Bus 400 exam 2
T/F for ideas and inventions to be innovative they must first commercialized
TRUE
T/F the best way for a firm to keep its proprietary technologies, recipes, or formulas secret is to obtain a patent
False - patent need full disclosure of the tech and know how so other can use it freelt once the patent protection has expired. some think its best not to patent
T/F innovation that target new markets with existing technologies is known disruptive innovation
False- known as architectural innovation
T/F a cost leader is a firm most likely to survive a price war
True
T/F according to the cross-the-chasm framework, the biggest chasm between customer segments is betweeen early adopters and the mass market made up of the early majority & the late majority
True
T/F not all firms are motivated by a need to grow
True - small business owners operate a business for convenience, stability, and lifestyle
the major value drivers that managers have at their disposal include product features, customer service and complements T/F
true
Which of the following statements is true of explicit knowledge? A- explicit knowledge is about knowing how to do a certain task. b- explicit knowledge is shared in non--equity alliance firms.
B
in a focused cost- leadership strategy a firm a- caters to the segment of the market that is least cost- sensitive b- delivers low-cost products & services to a specific, narrow part of the market.
B
in radical innovation, a firm targets a- existing markets by using new technologies b- new markets by using new technologies c- new markets by using existing technologies
B
in the US the time period for the right to exclude others from the use of a patented technology
20 years
Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing. A. industry B. functional department C. economy D. customer segment
A
Firms that use taper integration also use _____ when they rely on outside-market firms for some of their supplies. A. backward vertical integration B. forward vertical integration C. backward horizontal integration D. forward horizontal integration
A
______ is best described as decreases in cost per unit as output increases A- economies of scale b- economies of scope
A
______ is best described as the output range needed to bring down the cost per unit as much as possible, allowing a firm to stake out the lowest- cost position that is achieved through economies of scale A- minimum efficient scale b- break even output
A
a voluntary arrangement between firms that involves the sharing of knowledge, reosurces, and capabilities with the intent of developing processes, products, or services is best described as a- proprietorship b- cooperative c- strategic alliance
C
the pursuit of both differentiation and low cost at the same time in a way that creates a leap in value for both the firm and consumers is a- cost driving b- value driving c- value innovation
C
which of the following is an example of explicit knowledge? A- a research skill B- knowing how to assemble semiconductors C- a research summary
C - explicit knowledge can be codified - research summaries, patent, and user manuals, fact sheets
T/F social entrepreneurs forego the pursuit of profits to achieve social & environmental goals
False
which of the following examples uses a focused differentation strategy? a- coffee shop that offer mediocre lattes at a price of $5 for a small latte b- a cosmetics brand that offers superior skin lotion for sensitive skin priced @ $100 per bottle
b-
which of the following is a feature of the shakeout phase of the industry life cycle?
competitive industry within the industry increases
in which of the following stages of the industry life cycle is a standard first established?
growth stage
organizational inertia
is a firms resistance to changes in the status quo
a new product often has a high price when it is launched because of a
large investment in designing a product while producing small quantities
the primary goal of a firm pursuing a blue ocean strategy should be to
offer a differentiated product or service at a low cost
the four step innovation process ends with a- idea gneration b- imitation
B
which of the following best illustrates physical-asset specificity? A) a unique training program in an organization b- a machine solely designed to give a candy its trademarked shape
B
Decisions relating to "what stages of the industry value chain to participate in" determine a firm's A. level of diversification. B. geographic scope. C. vertical integration. D. absorptive capacity.
C
When a firm pursues a maintain strategy, it A. exits a declining industry to maintain the goodwill of its overall brand name. B. reduces investments in product support and allocates only a minimum of human and other resources. C. continues to support marketing efforts even if the demand for the product is declining. D. chooses to consolidate the industry by buying rival firms, those who plan to exit.
C
T/F the internal and external costs associated with an economic exchange are known as interaction costs
FALSE- known as transaction costs
What is horizontal integration?
Process of merging with a competitor at the same stage in the value chain
what are the two different generic business strategies available to firms?
