BUSMHR 2500 Chapter 3 Generating and Exploiting New Entries

To extend their lead time in a particular market, first movers should _____.

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

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

Scope

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

lead time

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

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

Knowledge

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

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

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

imitation

A true statement about customer loyalty is that _____.

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

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.

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

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

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

An accurate statement about imitation strategies is that _____.

they serve as substitutes for individual learning and research

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

uncertainty for customers

A bundle of resources if valuable

when it enables the firm to pursue opportunities, neutralize threats, and offer products and services that are valued by customers

A bundle of resources is rare

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

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

window of opportunity

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

False

A feature of entrepreneurial knowledge is that ....

It is as valuable or more valuable than entrepreneurial resources.

T/F: Knowledge can be unique to the experiences of an individual entrepreneur

True

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

Resources...

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

In the context of strategy of product differentiation, firms with narrow-scope strategies are most likely to _____.

charge premium prices for their products and services

A narrow-scope strategy is most likely to _____.

focus on producing niche products with high levels of quality

A bundle of resources is inimitable

when the replication of the sources would be difficult and/or costly for (potential) competitors

An error of _____ occurs from the decision to pursue a new entry opportunity, only to find out later that an entrepreneur had overestimated his or her ability to create customer demand and/or to protect the technology from imitation by competitors.

commision

Which of the following is true of demand uncertainty? It is not present in emerging industries and is only present in matured industries. It only allows first movers to accurately estimate future demand patterns. It can cause entrepreneurs to suffer the costs associated with undercapacity. 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.

Which of the following is true of scope?

It depends on the type of entrepreneurial risk taken.

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

Identify a characteristic of narrow-scope strategies.

They normally concentrate on a specific group of customers.

A characteristic of first movers is that _____.

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

An entrepreneur's assessment of a new entry's attractiveness is most likely about _____.

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

Identify the advantages that entrepreneurial firms are most likely to experience if they are first movers. (Check all that apply.) 1. They experience less competitive rivalry than do other firms. 2. They are able to prosper under every circumstances as they are the first movers. 3. They are able to replicate the products of their competitors. 4. They are able to reduce costs as they can spread their fixed costs because of economies of scale.

1 4

Identify the advantages of imitation strategies. (Check all that apply.) 1. They will always enhance a firm's performance. 2. They allow firms to develop the skills required to succeed in an industry. 3. They provide organizational legitimacy to firms. 4. They are rare, valuable, and specific to individual firms.

2 3

Identify the conditions from which liabilities of newness emerge. (Check all that apply.) 1. When communication within an organization occurs through formal channels only 2. When there is some overlap or gaps in responsibilities 3. When a company has to deal with the costs associated with learning 4. When particular roles are clearly defined and demarcated by a firm

2 3

When does the risk of downside loss occur in a firm? (Check all that apply.) 1. When the entrepreneur adopts market scope strategies 2. When the entrepreneur is uncertain over market demand 3. When the firm copies the practices of other firms 4. When there is a technological development

2 4

When does the risk of downside loss occur in a firm? (Check all that apply.) 1. When the firm copies the practices of other firms 2. When there is a technological development 3. When the entrepreneur adopts market scope strategies 4. When the entrepreneur is uncertain over market demand

2 4

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

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

False

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

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 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 is typically easily to communicate to others.

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

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

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 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 is typically considered a disadvantage for first movers. It does not provide entrepreneurs with a period of limited competition.

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

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

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

If an entrepreneurial firm is a first mover in a particular market, it _____.

can learn by trial and error over time

An attribute of technological uncertainty is that _____.

delayed entry allows firms to decrease technological uncertainty

In order to develop a good fit with the external environment, an entrepreneur should initially determine the _____ of the targeted industry.

key success factors

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

key success factors

When an entrepreneur is faced with a window of opportunity, the entrepreneur must _____.

quickly exploit the opportunity with his or her product or idea

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

risk

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

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