Ch 7 Management

According to the text, which event played a role in the innovator CNN losing its leadership position in the 24-hour cable news industry? A. The downturn in the economy impacting media firms B. "Second movers" using incremental innovation to continuously improve their offering C. Not investing enough resources into R&D and satellite technology D. Becoming too diversified and losing strategic focus

"Second movers" using incremental innovation to continuously improve their offering

After an industry has established a dominant design and the industry is in the growth stage, the basis of competition turns to: A. "Price skimming" the market. B. Reducing processes and procedures. C. How to better produce a product or deliver a service. D. How to diversify the firm.

How to better produce a product or deliver a service.

Continuous innovation, rapid technological changes, and intense competition create: A. Consistency in an industry. B. Product repetition. C. Hypercompetition. D. Sustained competitive advantages.

Hypercompetition

According to Michael Porter, firms face hypercompetition because they rely too much on _______________, which leads to a failure of distinct strategic positioning for the individual firm. A. Imitating one another B. Reaching technological limitations C. Joint destruction D. Creative competition

Imitating one another

Strategic initiatives that a firm can use to counter disruptive innovations in the industry include all of the following EXCEPT: A. Improve the product or service value perception by increasing prices B. Stay "ahead of curve" by incremental innovation. C. Protect the low end of the market by introducing low-end innovations. D. Use the needs of emerging markets to reverse innovate.

Improve the product or service value perception by increasing prices

After an innovator launches a radical innovation, it must follow-up with ___________ innovations in order to protect its original advantage(s) and pre-empt potential rivals. A. Proactive B. Defensive C. Incremental D. Institutional

Incremental

Discontinuities are periods of time when all of the following occur EXCEPT: A. Many firms experience upheaval B. Traditional technology is challenged by updated technology C. Incumbent firms are protected. D. New opportunities exist.

Incumbent firms are protected.

Intel and Apple are innovators who entered the market during the introduction stage of an industry life cycle. All of the following are characteristics of this stage EXCEPT: A. Differentiation is the basis of competition. B. Network effects increase the value of the offering. C. Keeping costs low is the main objective. D. Achieving market acceptance is critical.

Keeping costs low is the main objective.

After long periods of competition and innovation, a(n) ____________ is required to "restart" an industry. A. Government intervention B. Radical innovation C. Imitation process D. Reverse process

Radical innovation

All of the following are features of hypercompetition EXCEPT: A. "Creative destruction" and innovation have made competition intense. B. Time periods of competitive advantage have shortened. C. Revenue making potential has increased. D. A firm must have a "sequence" of innovations in order to remain viable.

Revenue making potential has increased.

A positive implication of the disruptive force of the Internet for a firm is: A. That there is almost a limitless low-cost shelf-life for product offerings. B. That the digitization of products leads to market confusion. C. That target markets can no longer be segmented. D. That "going digital" makes a firm's product easier to imitate.

That there is almost a limitless low-cost shelf-life for product offerings.

Which of the following is NOT an example of an industry standard or dominant design? A. Blu-ray media storage B. Barcode scanners C. Wintel operating systems D. The Dvorak (DSK) keyboard

The Dvorak (DSK) keyboard

A disruptive innovator attacks from the "bottom up" because of all of the following EXCEPT: A. Incumbent firms often fail to defend the low end of the market. B. The industry is generally in the maturity stage by the time a disruptive innovation is introduced. C. The gaps in quality at the time of introduction necessitate lower prices. D. Competing in the low end gives a firm time to gain market expertise.

The industry is generally in the maturity stage by the time a disruptive innovation is introduced.

GE disrupted itself by: A. Replacing the top levels of the executive hierarchy. B. Using the needs of developing countries to replace older and more expensive products with newer and more adaptive ones. C. Saturating the global market by having too many products in each market. D. Losing strategic focus and not protecting its market share in health care technology.

Using the needs of developing countries to replace older and more expensive products with newer and more adaptive ones.

Due to hypercompetition, a firm must engage in incremental innovation to remain competitive and gain advantage(s). However, the duration of these advantages: A. Are shorter in duration and magnitude with each subsequent innovation. B. Will eventually leave a firm vulnerable to radical innovations. C. Depend on when discontinuities occur in the industry. D. All of these.

all of these

Digital photography replacing film photography is an example of which type of innovation? A. Disruptive B. Incremental C. Progressive D. Alternative

disruptive

The ZIP drive for data storage is an example of a(n) ___________ innovation that began as a low-cost solution to an existing problem. A. Disruptive B. Technical C. Radical D. Advanced

disruptive

When Japanese carmakers attacked the existing U.S. automobile market by offering low-cost, fuel-efficient cars based on new technology, they were engaging in ___________ innovation. A. Distinctive B. Radical C. Disruptive D. Stealth

disruptive

Which of the following is most successfully innovating to overcome the problem of "thin markets"? A. Macy's B. eBay C. Gillette D. Walmart

eBay

The type of customers vital to a firm introducing a new innovation are the _________, who are willing to pay higher prices and like to tinker with new products. A. Late adopters B. Early adopters C. Early laggards D. Late majority

early adopters

The agents who create change in an industry by introducing new ideas and products are: A. Executives. B. Speculators. C. Entrepreneurs. D. Investors.

