Chapter 4, 5, & 6 quizzes

A firm's ability to respond quickly to external change depends upon:

Accurate information readily available & a short product cycle time

The difference between "evolutionary" and "revolutionary" standards strategies is:

Evolutionary strategies maintain compatibility with what went before

A key success factor in the maturity stage of the industry life cycle is a firm's ability to develop the necessary supporting capabilities to scale up production of its good/service.

False

Emphasis often shifts from process innovation to product innovation once a dominant design emerges.

False

Isolating mechanisms are forces that tend to equalize profit rates among firms, i.e., phenomena that erode a firm's competitive advantage.

False

The industry life cycle consists of 4 stages: 1) Introduction, 2) Growth, 3) Plateau, and 4) Rejuvenation.

False

External changes can only give rise to competitive advantage when those changes differentially affect firms.

True

In the long run, competition eliminates differences in profitability between firms.

True

Two main factors drive industry evolution: demand growth and the production and diffusion of knowledge.

True

___________ refers to the idea that, when a would-be imitator cannot clearly understand the causes of a competitor's success, any attempt to imitate that strategy is subject to unknown success.

Uncertain Imitability

The key challenges for firms entering the growth stage of the industry life cycle include:

a. scaling up output to meet demand b. obtaining sufficient resources and capabilities to support effective scaling-up of operations c. adapting product designs and manufacturing capabilities to accommodate large-scale production d. All of the above

Dynamic capabilities:

are a firm's higher level ability to learn new capabilities

As an industry moves through the stages of the life cycle, overall strategies tend to:

change in most major aspects

An organization that engages in both exploitative and explorative activities in the same organizational units, with the same people employs ____________.

contextual ambidexterity

The number of firms in most industries tends to _______________ with the onset of the maturity stage of the industry life cycle.

decrease significantly

A cost leadership strategy means that a firm must:

exploit sources of cost advantage in providing customers with a standardized product

Research has shown that higher R&D output has a strong positive relationship with firm performance.

false

If a strong regime of appropriability exists, the innovating firm:

has the advantage in terms of capturing a significant portion of value created by the innovation

Competitive advantage and technology are linked by:

innovation

Michael Porter's early work suggests that combining cost leadership and differentiation strategies:

is likely to result in a firm becoming "stuck in the middle"

The value created by an innovation:

is not distributed among the various players in any consistent manner

Standards emerge in markets that are subject to __________.

network externalities

Differentiation is when a firm:

offers customers something valuable and unique for which customers are willing to pay a price premium

Strategic innovation involves:

pioneering along at least one of three dimensions: new industry, new customer segment, or a new source of competitive advantage

Once established, competitive advantage is:

subject to erosion by competitors or new entrants

The idea that an organization's existing capabilities are path dependent means that:

the capabilities it possesses today are the result of the steps it has taken throughout his history

The extent to which an innovation leads to greater profit for the innovating firm depends upon:

the creation of value for consumers by the innovation & the appropriation of value created from the innovation by the innovating firm

The most successful follower strategies are:

those that initiate a product's transition from niche market to mass market

An innovation diffuses:

through the adoption of products by customers and the imitation by competitors

If a firm is able to establish clear property rights over its innovation, then there is an advantage in leading.

true