BUS 195 Chapter 8

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. A. a pioneering B. an imitative C. an adaptive D. a creative

A. a pioneering

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 ________________. A. a strategy of forbearance B. a strategy of co-opetition C. a hardball strategy whereby competitive actions are not undertaken without a clear advantage D. a weakness strategy that leads a company into constant decline

A. a strategy of forbearance

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

A. angels

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 ______________ 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

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 _____________. A. imitative new entry B. adaptive new entry C. proactive new entry D. pioneering new entry

A. imitative new entry

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. loans B. venture capital C. public financing D. angel financing

A. loans

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

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

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

B. a low-cost leader

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

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

B. affordable

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 _____________. A. increased dynamic capabilities B. increased market commonality C. erosion of first mover advantages D. the choice of tactical over strategic actions

B. increased market commonality

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. pioneering C. adaptive D. differentiated

B. pioneering

Which of the below best describes the competitive tendencies of small firms? A. Small firms tend to signal their competitive actions long before they launch those actions, because they lack legitimacy in the marketplace B. Small firms typically have more resources available as they undertake competitive attacks than do large firms. C. Small firms are more nimble and can respond quickly to competitive attacks. D. Small firms are more nimble and cannot respond quickly to competitive attacks.

C. Small firms are more nimble and can respond quickly to competitive attacks.

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. adaptive D. differentiated

C. adaptive

All of the following are examples of strategic actions a firm might take EXCEPT _____________. A. partner with competitors to reduce competition B. expand into neglected markets C. change product packaging D. tie up raw materials sources

C. change product packaging

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

C. investing venture capital.

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

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.

Based on statistics reported in the text, which of the following statements is not true? A. Firms that obtain venture-capital funding receive an average of over $1 million each. B. Total investment in start-up firms averages about $80,000 in the first year of the activity of the firm. C. Among the 100 fastest-growing new businesses identified by Entrepreneur magazine, 61 percent obtained start-up funding from personal savings. D. Ninety percent of the companies financed with venture capital funds fail.

D. Ninety percent of the companies financed with venture capital funds fail.

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. plagiarize with pride and deceive the competition C. unleash massive and overwhelming force D. lower competitor costs

D. lower competitor costs

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

Which of the following is not a factor that affects how a competitor will respond to a competitive attack? A. how dependent the competitor is on that industry or particular market segment B. the degree of market power and reputation of the company that initiated the attack C. the resources which are available for a firm to respond D. the stock market reaction to the initial competitive attack

D. the stock market reaction to the initial competitive attack

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

False

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

False

Forbearance is a particularly aggressive type of competitive attack.

False

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

False

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

False

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

False

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.

False

Spandex, founded in 2000, created footless pantyhose and other undergarments for women. This is an example of an imitative new entry strategy.

False

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

False

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

False

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

True

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

True

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

True

Opportunity recognition involves two phases of activity: discovery and execution.

True

Pandora, launched in 2000, radically changes the radio business with its Music Genome Project system that analyzes music for its underlying traits. This is an example of a pioneering new entry strategy.

True

The majority of entrepreneurial start-ups are financed with personal savings and the contributions of family and friends.

True

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

True

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

True

Warby Parker makes eyeglasses. It keeps costs low through several means and has a social mission. This is an example of a firm that uses a combination strategy.

True