BUSMHR 2500 Chapter 3

True or false: An entrepreneur's assessment of a new entry's attractiveness is more about whether this opportunity "really" exists or not and less about whether the entrepreneur believes he or she can make it work.

False Reason: This is false. An entrepreneur's assessment of a new entry's attractiveness is less about whether this opportunity "really" exists or not and more about whether the entrepreneur believes he or she can make it work. Making it work depends, in part, on entrepreneurial strategies.

In the context of strategy of product differentiation, firms with narrow-scope strategies are most likely to _____. offer low levels of product quality to their customers face increased competition with the larger established firms cater to mass markets rather than specific groups of customers charge premium prices for their products and services

charge premium prices for their products and services

A strategy that involves copying products that already exist and attempting to build an advantage through minor variations is known as _____. a "me-too" strategy franchising a narrow-scope strategy scoping

a "me-too" strategy

Industries that have been newly formed and are growing are known as ________ ________.

emerging industries

The ability to obtain, and then recombine, resources into a bundle that is valuable, rare, and inimitable is considered an important ________ resource.

entrepreneurial

A true statement about emerging industries is that _____. entrepreneurs do not have considerable freedom in how they achieve success the rules of emerging industries are established very quickly entrepreneurs are able to easily detect changes in emerging industries they are very likely to have a high degree of environmental changes

they are very likely to have a high degree of environmental changes

A characteristic of first movers is that _____. they do not develop any cost advantages they will be able to establish their product as the industry standard they will be unable to select and secure the most attractive segments of the market they may be able to monitor changes in the market better than firms that are not in the market

they may be able to monitor changes in the market better than firms that are not in the market

An accurate statement about imitation strategies is that _____. they are typically rare, valuable, and specific to a firm they serve as substitutes for individual learning and research they do not provide a firm with organizational legitimacy they cannot enhance a firm's performance

they serve as substitutes for individual learning and research

The period of time when the environment is favorable for entrepreneurs to exploit a particular new entry is known as ________ ________ ________.

window of opportunity

Which of the following is true of demand uncertainty? It can cause entrepreneurs to suffer the costs associated with undercapacity. It only allows first movers to accurately estimate future demand patterns. It is not present in emerging industries and is only present in matured industries. It makes it easy to predict the key dimensions along which a market will grow.

It can cause entrepreneurs to suffer the costs associated with undercapacity.

An entrepreneur's assessment of a new entry's attractiveness is most likely about _____. the amount of time the entrepreneur spends searching for information the availability of an opportunity in a new market whether an opportunity actually exists or not whether the entrepreneur believes that he or she can create the market demand

whether the entrepreneur believes that he or she can create the market demand

Strategies that involve copying the practices of other firms are ________ of 1 strategies.

imitation

True or false: When a firm uses a "me-too" strategy, the firm makes no changes at all when it copies products from another firm.

False Reason: This is false. When a firm uses a "me-too" strategy, the firm makes minor variations when it copies products from another firm and normally delivers its product in a different manner.

True or false: Newness/new entry of a new product normally creates no challenges for entrepreneurs.

False Reason: This is false. Whether associated with a new product, a new market, and/or the creation of a new organization, "newness" is like a double-edged sword. On the one hand, newness represents something rare, which can help differentiate a firm from its competitors. On the other hand, newness creates a number of challenges for entrepreneurs.

What is a feature of entrepreneurial knowledge? It is considered to be common rather than rare. It is as valuable or more valuable than entrepreneurial resources. Market knowledge will always be more important than technology knowledge. It is not unique among individual entrepreneurs.

It is as valuable or more valuable than entrepreneurial resources.

Identify the advantages that entrepreneurial firms are most likely to experience if they are first movers. (Check all that apply.) They are able to reduce costs as they can spread their fixed costs because of economies of scale. They are able to prosper under every circumstances as they are the first movers. They are able to replicate the products of their competitors. They experience less competitive rivalry than do other firms.

They are able to reduce costs as they can spread their fixed costs because of economies of scale. They experience less competitive rivalry than do other firms.

Identify the conditions from which liabilities of newness emerge. (Check all that apply.) When particular roles are clearly defined and demarcated by a firm When a company has to deal with the costs associated with learning When there is some overlap or gaps in responsibilities When communication within an organization occurs through formal channels only

When a company has to deal with the costs associated with learning When there is some overlap or gaps in responsibilities

Inimitable

When replication of the resources would be difficult and/or costly for (potential) competitors

To extend their lead time in a particular market, first movers should _____. increase switching costs to lock in existing customers establish a good relationship with any supplier by sharing trade secrets share their products' unique features with local firms build customer loyalty by establishing their products in the minds of customers

build customer loyalty by establishing their products in the minds of customers

If an entrepreneurial firm is a first mover in a particular market, it _____. can learn by trial and error over time can prevent the changes that occur in an industry will not be able to select the most attractive segment of the market will not face any competitive rivalry

can learn by trial and error over time

An attribute of technological uncertainty is that _____. delayed entry typically enhances the technological uncertainty of a market technological uncertainty is only present for first movers technological uncertainty has no impact on a firm's production and capital delayed entry allows firms to decrease technological uncertainty

delayed entry allows firms to decrease technological uncertainty

Considerable difficulty in accurately estimating the potential size of a market, how fast it will grow, and the key dimensions along which it will grow is known as

demand uncertainty

A firm with a narrow-scope strategy is most likely to _____. develop high quality products for the high end of a market cater to mass markets rather than specific groups in a market focus on producing a wide variety and range of products face more competition than a firm with a broad-scope strategy

develop high quality products for the high end of a market

A true statement about customer loyalty is that _____. it is typically developed by increasing switching costs it can be developed when buyers identify an industry with a first mover it cannot be established by first movers with unique products it does not help first movers in erecting barriers to entry

it can be developed when buyers identify an industry with a first mover

In order to develop a good fit with the external environment, an entrepreneur should initially determine the _____ of the targeted industry. key success factors key resources profitability revenue

key success factors

An error of _____ occurs from the decision not to act on a new entry opportunity, only to find out later that an entrepreneur had underestimated his or her ability to create customer demand and/or to protect the technology from imitation by competitors.

