410 chap 8 testbank

______________ provide(s) a key avenue for growth for many young and small firms through partnering to obtain resources and to expand into new markets. A. Strategic alliances B. Funding C. Banking D. Research and development

A. Strategic alliances

Which of the following is NOT one of the characteristics of an entrepreneurial opportunity? A. affordable B. attractive C. achievable D. value creating

A. affordable

Which of the following is NOT one of the three characteristics of entrepreneurial leadership mentioned by the text? A. clarifying job responsibilities B. dedication and drive C. commitment to excellence D. vision

A. clarifying job responsibilities

Intense rivalry involving actions and responses among similar competitors vying for the same customers in a marketplace is known as A. competitive dynamics. B. resource similarity. C. threat of substitutes. D. pioneering new entry.

A. competitive dynamics.

When an industry is mature, a(n) ______________ strategy is considered to be one of the most effective approaches for a new entrant. A. focus B. differentiation C. overall low-cost D. small business

A. focus

Competitors with similar offers find that a new entrant is threatening because A. nearly all market need is already being met. B. the new entrant might increase prices. C. the new entrant offers the same product. D. the new entrant is a pioneer.

A. nearly all market need is already being met. 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.

New ventures may find it difficult to use differentiation strategies successfully because they lack _____________ and __________. A. sufficient funding; superior innovation B. competitors; superior technology C. sufficient funding; qualified entrepreneurs D. innovative ideas; potential customers

A. sufficient funding; superior innovation

According to the text, which of the following does not make it difficult for entrepreneurial firms to effectively pursue a strategy of differentiation? A. Differentiation strategies are often expensive to enact. B. Incumbent firms are constantly seeking opportunities to specialize in market niches. C. It may be difficult for a young firm to establish a strong brand identity. D. Implementing superior new technologies may be challenging for entrepreneurial firms.

B. Incumbent firms are constantly seeking opportunities to specialize in market niches.

According to the text, for an entrepreneurial start-up to be successful, three ingredients are critical. What are they? A. good ideas, a team of investors, and a business plan B. a viable opportunity, available resources, and a qualified and motivated founding team C. an opportunity, a marketing plan, and office space D. management, marketing, and money

B. a viable opportunity, available resources, and a qualified and motivated founding team

Private individuals who provide seed capital to young ventures are known as A. gazelles. B. angels. C. cash cows. D. rising stars.

B. angels.

When an opportunity is attractive long enough for it to be successfully developed and deployed, it is said to be A. value creating. B. durable. C. achievable. D. affordable.

B. durable.

Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as _____________ new entry. A. adaptive B. imitative C. proactive D. pioneering

B. imitative

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? A. pioneering B. imitative C. adaptive D. differentiated

B. imitative 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.

The U.S. Small Business Administration supports small business through all of the following except A. government contracting. B. investing venture capital. C. underwriting loans. D. training and counseling.

B. investing venture capital.

According to the text, new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by A. established corporations. B. lone wolf entrepreneurs. C. bootstraps. D. individual investors.

B. lone wolf entrepreneurs.

One of the ways entrepreneurs achieve success is by using resources more efficiently. This is an example of how entrepreneurs use a(n) ______________ strategy. A. imitative B. low-cost leader C. differentiation D. combination

B. low-cost leader

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? A. devastate profit sanctuaries of rivals B. lower competitor costs C. unleash massive and overwhelming force D. plagiarize with pride and deceive the competition

B. lower competitor costs

Tuft and Needle makes mattresses, according to Strategy Spotlight 8.5 in the textbook. Which generic strategy most closely represents theirs? A. differentiation B. overall cost leadership C. focus D. combination

B. overall cost leadership

The first personal computer revolutionized computing and how business is conducted. It was using a(n) ______________ entry strategy. A. imitative B. pioneering C. adaptive D. creative

B. pioneering

Which of the following is not a primary source of financing for entrepreneurial start-ups? A. investments by family and friends B. public equity C. private investors D. personal savings

B. public equity

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. A. slowly B. quickly C. steadily D. painlessly

B. quickly quickly generates cash flow, builds credibility, attracts good employees, and overcomes the liability of newness.

Vision is an important element of entrepreneurial leadership because A. a vision statement is part of the documentation used to obtain venture financing. B. the entrepreneur has to envision realities that do not yet exist. C. organizations cannot function without a detailed and operational vision. D. banking institutions require it.

B. the entrepreneur has to envision realities that do not yet exist.

Amazon is an example of a company that used the differentiation strategy to enter the market. The differentiation features included A. minimal customer service. B. traditional back office logistics. C. exceptional customer service. D. traditional delivery logistics.

C. exceptional customer service.

Running Press launched the Miniature Editions line of books in 1993. Today it has sold over 20 million copies. Which of the following most closely represents their strategy? A. differentiation B. overall cost leadership C. focus D. combination

C. focus

According to a study by the Kaufmann Foundation, which of the following is the largest source of funding for businesses that have been operating at least five years? A. public financing B. venture capital C. loans D. angel financing

C. loans

Aircraft makers Boeing and Airbus have a high degree of ______________ because they make very similar products and have many buyers in common. A. dynamic capabilities B. first mover advantages C. market commonality D. equity funding

C. market commonality

The process of identifying, selecting, and developing new venture opportunities is known as A. innovativeness. B. bootstrapping. C. opportunity recognition. D. brainstorming.