are two fundamentally different generic business strategies - differentiation & cost leadership
according to the five forces model, which of the following is viewed as a major risk to a business pursuing a cost-leadership strategy? A- new entrants with small production scale b- innovation that allows competitors to emerge with more economical replacements
B
because strategic alliances rarely work as well as managers expect they will, why do companies continue to go through with them? A- recent advances in management science have greatly improved the success rate of strategic alliances b- many owners, managers, and business analysts believe they are essential to survive in an industry
B
Which of the following is a feature of the maturity stage of the industry life cycle? a- competivte intensity within the industry is at its peak 'b- market reaches its max. size
B
_____ is best described as a firms ownership of its production of needed inputs or of the channels by which it distributes its outputs A-bootlegging B- vertical integration
B
what is an invention
the transformation of an idea into a new product or process
a differentiator is least likely to be threatened by increases in input prices due to powerful suppliers when the a- differntiator is able to create a big difference between perceived value & current market prices. b- source is able to reduce the value gap
A
a primary advantage of organizing economic activity within firms is the a- ability to coordinate highly complex tasks to allow for specialized division of labor b- low administrative costs b/c of reduced bureaucray
A
a ______ primarily details the goal-directed actions managers to take in their quest for competitive advantage when competing in a single product market. A) business- level strategy B) functional level strategy
A- business level strategy
A drawback of short-term contracting as an alternative to making a component in-house is that A. it is the most-integrated alternative to performing an activity so the principal company has no control over the agent. B. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality. C. it fails to allow a long planning period that individual market transactions provide. D. the buying firm cannot demand lower prices due to the lack of a competitive bidding process.
B
which of the following is an ineffective practice in alliance management? A- corrdinating a firms portfolio of alliances? B- focusing on developing an alliance-mangement capability in isolation
B
which of the following is primarily a value driver a- cost of input factors b- complements
B
which of the following motivations for business growth involves principal-agent problems A) increasing profits. B) motiviating managers
B
which of the following sources of differential appeal is least effective in helping a firm sustain its advantage? a- reputation for quality b- observable product features
B
which of the following stakeholder of a company would most likely be responsible for A- the first- line employees B) the CEO
B
which of the following statements about managing alliance-related tasks is true? A- forming an alliance with another firm prohibits that firm form forming other alliancies B- alliance management capability is based on three alliance- related tasks
B
which of the following statements is true of the early majority section of consumers? A- they come into the market during the introduction stage b- they weigh the benefits and costs carefully when adopting a new product
B
Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage? A. The barriers to entry increase during this stage. B. The firms in the industry yield the highest profits during this phase. C. Rivalry among competitors decreases in this stage. D. The weaker firms are forced out of the industry in this stage.
D
T/F process innovation typically overtakes product innovation in importance during the shakeout stage of the industry life cycle.
TRUE
T/F a firm that decides to stop components from suppliers and start producing them in-house is pursuing backward vertical integration
True
assume that the market for print book publishing has entered the maturity stage. which of the following would most likely exist during this stage?
a few large publishers
Blue Ocean Strategy
a firm in a crowded marketplace, instead if attempting to out-compete your rivals by offering better features or lower costs, successful value innovation makes competition irrelevant by providing a leap in value creation - opening new & unconnected market spaces.
When a differentiator charges a similar price as its competitors in the same strategic group but offers more perceived value, it a- loses its competitive advantage b-gains market share from other firms
b
focused differentiation strategy
create higher value for customers than the value that competitors create, by delivering products or services with high quality features at a high price.
to be successful and to survive the shakeout stage of the industry life cycle, a firm should
gain economies of scale
in the decline stage, which of the following involves a reduction of investments in product support?
harvest strategy - firm reduced investments in product support
generic differentiation strategy
its value curve tends to reflect a relatively higher cost structure and consists of higher scores on competitive elements i.e prices, product features, and customer service.
to initiate a strategic move that allows a firm to open up new and uncontested market space through value innovation, managers must address four key questions when formulating a blue ocean business strategy
lowering cost and increasing perceived customer benefits
managers had many choices when determining the boundaries of the firms; produced goods and services in house (make) or purchase them externally (buy)
make and buy choices
the strategic objective of a first mover during the introduction stage of the industry life cycle is to
pursue a harvest strategy
the key objective for firms during the growth phase is to
stake out a strong strategic position not easily imitated by rivals
which of the following is a feature of the growth stage of the industry life cycle?
the consumer demand increases
which of the following statements accurately brings out the distinction between the intro and growth stages of the industry life cycle?