entrepreneurs

When engaging in strategic entrepreneurship an existing firm is often able to: A. Introduce radical innovations into the market. B. Exploit new or existing opportunities through innovation. C. Ignore its known core competencies. D. Keep costs low.

exploit new or existing opportunities through innovation

Which of the following is most notably benefitting from the "long tail"? A. Walmart B. Disney C. Intel D. Netflix

netflix

After the Internet was introduced, its value increased exponentially as the number of users increased. This is the positive effect of a(n): A. Adopter force. B. Network effect. C. User effect. D. Internet force.

network effect

Discontinuities generally favor ___________ because they don't have entrenched processes and technologies. A. New entrants B. Incumbents C. Conglomerates D. Diversified firms

new entrants

A disruptive innovation leverages _______ technologies, while architectural innovations are based on ________ technologies. A. Existing; new B. Essential; drastic C. New; existing D. Drastic; essential

new; existing

During the time of a(n) ____________, an existing industry is transformed due to revolutionary technology, becoming the new standard. A. Industry shift B. Market shift C. Innovative shift D. Paradigm shift

paradigm shift

Wikipedia's "open source" approach to competitive advantage will be sustainable as long as: A. The market isn't saturated with book-based encyclopedias. B. Another firm doesn't introduce a CD-based encyclopedia. C. People are willing to volunteer to contribute content. D. All of these.

people are willing to volunteer to contribute content

Each of the following are a distinct phase in an industry life cycle EXCEPT: A. Growth B. Introduction C. Plateau D. Maturity

plateau

Under the "long tail" phenomenon, the short head represents: A. The smallest segment of the market. B. Where customer demand levels off. C. The maturity stage of the industry life cycle. D. The largest segment of the market.

the largest segment of the market

After Jeff Bezos read about how the Internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and created Amazon, which is now the world's largest online retailer. This is clearly an example of: A. A firm with a strong core competency in R&D. B. An entrepreneur who transformed invention into an innovation. C. An entrepreneur who tried to harvest the remaining demand on the Internet. D. Someone who focused on the "short head" of the Internet.

An entrepreneur who transformed invention into an innovation.

During the growth phase of an industry life cycle, demand is strong and: A. Both inefficient and efficient firms thrive. B. A firm should "harvest" its products. C. Only a cost leadership strategy should be pursued. D. Market demand starts to decrease.

Both inefficient and efficient firms thrive.

Understanding how the "80-20" rule can be applied to the disruptive force of the Internet allows a firm to do all of the following EXCEPT: A. "Sell less of more" to customers with heterogeneous tastes. B. Target the remaining 20 percent of potential sales. C. Leverage the Internet to reduce transaction costs. D. Charge 20 percent more for online purchases.

Charge 20 percent more for online purchases.

The process of __________ turns an invention into an innovation. A. Integration B. Commercialization C. Diversification D. Exploitation

Commercialization

The group of customers referred to as the ___________ lead the wave of increased demand as the industry moves from the introduction stage to the growth stage. A. Laggards B. Experimenters C. Early majority D. Innovators

Early Majority

Which of the following strategies do firms typically employ as competitive intensity increases and the market matures? A. Turning to radical innovation in order to introduce a new product B. Employing manufacturing and process engineering capabilities to drive costs down C. Charging high prices in order to capture as much revenue as possible D. Adding additional features to the offering to increase perceived value

Employing manufacturing and process engineering capabilities to drive costs down

___________ makes the process of "creative destruction" happen by replacing existing goods, services, and processes with newly created ones. A. Engagement B. Entrepreneurship C. Venturing D. Speculation

Entrepreneurship

Which of the following is NOT true about the decline stage of an industry life cycle? A. Inefficient firms exit the industry. B. "Laggards" are the last consumer segment to enter the market. C. Firms that consolidate and buy their rivals are typically at a disadvantage. D. There is generally excess industry capacity.

Firms that consolidate and buy their rivals are typically at a disadvantage.

The likelihood of a discontinuity occurring in an industry: A.Is very strong if the industry produces simplified products. B.Is very strong if the existing technology is close to its physical limit. C.Is very weak unless the new technology is cheaper. D.Cannot be predicted.

Is very strong if the existing technology is close to its physical limit.

The four best strategic choices available to management during the decline stage of an industry include all of the following EXCEPT: A. Exit the industry. B. Consolidate by buying rivals. C. Persist by increasing investments in the product. D. Harvest by reducing investments and maximizing cash flow.