C. opportunity recognition.

The majority of entrepreneurial start-ups are financed through monies from A. bank financing. B. SBA loans. C. personal savings and the contributions of family and friends. D. venture-capital financing.

C. personal savings and the contributions of family and friends.

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? A. imitative B. adaptive C. pioneering D. differentiated

C. pioneering

The new entry strategy that a firm chooses is dependent upon the ______________ and the ______________ of the new business concept. A. riskiness; cost B. riskiness; potential sales C. riskiness; innovativeness D. idea; innovativeness

C. riskiness; innovativeness

In competitive dynamics, new entrants may be force to change their strategies or develop new ones to _______ competitive challenges by _____________. A. overcome; other new rivals B. succumb; potential rivals C. survive; incumbent D. survive; former rivals

C. survive; incumbent

Which of the following is not one of the reasons a company might launch new competitive actions? A. to obtain first mover advantages B. to improve market position C. to find new sources of raw materials D. to capitalize on growing demand

C. to find new sources of raw materials

Which of the following is not a factor that makes it more difficult for new ventures to be successful as differentiators? A. The strategy is thought to be expensive to put into action. B. Establishing a brand, important to a differentiation strategy, is thought to be expensive. C. Superior innovation is often very costly. D. Customer service is often costly, but it does not affect a differentiation strategy.

D. Customer service is often costly, but it does not affect a differentiation strategy.

Opportunities can be found through a structured search process. The example of Ancient Ales with their innovative line of craft beers demonstrates which of the following types of structured search? A. Identify frustrations with current products or processes. B. Talk to people who know including suppliers, customers, frontline employees. C. Borrow ideas from other markets. D. Find historical ideas and re-purpose them.

D. Find historical ideas and re-purpose them. Sometimes, the best ideas are not actually new ideas. Opportunities in industries can often be discovered by looking to the past to find good ideas that have slipped out of practice but might now be valued by the market again. For example, Sam Calagione, founder of Ancient Ales, developed an innovative line of craft beers by using ancient brewing techniques and ingredients that differ from modern brews

Which of the following statements about venture capital is not true? A. Entrepreneurs raise venture capital by selling shares of ownership in their business. B. Venture capital groups can often provide helpful management advice. C. Venture capital is used to finance rapid growth or large capital expenditures. D. Venture capital is a form of public equity financing.

D. Venture capital is a form of public equity financing

Which of the following terms is used to refer to opportunities that are practical and physically possible? A. durable B. valuable C. sustainable D. achievable

D. achievable

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? A. imitative B. pioneering C. differentiated D. adaptive

D. adaptive

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? A. imitative B. pioneering C. differentiated D. adaptive

D. adaptive

Generally speaking, the opportunity recognition process consists of two phases of activity. They are ______________ and _____________. A. global search; recycling profits B. value creation; affordability C. global search; valuation D. discovery; evaluation

D. discovery; evaluation

Entrepreneurial firms that pursue a low-cost leadership strategy use all of the following to achieve lower costs except A. cost-saving technology such as the Internet. B. simple organizational structures. C. rapid decision making. D. extensive investment in order to achieve economies of scale.

D. extensive investment in order to achieve economies of scale.

Which of the following is not a common source of new business opportunities? A. current or past work experiences B. suggestions by family or friends C. chance event D. future work

D. future work

Which of the following is the most important resource for a start-up activity? A. social recognition B. land C. personnel D. money

D. money

According to the textbook, which of the following is NOT a common new entry strategy? A. imitative new entry B. adaptive new entry C. pioneering new entry D. proactive new entry

D. proactive new entry

Unilever has taken a dominant position (65 percent market share) in the Vietnamese laundry detergent market by employing an investment and marketing campaign that decimated the market position of the local, incumbent competitors. According to the Stalk and Lachenauer book, this is an example of ________________ strategy. A. plagiarize with pride B. deceive the competition C. raise competitor costs D. unleash massive and overwhelming force

D. unleash massive and overwhelming force

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

F

Angel investors are always public institutions which provide seed capital to young ventures.

F

Angel investors are private individuals who provide equity investments for seed capital during the later stages of a new venture.

F

As investors, venture capitalists rarely provide any help or services to entrepreneurial firms other than financing.

F

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

F

Few start-ups enter industries that are mature

F

Forbearance is a particularly aggressive type of competitive attack.

F

Founders using a pioneering new entry strategy look for opportunities to capitalize on proven market successes.

F

If a start-up enters a market with a broad or aggressive strategy, it is likely to evoke little retaliation from a more powerful competitor

F

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

F

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

F

Most entrepreneurial firms first seek financing from venture capitalists in order to begin activity.

F

New entry into markets, whether by start-ups or by incumbent firms, rarely threatens existing competitors.

