieves initial success, the challenge is to keep the idea fresh. If the attractive features of the new business are copied, the entrepreneurial firm must find ways to adapt and improve the product or service offering.

25.

Because new ventures typically are small, they usually do not have high economies of scale relative to competitors.

TRUE

Because new ventures typically are small, they usually do not have high economies of scale relative to competitors. This means that new firms must seek a different approach, if they wish to pursue a cost-leadership strategy.

AACSB: Analytic
Blooms: Understand
Learning Objective: 08-03 How the generic strategies of overall cost leadership; differentiation; and focus are used by new ventures and small businesses.
Level of Difficulty: 2 Medium
Topic: Entrepreneurial Strategy

26.

Entrepreneurial firms are often in a strong position to use combination strategies, because they have the flexibility to approach situations uniquely.

TRUE

Entrepreneurial firms are often in a strong position to offer a combination strategy, because they have the flexibility to approach situations uniquely. For example, holding down expenses can be difficult for big firms, because each layer of bureaucracy adds to the cost of doing business across the boundaries of a large organization.

27.	Entrepreneurial competitive dynamics refers to a cycle of actions and responses between firms competing for the same customers. TRUE Competitive dynamics is intense rivalry, involving actions and responses, among similar competitors vying for the same customers in a marketplace.

AACSB: Analytic
Blooms: Remember
Learning Objective: 08-03 How the generic strategies of overall cost leadership; differentiation; and focus are used by new ventures and small businesses.
Level of Difficulty: 1 Easy
Topic: Entrepreneurial Strategy

28.

Warby Parker makes eyeglasses. It keeps costs low through several means and has a social mission. This is an example of a firm that uses a combination strategy.

TRUE

Entrepreneurial firms, by contrast, can often create high-value products and services through their unique differentiating efforts. In the case of Warby Parker, two entrepreneurs found a recipe to sell fashionable eyeglasses to demanding customers while also cutting costs and serving a social mission.

29.

A focus strategy must not include elements of differentiation and overall cost leadership in order to be successful.

FALSE

30.

Running Press created a line of palm-sized mini books that were sold as point-of-sale impulse items. The company grew rapidly, even though it had a small fraction of the sales in the publishing industry. They used a pure overall cost leadership strategy to capture market share.

FALSE

Focus strategies are often associated with small businesses because there is a natural fit between the narrow scope of the strategy and the small size of the firm. A focus strategy may include elements of differentiation and overall cost leadership, as well as combinations of these approaches. To be successful within a market niche, the key strategic requirement is to stay focused. Even though these books represent just a tiny fraction of total sales in the $23 billion publishing industry, they have been a mainstay for Running Press. As the Running Press example indicates, many new ventures are successful even though their share of the market is quite small.

31.

Entrepreneurial new entry is often perceived as a competitive threat because most market needs are being met, either directly or indirectly, by an existing firm.

TRUE

New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is true in part because nearly every market need is already being met, either directly or indirectly, by existing firms. As a result, the competitive actions of a new entrant are very likely to provoke a competitive response from companies that feel threatened. This, in turn, is likely to evoke a reaction to the response.

AACSB: Analytic
Blooms: Understand
Learning Objective: 08-04 How competitive actions; such as the entry of new competitors into a marketplace; may launch a cycle of actions and reactions among close competitors.
Level of Difficulty: 2 Medium
Topic: Competitive Dynamics

32.

Market commonality is the extent to which rivals draw from the same types of resources.

FALSE

Market commonality is whether or not competitors are vying for the same customers and how many markets they share in common. Resource similarity is the degree to which rivals draw on the same types of resources to compete.

AACSB: Analytic
Blooms: Remember
Learning Objective: 08-05 The components of competitive dynamics analysis-new competitive action; threat analysis; motivation and capability to respond; types of competitive actions; and likelihood of competitive reaction.
Level of Difficulty: 1 Easy
Topic: Competitive Dynamics

33.

Market commonality refers to the extent to which competitors are vying for the same customers in the same markets.

TRUE

Market commonality is whether or not competitors are vying for the same customers and how many markets they share in common. For example, aircraft manufacturers Boeing and Airbus have a high degree of market commonality because they make very similar products and have many buyers in common.

34.

When attacked, older and larger firms tend to respond more quickly, but their responses are often more predictable.

FALSE

Older and larger firms may have more resources and a repertoire of competitive techniques they can use in a counterattack. Large firms, however, tend to be slower to respond. Older firms tend to be predictable in their responses because they often lose touch with the competitive environment and rely on strategies and actions that have worked in the past.

AACSB: Analytic
Blooms: Understand
Learning Objective: 08-05 The components of competitive dynamics analysis-new competitive action; threat analysis; motivation and capability to respond; types of competitive actions; and likelihood of competitive reaction.
Level of Difficulty: 2 Medium
Topic: Competitive Dynamics

35.

Cutting prices or increasing marketing efforts are examples of tactical competitive actions.

TRUE

Two broadly defined types of competitive action include strategic actions and tactical actions. Tactical actions include refinements or extensions of strategies. Examples of tactical actions include cutting prices, improving gaps in service, or strengthening marketing efforts. Such actions typically draw on general resources and can be implemented quickly.

36.

In the context of competitive dynamics, tactical actions involve major commitments of distinctive and specific resources to strategic initiatives.

FALSE

Two broadly defined types of competitive action include strategic actions and tactical actions. Strategic actions represent major commitments of distinctive and specific resources. Such actions require significant planning and resources and, once initiated, are difficult to reverse.

37.

Refinements or extensions of existing strategies are often referred to as tactical actions.

TRUE

38.	Forbearance is a particularly aggressive type of competitive attack. FALSE There may be many circumstances in which the best reaction is no reaction at all. This is known as forbearance, refraining from reacting at all as well as holding back from initiating an attack.

39.

Co-opetition, where competitors work together behind the scenes, is a form of illegal tacit collusion.

FALSE

Co-opetition is a term that was coined by Novell network software company founder and former CEO, Raymond Noorda, to suggest that companies often benefit most from a combination of competing and cooperating. Close competitors that differentiate themselves in the eyes of consumers may work together behind the scenes to achieve industrywide efficiencies.

Answer & Question

Monday 3 June 2019

Smell-O-Vision created an invention that would pump odors into movie theatres. It did not make it to market. This was an attempt to be an adaptive entry strategy.

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