there is more strategic variety in the growth stage when compared to the introduction stage
T/F firms are more capable than the market at coordinating highly complex tasks, while markets more capable of providing high powered incentives for entrepreneurship
true
How is a cost-leader protected from threats from powerful suppliers a- it is more able to absorb price increases through accepting lower profit margins b- absorb increases by generating higher profits
A
Value drivers contribute to a firm's competitive advantage only if A) the increase in value creation exceeds the increase in costs. b) they can shrinl the firms value gap
A
When does a merger between companies typically occur? A- when two firms of comparable size join a combined entity B- when large, incumbent firms buy start-ups
A
in a successful _____ strategy, the trade offs between differentiation and low cost are reconciled. A- Blue ocean c) divestment
A
in terms of the build-borrow-or-by framework, a firm's internal resources are considered to be relevant when they are a- similar to those that need to be developed & superior to those of competitors in the targeted area b-similar to those that need to be developed & inferior to those of competitors in the targeted area
A
the process of alliance management begins with A- selecting the best possible partner B- designing the alliance b- creating resources combo that obey the VRIO
A
which if the following statements is true of joint ventures? A- they enable the exchange of both tacit & explicit knowledge B- they reduce the possibilities of trust and commitment
A
which of the conditions prevail when an industry is at the end of its life cycle? A- the level of process innovation reaches its max. as firms attempt to lower cost b- industry structure is perfect competivite with a large # of buyers
A
which of the following best illustrates site specificity? A- equipment necessary for mining bauxite & aluminum smelting b-investment made to train employees to operate computers
A
which of the following customer segments as described in the chasm framework make up the mass market? a- the early and late majority together b- early adopter alone technology enthusiasts alone
A
which of the following is a common drawback of a non-equity alliance? A- lack of trust between partners B- difficulty initiating the contract
A
which of the following scenarios would be characterisic of an entrepreneur? a- Rachel implemented a new and more efficient way to produce pottery. b- mary imitated a new more efficient method of producing pottery
A
which of the following statements accurately brings out the difference between technology enthusiasts & early adopters? a- unlike technology enthusiasts, early adopters' demand is fueled more by intuition and vision rather than technology concerns b- early adopters make up the smallest market segment
A
How does horizontal integration within an industry affect the surviving firms? A- by increasing the threat the surviving firms will face from entrant B- by strengthening the bargaining power of the surviving firms vis-a-vis suppliers and buyers
B
How is an equity alliance different from a joint venture? A. An equity alliance involves ownership that facilitates transaction-specific ventures; a joint venture involves taking ownership by buying stock. B. An equity alliance involves taking ownership in a partner; a joint venture involves two or more people owning a firm. C. An equity alliance involves taking ownership in a partner; a joint venture involves taking ownership by buying stock. D. An equity alliance involves partners contributing equity to a joint venture; a joint venture involves two or more people owning a firm.
B
In the context of industrial growth, which of the following statements is true of standards? A. Standards emerge exclusively from bottom-up through competition in the marketplace. B. As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices. C. Standards are exclusively imposed top-down by government or other standard-setting agencies such as the Institute of Electrical and Electronics Engineers. D. After a standard is established in an industry, the basis of competition tends to move away from process innovations toward product innovations.
B
The downside of equity alliances is A. the weaker ties and reduced trust between partners. B. the amount of investment that can be involved. C. that the alliances cannot be abandoned if not promising. D. that they are not useful stepping-stones toward full integration of the partner firms.
B
What must a cost-leadership strategy accomplish to be successful? a) it must increase the firm's cost above that of its competitors while offering adequate value B) it must reduce the firms cost below that of its competitors while offering adequate value
B
how does the availability of complements act as a value driver? a- complements add value to a product by offering an inferior substitute to it b- complements add value to a product when they are consumed in tandem with it
B
how is differentiation parity different from cost parity? a- differentiation parity deals with pricing not innovation b- differentation parity deals with value not cost
B
incumbent firms favor incremental innovation over radical innovation because a- thier business decision are independent of other parties in thier innovation system b- radical innovation will disturb the exisitng power distribution within the firms
B
is it important for a firm to win over the early majority of the market to ensure the commerical success of an innovation because they a- are driven by technology concerns rather than practically of a new product b- enter into the market in large numbers, creating a herding effect.
B
The customers entering the market in the growth stage are primarily A. technology enthusiasts. B. laggards. C. early adopters. D. late majority.
C
decisions relating to the range of products and services a firm will offer will offer determine the firms A- level of diversification B- geographic scope
A
______ are best described as voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage A- embargos B- strategic alliance s
B
______ is best described as a situation in which one party is more informed than another, because of the possession of private info a- infomation governance b- information asymmetry
B
a differentiation strategy works best when a A- firm had tangible resources, its focus of competiton shifts to price B- firm has intangible resources, is able to pass on increases in supplier cost to the customer and its differentiation appeal creates customer loyalty.
B
a firms business strategy can lead to competitive advantage of it allows the firm to a- reduce the value gap b- perform different activities than its rivals. c- position itself below the productive frontier
B
a firms follows a(n) _____ when less than 70 % of its revenues come from a single business and there are few, if any, linkages among its businesses. A- related - constrained strategy b- unrelated diversification strategy
B
a firms resistance to changes in the status quo is referred to as a- organizational parrity b- organizational inertia
B
when a firm makes choices between a cost or value postion to achieve competitive advantage, its primarily involved in a- collective bargaining b- strategic trade-offs
B
When firms innovate by leveraging existing technologies into new markets, they are said to be involved in A. incremental innovations. B. radical innovations. C. architectural innovations. D. disruptive innovations.