omission

When an entrepreneur is faced with a window of opportunity, the entrepreneur must _____. wait and see if another entrepreneur experiences success in the same market quickly exploit the opportunity with his or her product or idea enter the market even if he or she has no market or technological knowledge always gather more information before entering the market

quickly exploit the opportunity with his or her product or idea

________ are the basic building blocks to a firm's functioning and performance, and they are simply the inputs into the production process.

resources

The probability, and magnitude, of downside loss, which could result in the bankruptcy of a firm, is known as

risk

________ is a choice by an entrepreneur about which customer groups to serve and how to serve them.

scope

Considerable difficulty in accurately assessing whether a technology will perform and whether alternate technologies will emerge and leapfrog over current technologies is known as

technological uncertainty

When customers have considerable difficulty in accurately assessing whether a new product or service provides value for them, this leads to ________ ________ ________.

uncertainty for customers

True or false: In a market, first movers normally obtain knowledge through vicarious learning rather than learning-by-doing.

False Reason: This is false. In a market, first movers normally obtain knowledge through learning-by-doing rather than vicarious learning.

Rare

When the resources are possessed by few, if any, (potential) competitors

The grace period in which a first mover operates an industry under conditions of limited competition is known as ________ ________.

lead time

Negative implications arising from an organization's newness are known as ________ ________ ________.

liabilities of newness

A strategy that offers a small product range to a small number of customer groups to satisfy a particular need is known as a _____ strategy. minor-scope broad-scope narrow-scope major-scope

narrow-scope

Offering a new product to an established or new market, offering an established product to a new market, or creating a new organization is the entrepreneurial act of ________ ________.

new entry

Error of commission

Adverse effects are a result of acting on an opportunity.

Error of omission

Adverse effects are a result of not acting on an opportunity.

Which of the following is true of customer uncertainty? The problem of customer uncertainty can only be eliminated by offering informational advertising. Potential customers' uncertainty do not stem from the broader context in which a product is to be used. It can be present even when a new firm has a superior product when compared with its competition. It is typically not present when a product or service is highly innovative.

It can be present even when a new firm has a superior product when compared with its competition.

Identify a true statement about knowledge that is the basis of entrepreneurial resource. It is typically easily to communicate to others. It can be unique to the experiences of an individual entrepreneur. It is not important for generating a bundle of resources. It is typically common rather than rare.

It can be unique to the experiences of an individual entrepreneur.

Which of the following is true of scope? It refers to the probability, and magnitude, of downside loss. It does not range from a narrow- to a broad-scope strategy. It depends on the type of entrepreneurial risk taken. It is not a choice about which customer groups to serve and how to serve them.

It depends on the type of entrepreneurial risk taken.

In the context of strategy of product differentiation, identify a true statement about a firm's narrow-scope strategy. It always reduces the risks associated with competition. It is susceptible to the risk that market demand does not materialize as expected and/or changes over time. It always reduces the risks associated with market uncertainties. It offers a large product range to a large number of customer groups to satisfy a general need.

It is susceptible to the risk that market demand does not materialize as expected and/or changes over time.

Which of the following is true of lead time? It is typically considered a disadvantage for first movers. It does not provide entrepreneurs with a period of limited competition. It does not involve the erection of barriers to prevent other firms from entering a market. It provides first movers with the chance of setting their product as the industry standard.

It provides first movers with the chance of setting their product as the industry standard.

What is the basis of the entrepreneurial capability to gather, and then recombine, resources into a bundle that is valuable, rare, and inimitable? Capital Wealth Power Knowledge

Knowledge

Which of the following is true of imitation strategies? They are used to decrease the risk of downside loss related to new entry. They are normally rare and valuable. They do not represent substitutes for individual learning. They cannot enhance the performance of a firm.

They are used to decrease the risk of downside loss related to new entry.

When does the risk of downside loss occur in a firm? (Check all that apply.) When the entrepreneur is uncertain over market demand When the firm copies the practices of other firms When the entrepreneur adopts market scope strategies When there is a technological development

When the entrepreneur is uncertain over market demand When there is a technological development

Valuable

When the resources enable a firm to pursue opportunities, neutralize threats, and offer products and services that are valued by customers

The requirements that any firm must meet to successfully compete in a particular industry are known as ________ ________ ________.

key success factors

A narrow-scope strategy is most likely to _____. offer a range of products across many different market segments provide a better way of managing demand uncertainty than a broad-scope strategy focus on producing niche products with high levels of quality focus on mass markets rather than a specific group of customers

focus on producing niche products with high levels of quality

Identify the advantages of imitation strategies. (Check all that apply.) They will always enhance a firm's performance. They provide organizational legitimacy to firms. They are rare, valuable, and specific to individual firms. They allow firms to develop the skills required to succeed in an industry.

They provide organizational legitimacy to firms. They allow firms to develop the skills required to succeed in an industry.