|
61.
|
When
launching a new venture, finding a way to begin doing business must
______________ generate cash flow, build credibility, attract good employees,
and overcome the liability of newness.
One of the most challenging
aspects of launching a new venture is finding a way to begin doing business
that quickly generates cash flow, builds credibility, attracts good
employees, and overcomes the liability of newness. The idea of an entry
strategy or entry wedge describes several approaches that firms may take to get
a foothold in a market.
|
|
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 |
|
62.
|
Pandora
entered the radio business in 2000 using the Music Genome Project system that
analyzes music for its underlying traits as a means to distinguish itself. It
was using ______________ entry strategy.
Pandora pioneered a new way
to broadcast music. 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.
|
|
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 |
|
63.
|
The
new entry strategy that a firm choses is dependent upon the ______________
and the ______________ of the new business concept.
In some respects, any type of
entry into a market for the first time may be considered entrepreneurial. But
the entry strategy will vary depending on how risky and innovative the new
business concept is.
|
|
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 |
|
64.
|
Smell-O-Vision
designed an invention to pump odors into movie theatres. It flopped, in spite
of its innovativeness. What kind of new entry strategy was the company using
to penetrate the market?
Smell-O-Vision, an invention
designed to pump odors into movie theatres from the projection room at
pre-established moments in a film. It was tried only once (for the film Scent
of a Mystery) before it was declared a major flop. It definitely was
innovation, but it was hardly a good idea at the time. 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.
|
|
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 |
|
65.
|
Square
provides a means for small businesses to process credit and debit card sales
without signing up for a traditional credit card arrangement of monthly fees
and minimum charges. It used which new entry strategy to enter the market
initially?
Whereas pioneers are often
inventors or tinkerers with new technology, imitators usually have a strong
marketing orientation. They look for opportunities to capitalize on proven
market successes. An imitative new entry strategy is used by entrepreneurs
who see products or business concepts that have been successful in one market
niche or physical locale and introduce the same basic product or service in
another segment of the market. While Square has quickly established itself in
the market, it now faces strong competition from major competitors, including
Intuit and PayPal.
|
|
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 |
|
66.
|
Tom
Monahan, a business creativity coach, says that every new idea is merely a
spin of an old idea. A company that enters the market by offering a product
or service that is somewhat new and sufficiently different in order to create
value for customers by capitalizing on current trends is using which new
entry strategy?
Most new entrants use a
strategy somewhere between pure imitation and pure pioneering. That is, they
offer a product or service that is somewhat new and sufficiently different to
create new value for customers and capture market share. Such firms are
adaptive in the sense that they are aware of marketplace conditions and
conceive entry strategies to capitalize on current trends.
|
|
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 |
|
67.
|
In
2005, Plum Organics entered the market with organic baby food and snack foods
for children. It now has over 20 products and is listed at number 63 on the
Inc 500 list of fastest growing private companies. It used which new entry
strategy in 2005?
Most new entrants use a
strategy somewhere between pure imitation and pure pioneering. That is, they
offer a product or service that is somewhat new and sufficiently different to
create new value for customers and capture market share. Such firms are
adaptive in the sense that they are aware of marketplace conditions and
conceive entry strategies to capitalize on current trends.
|
|
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 |
|
68.
|
Which
of the following is not a factor that makes it more difficult for new
ventures to be successful as differentiators?
There are several factors
that make it more difficult for new ventures to be successful as
differentiators. For one thing, the strategy is generally thought to be expensive
to enact. Differentiation is often associated with strong brand identity, and
establishing a brand is usually considered to be expensive because of the
cost of advertising and promotion, paid endorsements, exceptional customer
service, etc. Differentiation successes are sometimes built on superior
innovation or use of technology. These are also factors where it may be
challenging for young firms to excel relative to established competitors.
|
|
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 |
|
69.
|
Amazon
is an example of a company that used the differentiation strategy to enter
the market. The differentiation features included _____________.
Amazon set out to use
Internet technology to revolutionize the way books are sold. As a bookseller,
Amazon founder Jeff Bezos set out to use Internet technology to revolutionize
the way books are sold. Bezos was not doing anything that had not been done
before. But the two key differentiating features of doing it on the Internet
and offering extraordinary customer service have made Amazon a differentiated
success.
|
|
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 |
|
70.
|
One
of the ways entrepreneurs achieve success is by using resources more efficiently.
This is an example of how entrepreneurs use ______________ strategy.
One of the ways
entrepreneurial firms achieve success is by doing more with less. By holding
down costs or making more efficient use of resources than larger competitors,
new ventures are often able to offer lower prices and still be profitable.
Thus, under the right circumstances, a low-cost leader strategy is a viable
alternative for some new ventures.
|
|
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 |
|
71.
|
Entrepreneurial
firms that pursue a low-cost leadership strategy use all of the following to
achieve lower costs except _____________.
Compared to large firms, new
ventures often have simple organizational structures that make decision
making both easier and faster. The smaller size also helps young firms change
more quickly when upgrades in technology or feedback from the marketplace
indicate that improvements are needed.
|
|
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 |
|
72.
|
When
an industry is mature, a ______________ strategy is considered to be one of
the most effective approaches for a new entrant.
Most start-ups enter
industries that are mature, where growth in demand tends to be slow and there
are often many competitors. If a start-up wants to get a piece of the action,
it often has to take business away from an existing competitor. If a start-up
enters a market with a broad or aggressive strategy, it is likely to evoke
retaliation from a more powerful competitor. Young firms can often succeed
best by finding a market niche where they can get a foothold.
|
|
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 |
|
73.
|
According
to the text, which of the following might does not make it difficult for
entrepreneurial firms to effectively pursue a strategy of differentiation?
