MGT 3830 Exam 2 Quiz Questions

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. True False

False

An industry that operates in multiple countries is generally at the same stage of its life cycle in different countries. True False

False

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

False

In most industries, being the leader is the best strategy to effectively exploit an innovation. True False

False

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

False

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

False

Suppose that a firm has developed an innovation in an industry where technical standards are really important. In this situation, all else held equal, it would be to this firm's advantage to be a follower. True False

False

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

False

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

True

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

True

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

True

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

True

__________ is when a firm's core competences become core rigidities. a. The competency trap b. Organizational inertia c. Industry evolution d. Satisficing

a. The competency trap

The emergence of __________ is a critical event in an industry's life cycle because it signals the shift from the introduction to the growth phase. a. a dominant design b. long production runs c. a radical process innovation d. overcapacity

a. a dominant design

Strategic innovation involves: a. pioneering along at least one of three dimensions: new industry, new customer segment, or a new source of competitive advantage b. Top managers' total dedication to achieving timely innovations c. spending more on R&D than your competitors d. limitless financial and organizational resources

a. 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: a. subject to erosion by competitors or new entrants b. easily maintained unless entry barriers are high c. a firm's reward for leading the industry d. relatively stable over time

a. subject to erosion by competitors or new entrants

The idea that an organization's existing capabilities are path dependent means that: a. the capabilities it possesses today are the result of the steps it has taken throughout his history b. new capabilities are developed incrementally c. new capabilities can only be developed in a step-by-step, sequential manner d. past circumstances influenced the organization's past capabilities

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

The most successful follower strategies are: a. those that initiate a product's transition from niche market to mass market b. those that initiate a product's transition from mass market to low-cost market c. those that initiate a product's transition from low-cost market to mass market d. those that initiate a product's transition from niche market to low-cost market

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

Suppose that a firm possesses a competitive advantage over its rivals. This firm is widely known as an aggressive firm that will cut its prices to drive out competition. From this we can conclude that this firm has constructed an isolating mechanism of ______________ to prevent imitation. a. causal ambiguity b. deterrence c. nontransferable resources and capabilities d. pre-emption

b. deterrence

A cost leadership strategy means that a firm must: a. exploit sources of cost advantage before tailoring the product to each customer b. exploit sources of cost advantage in providing customers with a standardized product c. exploit sources of cost advantage in providing each customer with their minimum requirements d. exploit sources of cost advantage while providing every customer with an individual service

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

If a strong regime of appropriability exists, the innovating firm: a. cannot acquire strong property rights over its innovation b. has the advantage in terms of capturing a significant portion of value created by the innovation c. faces conditions that should prompt it to try to sell its innovation d. cannot capture a significant portion of the valued created by the innovation

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

The value created by an innovation: a. is distributed equally among players b. is not distributed among the various players in any consistent manner c. is typically captured by the firm with the largest market share d. is generally captured by the innovating firm

b. is not distributed among the various players in any consistent manner

Once established, competitive advantage is: a. relatively stable over time b. subject to erosion by competitors or new entrants c. easily maintained unless entry barriers are high d. a firm's reward for leading the industry

b. subject to erosion by competitors or new entrants

The number of firms in most industries tends to _______________ with the onset of the maturity stage of the industry life cycle. a. increase significantly b. become unpredictable c. Decrease significantly d. remain relatively stable

c. Decrease significantly

The difference between "evolutionary" and "revolutionary" standards strategies is: a. Revolutionary strategies require recruiting strong allies b. Revolutionary strategies are more dramatic and, as such, are more effective c. Evolutionary strategies maintain compatibility with what went before d. Revolutionary strategies are more likely to gain investor attention

c. Evolutionary strategies maintain compatibility with what went before

Dynamic capabilities: a. are easy to develop b. develop rapidly in some industries then die c. are a firm's higher level ability to learn new capabilities d. refers to a firm's capacity to successfully implement a dual strategy

