Chapter 7 Strategic Management

Technological disruption:

compels firms to adopt new business models.

Cell phone technology is replacing traditional wired phone technology. This is an example of a(n):

technological paradigm shift.

An advantage of being a first mover is that:

there is an opportunity to increase sales volume ahead of rivals.

Which of the following will NOT help an established company in addressing the potential challenge of a disruptive technology?

Asking customers if they are interested in the new technology

Which of the following is NOT a basic strategy for a first mover?

Discourage development of complementary assets

Which of the following is NOT true of high-technology industries?

First movers have an advantage because their customers avoid switching costs.

A technological paradigm shift is most likely to occur in which stage of the industry life cycle?

Maturity

Which of the following statements is true about new entrants in the context of a technological paradigm shift?

New entrants do not need to worry about their established customer base.

Which of the following is true of first movers?

The first mover that creates a revolutionary product is in a monopoly position.

Which of the following is an advantage of first movers?

They have an opportunity to exploit network effects and positive feedback loops.

Which of the following statements is true about technological paradigm shifts?

They have the potential to threaten the survival of established industries.

Which of the following is a disadvantage of first movers?

They run the risk of building the wrong resources and capabilities.

In case of emergence of a disruptive technology, established companies should:

acquire newly emerging companies that are pioneering potentially disruptive technologies.

When a first mover does not have complementary assets, barriers to imitation are high, and there are several capable competitors, the first mover should:

enter into a joint venture to protect the product.