There are several factors
that make it more difficult for new ventures to be successful as
differentiators. For one thing, the strategy is generally thought to be expensive
to enact. Differentiation is often associated with strong brand identity, and
establishing a brand is usually considered to be expensive because of the
cost of advertising and promotion, paid endorsements, exceptional customer
service, etc. Differentiation successes are sometimes built on superior
innovation or use of technology.
|
|
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 |
|
74.
|
Intense
rivalry involving actions and responses among similar competitors vying for
the same customers in a marketplace is known as _____________.
Competitive dynamics is the
term for an intense rivalry, involving actions and responses, among similar
competitors vying for the same customers in a marketplace.
|
|
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 |
|
75.
|
Which
of the following is not one of the reasons a company might launch new
competitive actions?
There are several reasons why
companies launch new competitive actions, including to improve market
position, capitalize on growing demand, expand production capacity, provide
an innovative new solution, or obtain first mover advantages.
|
|
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 |
|
76.
|
BCG
authors Stalk and Lachenauer published a book in which they listed
competitive strategy for winning against incumbent rivals. Which of the
following is not one of their suggested strategies?
But competitive attacks come
from many sources besides new entrants. Some of the most intense competition
is among incumbent rivals intent on gaining strategic advantages. Winners in
business play rough and don't apologize for it, according to Boston
Consulting Group authors George Stalk, Jr. and Rob Lachenauer in their book
Hardball: Are You Playing to Play or Playing to Win? Their five strategies
are: devastate profit sanctuaries of rivals, plagiarize with pride, deceive
the competition, unleash massive and overwhelming force, and raise costs of competitors.
|
|
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 |
|
77.
|
Aircraft
makers Boeing and Airbus have a high degree of ______________ because they
make very similar products and have many buyers in common.
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.
|
|
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 |
|
78.
|
The
Wall Street Journal and the New York Times have seen the intensity of their
rivalry increase. One factor driving this is that the Wall Street Journal has
moved from financial news reporting to general national and global news
reporting and finally, to adding local New York news. The rivalry of these
two news providers has increased due to _____________.
Market commonality is whether
or not competitors are vying for the same customers and how many markets they
share in common. Here, the changes to Wall Street Journal reporting means the
two newspapers are now competing for the same customers.
|
|
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 |
|
79.
|
When
any two firms have both a high degree of market commonality and highly
similar resources, a ______________ threat is present.
When any two firms have both
a high degree of market commonality and highly similar resource bases, a
stronger competitive threat is present. Such a threat, however, may not lead
to competitive action. On the one hand, a market rival may be hesitant to
attack a company that it shares a high degree of market commonality with
because it could lead to an intense battle. On the other hand, once attacked,
rivals with high market commonality will be much more motivated to launch a
competitive response.
|
|
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 |
|
80.
|
Which
of the below best describes the competitive tendencies of small firms?
Consider the role of firm age
and size in calculating a company's ability to respond. Most entrepreneurial
new ventures start out small. The smaller size makes them more nimble
compared to large firms so they can respond quickly to competitive attacks.
|
|
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 |
|
81.
|
Southwest
Airlines began its no frills, no meals strategy in the late 1960s as a direct
assault on the major carriers of the day. What type of competitive action
does this represent?
This is a tactical action
because it was a refinement of an existing strategy. Some competitive actions
take the form of frontal assaults, that is, actions aimed directly at taking
business from another company or capitalizing on industry weaknesses. This
can be especially effective when firms use a low-cost strategy. The airline
industry provides a good example of this head-on approach. When Southwest
Airlines began its no-frills, no meals strategy in the late 1960s, it
represented a direct assault on the major carriers of the day.
|
|
AACSB:
Analytic
Blooms: Apply 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: 3 Hard Topic: Competitive Dynamics |
|
82.
|
All
of the following are examples of strategic actions a firm might take EXCEPT _____________.
Strategic actions represent
major commitments of distinctive and specific resources. Examples include
launching a breakthrough innovation, building a new production facility, or
merging with another company. Such actions require significant planning and
resources and, once initiated, are difficult to reverse.
|
|
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 |
|
83.
|
The
best example of a tactical action that a company might use in response to a
competitive attack is to _____________.
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.
|
|
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 |
|
84.
|
Which
of the following is not a factor that affects how a competitor will respond to
a competitive attack?
How a competitor is likely to
respond will depend on three factors: market dependence, competitor
resources, and the reputation of the firm that initiates the action (actor reputation).
|
|
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 |
|
85.
|
Which
of the following refers to a situation where a company has a high
concentration of its business in a particular industry market?
If a company has a high
concentration of its business in a particular industry, it has more at stake
because it must depend on that industry market for its sales, which is known
as market dependence. Single-industry businesses or those where one industry
dominates are more likely to mount a competitive response.
|
|
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 |
|
86.
|
A
firm is considering a large price cut on its leading product as a way to gain
market share. One executive strongly disagrees with the price cut. He
observes that they are in the same marketplace as their rivals and do not
have any competitive advantages in their cost structure. If they cut prices,
their competitors will likely do the same. The end result is that everyone
will make less money. These arguments are an example of
________________.
There may be many
circumstances (such as this potential price war) 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.
|
|
AACSB:
Analytic
Blooms: Apply 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: 3 Hard Topic: Competitive Dynamics |
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