Persist by increasing investments in the product.

Generally, a firm that ___________ is able to achieve competitive advantages for the longest time period because this type of innovation is novel and not easily duplicated at first. A. Architecturally innovates B. Focuses on costs C. Radically innovates D. Hyper-innovates

Radically innovates

A core competency which is capital-intensive but critical for a firm creating and launching a new innovation is: A. Process improvement. B. Research and Development (R&D). C. Supply-chain management. D. Customer relation management.

Research and Development (R&D).

Although there are "first-mover advantages" when it comes to bringing a new innovation to the market, there are also disadvantages. Which of the following is NOT one of these disadvantages? A. The firm builds a reputation as an innovator. B. Potential customers must be educated about the product. C. Distribution channels must be found. D. Complementary assets need to be located.

The firm builds a reputation as an innovator.

Entrepreneurial opportunities exist because of all of the following EXCEPT: A. At a certain point, technology and processes reach their limit. B. The market has unmet needs. C. The firm does not believe in risk-taking. D. A new invention can be commercialized.

The firm does not believe in risk-taking.

Each of the following are important reasons to understand the strategic implications of an industry life cycle EXCEPT: A. Each stage attracts different customer groups with unique needs. B. The firm should copy the industry leader in each distinct stage. C. Different competencies are required in each stage that must be created if not existent. D. The firm needs to know when changes in demand require changes in strategy.

The firm should copy the industry leader in each distinct stage.

The word processor brought more perceived value to the market and replaced the typewriter as the industry standard. Later, the word processor industry was undone by the computer industry which created even more value. This is an example of: A. The "ups and downs" of an economic cycle. B. A view of industry life cycles getting longer C. The positive and negative aspects of creative destruction. D. The effects of diversification.

The positive and negative aspects of creative destruction.

The main intention of a firm engaging in architectural innovation is to: A. Utilize new technology to create a new industry. B. Utilize existing technology to steadily improve existing products. C. Utilize existing technology to reconfigure products and create new markets. D. Utilize new technology to disrupt the market with existing products.

Utilize existing technology to reconfigure products and create new markets.

Absorptive capacity is important for a firm to have because: A. It must be able to absorb losses during the growth stage. B.Without new knowledge the firm could face a "technological lock-out." C.Profits will increase if there is excess capacity in the industry. D. Lean manufacturing is no longer a strategic weapon.

Without new knowledge the firm could face a "technological lock-out."

The ability of an existing firm to understand, evaluate, and integrate external technological developments is dependent on its: A. Own technology. B. Longevity in the industry. C. Strategic intent. D. Absorptive capacity.

absorptive capacity

Silicon chip technology will eventually reach its physical limit and will not be able to be improved upon. As that day grows closer: A. Companies like Intel increase investments in R&D B. Companies like Intel place "strategic bets" on emerging technologies. C. No new technology emerges as the best replacement until a paradigm shift occurs. D.All of these.

all of these

When the Japanese company Canon was able to redesign the copier and take market share away from Xerox, it was using which type of innovation? A. Architectural B. Groundbreaking C. Radical D. Intentional

architectural

When a new product, process, or idea is introduced into the market, it has been: A. Extracted. B. Commercialized. C. Invented. D. Executed.

commericalized

Innovation used as a sustained competitive weapon must be: A. Radical and low cost. B. Architectural and high cost. C. Short-term and efficient. D. Continuous and commercialized.

continuous and commercialized

Entrepreneurs do all of the following EXCEPT: A. Undertake economic risk. B. Act as change agents. C. Decrease value for society. D. Innovate in products and processes.

decrease value for society

As evidenced by the European Union determining that GSM should be the industry standard for cell phones, dominant designs can be driven by top-down decisions made by: A. Consumer agencies B. Government bodies C. Local activists. D. Cultural groups.

government bodies

IBM still offers typewriters even though it does not invest much in future innovations of its typewriter line. Instead, it has chosen a _________ strategy to maximize cash flow from the remaining demand for typewriters. A. Harvest B. Divest C. Exit D. Consolidate

harvest

As noted in ChapterCase 7, the success of Wikipedia is attributed to all of the following EXCEPT: A. Leveraging innovations enabled by the Internet. B. Utilizing crowdsourcing. C. Ignoring the "long tail." D. Maintaining a reputation for accuracy.

ignoring the "long tail"

Gillette introducing updated versions of its razor is an example of which type of innovation? A. Essential B. Disruptive C. Radical D. Incremental

incremental

The vast majority of innovations in an industry are ____________ because they build on a firm's existing knowledge base and reinforce the existing organizational structure and network relationships. A. Incremental B. Radical C. Relational D. Moderate

incremental

When a firm steadily improves its offerings by building on its knowledge base, it is engaging in: A. Architectural entrepreneurship. B. Incremental innovation. C. Disruptive entrepreneurship. D. Radical innovation.