C
T/F pipeline businesses are typically better than platform businesses at incorporating user feedback & taking advantage of network effects
False- platforms help exchanged between producers & consumers and gather data
which of the following lists the stages of the industry life cycle in the correct order? a- introduction, growth, shakeout, maturity and decline b-introduction, shakeout, growth, maturity, decline
a
Why are differentiation and cost-leadership strategies referred to as generic strategies?
bc they can be used by any organization
T/F differentiators tend to score highly on most competitive element on a strategy canvas, while cost leaders tend to hover near the bottom of the strategy canvas.
True
T/F the most challenging diversification strategy is likely to be one that combines new core competencies with new and emerging markets.
True
there are many reasons why firms need to grow. Which of the following reason is strongly influ\enced by economies of scale? A0 reducing risk B- lowering costs
B
managers in a firm to improve the firms profitability and ultimately the shareholders' value will add to the overall costs if they pursue thier own self-interests. what does this best illustrate? A-diseconomies of scale b- principal-agent problem
B
the typical four-step innovation process beings with a- the modification and as of an existing product or process b- the presentation of an idea as findings derived from basic research.
B
Why did incumbent pharmaceutical firms enter into hundreds of strategic alliances with biotech start-ups? A. to pursue an unrelated-options perspective without disrupting existing market economics B. to make small-scale investments in ventures poised to disrupt existing market economics C. to invest their excess cash flow in the superior technology of the biotech start-ups D. to share their continuously updated research technology with the biotech start-ups
B
a drawback involved in using cross-border strategic alliance to enter new foreign markets is that a- all potential business risks in the new market will have to be faced alone by the foreign firm b- some of the firms proprietary know-how may be appropriated by the foreign partner
B
when does a firm fall into the large competitive chasm between early adopters and early majority? a- when it creates strong network effects during the growth stage b- when it fails to successfully launch a mass market version of its products
B
when entering a foreign market, it is advisable for a new venture that has a core competency only in R &D to form a strategic alliance with a local partner b/c A- the local partner can be better protect its proprietary know-how B- building downstream complementary assets can be expensive & time-consuming
B
which of the following accurately describes a common difference between a merger and an acquisition? A- A merger tends to include mostly small firms; an acquisition can often involve large firms B- a meger tends to be friendly; an acquisition can be friendly or unfirendly
B
which of the following best describes a strategic trade-off? A- the tension between innovation & keeping manufacturing costs down B- the tension between value creation & the pressure to keep costs in check
B
which of the following is a competitive benefit experienced by the first mover firm in an industry? A- the first mover will be able to achieve a less steep learning curve b- the first mover will be able to reduce costs through economies of scale
B
which of the following is a drawback of vertical integration? A- increases the difficulty of securing critical supplies B- it increases the potential of legal repercussions
B
which of the following is a firm effect that has an impact on the competitive advantage of a firm a- the exit barriers within the industry in which the firm operates b- the value & cost position of the firm relative to its competitors
B
which of the following is an advantage of equity alliances when compared to non-equity alliances? A- thay are more flexible & easy to initiate & terminate b- they produce stronger ties between partners
B
which of the following is an example of an external transaction cost? A- the cost of setting up a production unit B- the cost of searching for a contract manufacturer
B
which of the following is an example of social entrepreneurship? a- cleaned better than other cleaners and used easy obtain ingredients b- cleaned as well as other cleaners and used organic ingredients
B
why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms? a- new entrants are embedded in an innovation ecosystem while incumbent firms are not b- unlike incumbent firms, new entrants do not have formal organizational structures and processes
B
In a non-equity alliance, which of the following types of information would firms most likely share? A. a manager's knowledge related to solving non-routine problems B. a top-level manager's experience related to making strategic decisions C. the documented information about the material composition of a product D. the employees' entrepreneurial skills
C
When large, incumbent firms buy start-up companies, the transaction is generally described as a(n) A. joint venture. B. partnership. C. acquisition. D. alliance.
C
T/F if two large movie-theater chains decide to merge, the result is likely a horizaontal intergration that creats a more favorable industry structure by decreasing competition
TRUE
T/F organization seeking strategic alliance often pursue non-equity alliances b/cthey are the easist to create & to sever. However, the short duration of these alliances often means there is liteel trust or commitment on either side
TRUE