Quiz 13 Innovation and Entrepreneurship

incumbent firms are slow to change.

A factor favoring the success of disruptive innovation is that:

Maturity stage

A few efficient and strong firms in the laptop industry have remained and emerged successful from the shakeout stage. Which of the following stages of the industry life cycle will they move to next?

entrepreneur who commercialized invention into an innovation.

After Jeff Bezos read about how the Internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and founded Amazon, which is now the world's largest online retailer. This is clearly an example of a(n):

Disruptive innovation

As a start-up company, Virtue Mobiles Inc. entered the low end of the highly competitive cell phone industry with its low-cost smartphones. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartphones in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?

Social entrepreneur

Georgia Ray is the founder of the departmental stores chain, Ether Inc. She ensures that the products in her stores are ethically and responsibly sourced. Most products are therefore 100 percent organic and manufactured from recycled material. Also, her company purchases handicrafts from non-profit organizations supporting the aged. Georgia's belief is that her company should be able to support the community at large. Which of the following terms best describes Georgia Ray?

The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation.

In developed economies, the electric car industry is in the introduction stage, and the industry for MP3 players is in the shakeout phase. What does this imply?

Shakeout stage

In emerging economies, the LCD television industry is in that phase of the industry life cycle in which the previously increasing market demand becomes limited. The competitive intensity within the industry is high, and inefficient firms have begun to exit the industry. This has allowed only a few major companies to come out as cost leaders and hold the shrinking market. Which of the following stages of the industry life cycle is the LCD television industry currently in?

20 years

In the U.S., the time period for the right to exclude others from the use of a patented technology is _____ from the filing date of a patent application.

It represents products that appeal to the largest segment of the market with homogenous tastes.

In the context of the long tail phenomenon, what does the short head represent?

radical innovation tends to disrupt the existing power distribution within the firms.

Incumbent firms favor incremental innovation over radical innovation because:

She will prefer to buy from well-established brands rather than unknown new ventures.

Sara can be categorized under the late majority customer segment. Which of the following behaviors is she most likely to exhibit?

long tail

The _____ business model is best described as one in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choices.

early adopters

The customers entering the market in the growth stage are primarily _____.

imitation

The four-step innovation process ends with:

There are only a few competitors in the 3D television market.

The market for 3D televisions is in the introduction stage of the industry life cycle. What does this imply?

survive by drawing on "deep pockets."

The strategic objective of businesses during the shakeout phase of the industry life cycle will primarily be to:

disruptive innovation

When Japanese carmakers attacked the existing U.S. automobile market by first offering small fuel-efficient cars, and then leveraging their low-cost and high-quality advantages into high-end luxury segments, they were engaging in _____.

reduces investments in product support.

When a firm pursues a harvest strategy, it:

Consolidation strategy

When the market for photo film negatives declined with the arrival of digital cameras, Momento Films Inc., a manufacturer of film negatives, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has Momento Films adopted in this scenario?

An automobile company using computer-aided design in its production

Which of the following best illustrates a process innovation as opposed to product innovation?

The early and late majority together

Which of the following customer segments as described in the chasm framework make up the mass market?

The availability of apps that led to network effects.

Which of the following has been a primary reason for increases in the Apple iPhone's installed base (Strategy Highlight 7.1)?

The first mover will be able to reduce costs through economies of scale.

Which of the following is a competitive benefit experienced by the first mover firm in an industry?

The second movers imitated CNN's incremental innovation to continuously improve their offering.

Which of the following is one of the reasons that led to CNN, an innovator, losing its leadership position in the 24-hour cable news industry?

Almost 80 percent of sales in a given product category come from only 20 percent of the offerings in that category.

Which of the following is stated by the long tail phenomenon?

Social entrepreneurs create value in pursuit of solutions to social problems.

Which of the following statements accurately describes social entrepreneurs?

They frequently enter the market during the decline stage.

Which of the following statements is true of laggards?

While the domestic airline industry is free from excess capacity, the pet clothing industry will have new entrants.

While the domestic airline industry is in the maturity stage of the industry life cycle, the pet clothing industry is in its growth stage. Which of the following can be inferred from the given data?

The number of competitors in the e-book reader industry will be larger when compared to the landline telephone industry.

While the industry for e-book readers is in its growth stage, the industry for landline telephones is in the decline stage of the industry life cycle. Which of the following can be inferred from this?

Unlike incumbent firms, new entrants do not have formal organizational structures and processes.

Why is it easier for new entrants to develop radical innovations when compared to incumbent firms?

The weaker firms are forced out of the industry in this stage.

Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage?

Thin markets

_____ is a situation in which transactions are likely not to take place because there are only a few buyers and sellers who have difficulty finding each other.