MGT 449 - CH 7

Which of the following key assumptions are innovations like Procter & Gamble's "Connect + Develop" based on? A. Combining the best of internal and external R&D will more likely lead to a competitive advantage. B. Almost 40 percent of sales comes from 80 percent of product selection found in the short head. C. The low end of a market is highly vulnerable to competitive attacks. D. Since the best people, the smartest people in the industry work for P&G, the best discoveries must be invented at P&G.

A. Combining the best of internal and external R&D will more likely lead to a competitive advantage.

To be successful and to survive the shakeout stage of the industry life cycle, a firm should: A. charge higher prices than its competitors. B. focus on product innovation rather than process innovation. C. gain economies of scale. D. shift from price to non-price competition.

C. gain economies of scale.

On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based? A. The number and size of competitors remain constant throughout the industry life cycle. B. Each stage of the industry life cycle is dominated by a different customer group. C. Industries tend to follow an unpredictable industry life cycle. D. The supply and demand sides of the market remain constant irrespective of the phase of the industry life cycle.

B. Each stage of the industry life cycle is dominated by a different customer group.

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? A. The cable news industry was in the maturity stage of the industry life cycle. B. The second movers imitated CNN's incremental innovation to continuously improve their offering. C. It failed to cross the large competitive chasm between the early adopters and early majority. D. Its business model relied heavily on crowdsourcing for its user-generated content.

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

While the industry for 3D televisions is in the introduction stage of the industry life cycle, the CRT (Cathode ray tube) television industry is in its decline stage. Which of the following statements will be true in this scenario? A. The market size for 3D televisions is extremely large, while the market size for CRT televisions is moderate. B. While product innovation will be at its maximum for the 3D television industry, process innovation will be more crucial for the CRT television industry. C. The focus in the 3D television industry will be on cost-leadership, whereas in the CRT television industry, the focus will be on differentiation. D. While the strategic objective of the CRT television industry will be achieving market acceptance, the strategic objective of the 3D television industry will be pursuing a harvest strategy.

B. While product innovation will be at its maximum for the 3D television industry, process innovation will be more crucial for the CRT television industry.

Incumbent firms favor incremental innovation over radical innovation because: A. their business decisions are independent of the other parties in their innovation ecosystem. B. radical innovation will disturb the existing power distribution within the firms. C. incumbent firms do not have formal organizational structures and processes like the way new entrants do. D. incremental innovations help firms sustain a permanent competitive advantage, whereas radical innovations only help gain a temporary advantage.

B. radical innovation will disturb the existing power distribution within the firms.

The demand for video recorders has drastically reduced, and there are only a few consumer electronics companies selling them at extremely low prices. Also, the current buyers of video recorders are mainly categorized under laggards. Which of the following stages of the industry life cycle is the video recorder industry in currently? A. Growth stage B. Maturity stage C. Decline stage D. Commercialization stage

C. Decline stage

_____ 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. A. Diseconomies of scale B. Resource ambiguity C. Thin markets D. Buyer resistance

C. Thin markets

When a firm pursues a maintain strategy, it: A. exits a declining industry to maintain the goodwill of its overall brand name. B. reduces investments in product support and allocates only a minimum of human and other resources. C. continues to support marketing efforts even if the demand for the product is declining. D. chooses to consolidate the industry by buying rival firms, those who plan to exit.

C. continues to support marketing efforts even if the demand for the product is declining.

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? A. Radical innovation B. Incremental innovation C. Architectural innovation D. Disruptive innovation

D. Disruptive innovation