F

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

F

Opportunity recognition is the process of identifying and selecting Entrepreneurial opportunities. It does not involve the development of those ideas

F

Rocket Internet, founded in 2007, funds start-ups. One of its successful investments was in Lamoda, a retailing fashion site in Russia that is modeled after Zappos. This is an example of a pioneering new entry strategy.

F

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.

F

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.

F

Square, founded in 2010, provides a means for small businesses to process credit and debit card sales without signing up for a traditional credit card arrangement. This is an example of a pioneering new entry.

F

Swedish breweries cooperate in recycling used bottles and therefore have no way to differentiate their offers in the minds of the customer.

F

The Amazon approach to selling books, using the Internet and offering superior customer service, gave it a strong entry strategy. This is an example of a focus strategy.

F

The evaluation phase of opportunity recognition occurs when an entrepreneur has an insight about a new business venture, often based on prior knowledge.

F

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

F

To obtain venture capital financing, business founders rarely have to give up some ownership and control of their business.

F

Tuft and Needle is a low-cost bed mattress manufacturer that finds it difficult to overcome competition using an overall cost leadership strategy

F

Under Armour Inc., founded in 1995, makes undershirts and other athletic gear using moisture-wicking fabric. This is an example of a pioneering new entry.

F

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

F

To be successful within a market niche, the key strategic requirement is to have a good differentiation strategy.

F A focus strategy may include elements of differentiation and overall cost leadership, as well as combinations of these approaches. But to be successful within a market niche, the key strategic requirement is to stay focused

Small Business Administration and government regulations prohibit small businesses from bidding on government contracts.

F A key area of support for small business is in government contracting. Programs sponsored by the SBA and other government agencies ensure that small businesses have the opportunity to bid on contracts to provide goods and services to the government.

Choosing which new entry strategy is best depends on competitive financial and marketplace considerations. The greatest opportunities most likely will be in existing markets, rather than in new markets.

F Considering these choices, an entrepreneur or entrepreneurial team might wonder which new entry strategy is best. The choice depends on many competitive, financial, and marketplace considerations and may stem from being willing to enter new markets rather than seeking growth only in existing markets.

Colgate-Palmolive, Unilever, Proctor and Gamble, and Henkel cooperated legally when they agreed to prearranged prices at which they would sell to retailers

F illegal

The majority of entrepreneurial start-ups are financed with angel financing.

F personal savings contributions of family and friends

Opportunity recognition involves two phases of activity: discovery and execution

F? 2nd should be an evaluation Opportunity recognition refers to more than just the Eureka feeling that people sometimes experience at the moment they identify a new idea. Although such insights are often very important, the opportunity recognition process involves two phases of activity (discovery and evaluation) that lead to viable new venture opportunities.

Adaptive new entry involves offering a radical new product or highly innovative service.

FALSE

Venture capital is a form of public equity financing used to help young firms grow rapidly.

FALSE

An entry wedge, according to the text, is a type of entrepreneurial strategy firms can use to enter into business

T

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

T

Competitive dynamics of the rivalry among similar competitors can alter company strategy.

T

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

T

Developed in 1993, WorldWideWeb, later named Nexus, was the first web browser. It radically changed how users access information on the Internet. This is an example of a pioneering new entry strategy.

T

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

T

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.

T

Entrepreneurship refers to new value creation and can include activities in major corporations.

T

Hollywood cooperation is responsible for saving some of the Kodak film manufacturing business, because the studios agreed to cooperate on buying movie film.

T

If similar competitors vie for the same customers in a marketplace, they are likely to escalate their competitive strategy through a reactive series of actions and responses.

T

New entry is among the most common reasons why a cycle of competitive actions and reactions gets started among similar competitors.

T

One of the most important considerations for a new entrant is the type of strategic positioning to choose that will help the business move forward.

T

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

T

Several arena factors make it more difficult for new ventures to be successful as differentiators. Examples include innovation, technology, customer service, and distinctive branding.

T

Small businesses create the majority of new jobs in the U.S. economy

T

The cycle of actions and reactions that occur in daily business leads to new value creation and ongoing advancement of economic well-being

T

The most threatening competitor to new entrants are close competitors, because they have similar structural features that help them adjust quickly and be flexible in decision making.

T

Venture capital funding for entrepreneurial ventures is usually available only after the start-up has become a going concern and established a track record.

T

Venture capitalists and angel investors regard the management team as the most important asset of an entrepreneurial venture.

T

In the Model of Competitive Dynamics, Exhibit 8.4 in the textbook, motivation and capability to respond is one of the reasons companies launch competitive challenges. The Toyota Prius offer set off the competitive dynamic cycle for more fuel-efficient automobiles.

T Some companies are also motivated to launch competitive challenges because they want to build their reputation for innovativeness or efficiency. For example, the Toyota success with the Prius signaled to its competitors the potential value of high-fuel-economy cars, and these firms have responded with their own hybrids, electric cars, high-efficiency diesel engines, and even more fuel-efficient traditional gasoline engines. This is indicative of the competitive dynamic cycle.

Entrepreneurial competitive dynamics refers to a cycle of actions and responses between firms competing for the same customers.

TRUE