incremental innovation

When management modifies strategic objectives based on which stage an industry is in they are responding to a(n): A. Industry life cycle. B. Growth life cycle. C. Economic life cycle. D. Entrepreneurial life cycle.

industry life cycle

Disruptive innovations such as the $200 netbook computer do all of the following EXCEPT: A. Target existing markets. B. Incorporate new technology. C. Introduce a radical idea and create a new industry. D. Attack the market from the "bottom up."

introduce a radical idea and create a new industry

The Wright Brothers creating the airplane is a(n) ______________; Boeing commercializing the airplane is a(n) _____________. A. Breakthrough; invention B. Invention; innovation C. Innovation; invention D. Product; process

invention; innovation

The disruptive force of the Internet provides opportunities due to the ____________ phenomenon, which allows for customer and product niches to come together online. A. Proportion tail B. Long tail C. Incremental market D. Bottom-up

long tail

During the later part of the growth stage, many firms turn to ____________ to bring more customers into the market. A. Lower prices B. Diversification C. Imitation D. Radical innovation

lower prices

During the _______ stage of an industry life cycle, market demand is at a minimum and competitive intensity increases. A. Introduction B. Innovative C. Maturity D. Disruptive

maturity

When new technologies emerge, old ones: A. Get eliminated. B. May improve due to the competitive pressure. C. Remain the same for established firms. D. Are no longer useful.

may improve due to the competitive pressure

When a firm successfully commercializes a new product or service, it is able to extract temporary ______________ but must continue to innovate to sustain competitive advantage(s). A. Monopoly profits B. Industry acknowledgements C. Lower costs of capital D. Competitive parity

monopoly profits

Six Sigma, lean manufacturing, and genetic engineering are examples of ___________ that deliver new ways to produce or deliver existing products or services. A. Procedural changes B. Process innovations C. Entrenched standards D. Trial innovations

process innovations

Generally, as the level of _________ innovation declines, the level of _________ innovation increases. A. Product; process B. Process; procedural C. Incremental; drastic D. Efficient; inefficient

product; process

Which of the following is an example of a discontinuity that has happened in the past? A. McDonald's introducing the Happy Meal B. Propeller airplanes being replaced by supersonic jets C. The Apple iPhone 2G being replaced by the 3GS D. Starbucks selling its goods in China

propeller airplanes being replaced by supersonic jets

The commercialization of new ideas and inventions often does all of the following EXCEPT: A. Creates value for society. B. Protects older industries. C. Disrupts an industry. D. Creates employment opportunities.

protects older industries

Entrepreneurs generally produce which type of innovation? A. Radical B. Speculative C. Reverse D. Incremental

radical

The X-ray is an example of a(n) ___________ innovation. A. Radical B. Incremental C. Drastic D. Fundamental

radical

The use of new materials with a new knowledge base to target new markets is a: A. Groundbreaking innovation. B. Trail innovation C. Radical innovation D. Modern innovation.

radical innovation

According to Strategy Highlight 7.4, GE's success with portable ultrasound devices is attributed to which type of innovation? A. Reverse B. Backward C. Internal D. Diversified

reverse

A(n) ____________ is the dominant design established during the growth stage of an industry life cycle once the market comes to agreement about the prevailing set of engineering features and design choices. A. Compliment B. Trial design C. Prototype D. Standard

standard

When an existing firm uses the tools and concepts learned from strategic management in order to pursue innovation, it is said to be engaging in: A. Strategic entrepreneurship B. Strategic invention. C. A strategic venture. D. A short-term strategy.

strategic entrepreneurship

A(n) ________ occurs during the time when existing technologies reach their limitations and several new technologies enter the fray. A. Industry slow-down B. Swarm of technology C. Loss of industry profits D. Innovation breakdown

swarm of technology

Which of the following is NOT an important aspect of innovation? A. Useful B. Novel C. Implemented D. Tangible

tangible

As noted in Strategy Highlight 7.1, _______________ has created part of the growth of the Apple iPhone due to the apps that are available to users. These apps increase the value of the iPhone and thus more people want to own an iPhone with apps. A. Ignoring the role of complements B. Apple's low-cost strategy C. The leveraging of network effects D. The targeting of "laggards"

the leveraging of network effects

__________ occur when transactions are not likely to take place because it is difficult to bring niche buyers and niche sellers together. A. Blended markets B. Wide markets C. Thin markets D. Diluted markets

thin markets

The disruptive innovation of the Internet and the "long tail" phenomenon in the retail industry would be in which category for a SWOT matrix for Barnes & Noble? A. Risks B. Weaknesses C. Threats D. Opportunities

threats