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

The changes that generate competitive advantage: a. are mainly external b. come mainly from a firm's innovations c. can be either external or internal in origin d. are mainly internal

c. can be either external or internal in origin

One challenge of ________ standards is that they may take a long time to emerge, which may result in delayed development of the market and potentially even the death of the technology overall. a. public b. mandatory c. de facto d. proprietary

c. de facto

A cost leadership strategy means that a firm must: a. exploit sources of cost advantage before tailoring the product to each customer b. exploit sources of cost advantage in providing each customer with their minimum requirements c. exploit sources of cost advantage in providing customers with a standardized product d. exploit sources of cost advantage while providing every customer with an individual service

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

Competitive advantage and technology are linked by: a. organizational culture b. corporate strategy c. innovation d. invention

c. innovation

In the _______ stage of the industry life cycle, demand for the industry's product/service is limited to affluent, risk-taking, innovation-minded consumers. a. maturity b. decline c. introduction d. growth

c. introduction

Differentiation is when a firm: a. offers customers a uniquely low price b. offers customers something valuable and unique at a significantly lower price than rivals c. offers customers something valuable and unique for which customers are willing to pay a price premium d. offers customers products with many additional features

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

An organization is ___________ when it stops searching for new alternatives when it finds one that is satisfactory. a. entering into the maturity stage of the industry lifecycle b. maximizing c. satisficing d. ambidextrous

c. satisficing

An innovation diffuses: a. mainly on the supply side b. mainly on the demand side c. through the adoption of products by customers and the imitation by competitors d. by industrial espionage and leaked information

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

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

d. All of the above

A firm's ability to respond quickly to external change depends upon: a. accurate information readily available b. a short product cycle time c. having a well-established market leadership position d. Both A and B.

d. Both A and B.

Radical product innovation is a key success factor in which stage of the industry lifecycle? a. Growth b. Decline c. Maturity d. Introduction

d. Introduction

Which of the following prompts the beginning of a new industry life cycle? a. A very large gap in the market emerges b. New knowledge emerges in the form of radical process innovation c. An existing industry dies d. New knowledge emerges in the form of radical product innovation

d. New knowledge emerges in the form of radical product innovation

___________ 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. a. Causal ambiguity b. Competitive advantage c. Pre-emption d. Uncertain imitability

d. Uncertain imitability

As an industry moves through the stages of the life cycle, overall strategies tend to: a. trend toward a broader product scope b. primarily focus on differentiation c. stay steady and not waver; don't change anything d. change in most major aspects

d. 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 ____________. a. structural ambidexterity b. path dependency c. competence enhancing technologies d. contextual ambidexterity

d. contextual ambidexterity

Competitive advantage and technology are linked by: a. corporate strategy b. organizational culture c. invention d. innovation

d. innovation

Michael Porter's early work suggests that combining cost leadership and differentiation strategies: a. is relatively easy; successful firms can easily pursue both strategies at the same time b. is likely to result in above average performance c. can be accomplished by focusing on a narrow market segment d. is likely to result in a firm becoming "stuck in the middle"

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

Standards emerge in markets that are subject to __________. a. unequal distribution of value among various parties b. intense competition between the innovators and imitators c. the establishment of clear property rights d. network externalities

d. network externalities

Suppose that an organization is trying to decide whether to be a leader or a follower with its new innovation. In making this decision, the organization should consider which factors? a. How important complementary resources and capabilities are b. Whether the potential to establish a standard exists c. Whether a lead-time advantage can be established d. Whether the innovation can be protected by property rights e. All of the above f. A and B only

e. All of the above

The extent to which an innovation leads to greater profit for the innovating firm depends upon: a. the creation of value for consumers by the innovation b. the appropriation of value created from the innovation by the innovating firm c. How quickly the innovation gets adopted by consumers d. All of the above e. Both A and B

e. Both A and B

All of the following are conditions that influence the regime of appropriability except: a. tacitness of the technology b. strength of property rights over the innovation c. lead-time d. complementary resources and capabilities e. organizational culture

e. organizational culture