Chapter 7: Business Strategy: Innovation, Entrepreneurship, and Platforms

Taking on an economic risk in order to innovate is known as ______. -entrepreneurship -disruptive innovation -strategic objectivization -intrapreneurship

-entrepreneurship

What question is asked along the horizontal axis of the markets-and-technology framework? -Is the innovation radical or disruptive to current technologies? -Is the innovation architectural in design or incremental? -Does the innovation build on existing technologies or create new ones? -Is the innovation targeted toward existing markets or new markets?

-Does the innovation build on existing technologies or create new ones?

True or false: Platform businesses are organized as traditional linear pipelines. -True -False

-False

Place the four steps of the innovation process in order from first to last. Place the first step at the top. -Imitation -Idea -Invention -Innovation

-Idea -Invention -Innovation -Imitation

During the decline stage of the industry life cycle, product innovation efforts ______. -increase dramatically -come to a halt -decline slightly -increase slightly

-come to a halt

The business structure that is linear and has producers at one end and consumers at the other is known as a(n) ______. -digital disruption -innovation ecosystem -platform -pipeline

-pipeline

An enterprise that creates value by matching external producers and consumers in a way that creates value for all participants and that depends on the infrastructure that the platform manages is a(n) ______. -platform business -linear pipeline -herding effect -incremental innovation

-platform business

A firm that successfully leverages network effects can ___. -push its industry into the growth stage -bring its industry life cycle to a halt -eliminate competition -establish a permanent competitive advantage

-push its industry into the growth stage

Which of the following statements about platform businesses is true? -They tend to receive little to no benefits from community feedback. -Growth involves time and planning and a complex supply chain. -They can grow faster than pipeline businesses. -They are not efficient in managing the flow of information from producer to consumer.

-They can grow faster than pipeline businesses.

During the growth stage of the industry life cycle, ______ increases rapidly. -the cost of production -imitation -research and development -demand

-demand

Which are the four steps of the innovation process? -imitation -instigation -invention -imagination -innovation -idea

-imitation -invention -innovation -idea

It is challenging for firms to "cross the chasm" because ______. -transitioning between stages requires significant amounts of capital -firms have difficulty moving from process to product innovation -firms are not able to deal with the technological challenges required -each stage of the industry life cycle features a different group of customers with different preferences and demands

-each stage of the industry life cycle features a different group of customers with different preferences and demands

In the maturity stage of the industry life cycle, industry growth ______. -increases slightly -maintains the same pace as during the growth stage -increases dramatically -flattens or even declines

-flattens or even declines

When a company introduces a new product or process or business model with the intent of gaining a competitive advantage, that company is engaging in ______. -innovation -cost control -branding -franchising

-innovation

True or false: Innovation can create value for one firm while destroying value for another. -True -False

-True

Which statement describes the long tail? -A small amount of revenue derived from a large number of units among a small number of choices -A large amount of revenue derived from a small number of units among almost unlimited choices -A small amount of revenue derived from a small number of units among almost unlimited choices -A large amount of revenue derived from a large number of units among a small number of choices

-A large amount of revenue derived from a small number of units among almost unlimited choices

What is the relationship between innovation and competitive advantage? -Innovation is the enemy of competitive advantage because it is a constant process. -Because innovation happens so quickly, it is of limited use when it comes to gaining competitive advantage. -Although innovation can help a company gain competitive advantage, it cannot help a firm maintain that advantage. -Innovation is a powerful weapon for gaining and maintaining competitive advantage.

-Innovation is a powerful weapon for gaining and maintaining competitive advantage.

Which of the following statements about a business pipeline is true? -It creates value by matching external producers and consumers in a way that creates value for all participants. -It is the traditional system of horizontal business organization. -It relies heavily on innovation and community feedback and involvement. -It is likely to outperform even the most successful platform business.

-It is the traditional system of horizontal business organization.

Which of the following are advantages of platform businesses compared to pipeline businesses? (Check all that apply.) -They scale efficiently by eliminating gatekeepers. -They unlock new sources of value creation and supply. -They benefit from community feedback. -They own and control all their resources.

-They scale efficiently by eliminating gatekeepers. -They unlock new sources of value creation and supply. -They benefit from community feedback.

An architectural innovation is ______. -a new product in which existing technologies are used in a novel way to create new markets -an innovation that draws on novel methods or materials and is derived from an entirely different knowledge base -an innovation that builds on an established knowledge base and steadily improves an existing product -an innovation that leverages new technologies to attack existing markets from the bottom up

-a new product in which existing technologies are used in a novel way to create new markets

During the shakeout stage of the industry life cycle, profits degrade for ______. -the most efficient firms only -all but the most efficient firms -all firms in the industry -a few of the weakest firms

-all but the most efficient firms

The invention of small desktop copiers to create a new consumer market using the same technology as large, stand-alone copiers is an example of a(n) ______ innovation. -incremental -architectural -radical -disruptive

-architectural

Which of the following are types of innovation? (Check all that apply.) -architectural -harvest -disruptive -incremental -radical -consolidation

-architectural -disruptive -incremental -radical

The negative effect of innovative ride-sharing services, such as Uber and Lyft, on traditional taxi cab companies is an example of ______. -creative destruction -corporate social responsibility -peer management -an adoption process

-creative destruction

Successfully transitioning from one stage of the industry life cycle to the next is referred to as ______. -minding the gap -stepping off the bridge -crossing the chasm -stage-transitioning

-crossing the chasm

In the ______ stage of the industry life cycle, falling demand leads to a reduction in market size. -introduction -shakeout -growth -decline -consolidation

-decline

Which of the following are stages of the industry life cycle? (Check all that apply.) -decline -standardization -maturity -shakeout -introduction -growth -multiplication

-decline -maturity -shakeout -introduction -growth

The process in which change agents create new products or processes at significant economic risk is known as ______. -competitive advantage -branding -entrepreneurship -franchising

-entrepreneurship

At which stage of the industry life cycle does the size of the market expand rapidly? -decline -growth -shakeout -introduction -maturity

-growth

The type of innovation that focuses on improving an existing product by using existing technology and targeting existing markets is a(n) ______ innovation. -radical -architectural -incremental -disruptive

-incremental

Which type of innovation applies to existing markets and existing technologies? -radical -architectural -incremental -disruptive

-incremental

The ______ identifies how industries tend to develop and change over time. -industry life cycle -AFI framework -network effect -VRIO strategy

-industry life cycle

In the ______ stage of the industry life cycle, a few number of large firms compete for a share of a market that has reached its maximum size. -maturity -decline -introduction -growth -shakeout

-maturity

Increases in the value of a product or service that result from a corresponding increase in the number of users are known as ___. -harvest strategies -core competencies -network effects -strategic objectives

-network effects

Innovation can ______. (Select all that apply.) -never be a basis for competitive advantage -only be achieved by government agencies -provide firms with a competitive advantage -make existing products or businesses obsolete

-provide firms with a competitive advantage -make existing products or businesses obsolete

Benny's Baos had an edge in the market, but other companies began to enter the market. Benny is now losing customers even though he has launched an aggressive marketing campaign in an attempt to attract customers. Benny's Baos is likely in the ______ stage of the industry life cycle. -shakeout -growth -introduction -decline

-shakeout

A business model in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choice is referred to as _____. -the short leash -strategic entrepreneurship -the long tail -the shakeout stage

-the long tail