MGMT 425 CH.6
Fragmented industries typically have high barriers to entry.
False
The franchisor typically owns and funds each of its franchisees
False
A product proliferation strategy can be used to lower the entry barriers in a mature industry.
False
Alpha Corporation owns and controls several retail outlets and is pursuing a strategy called franchising.
False
Development of a mass market is the stimulus for an industry to change from growth to embryonic.
False
Early adopters are customers who purchase a new technology or product only when they are convinced that it will be around for a long time
False
Franchisees essentially pursue independent strategies and do not use the business model of the franchisor.
False
Horizontal mergers often lead to industry fragmentation.
False
In the embryonic stage of the industry life cycle, a companys production costs are low
False
Laggards are technologically sophisticated customers willing to tolerate the limitations of the product.
False
Laggards are the customers who are the first ones to try and adopt a new technology.
False
Market penetration involves the creation of new or improved products to replace existing products.
False
Relish Inc. created the first national chain of fast-food restaurants in a previously fragmented industry. This is called divestment.
False
The late majority customers are typically reached through specialized distribution channels, and products are often sold by word of mouth.
False
Innovators and early adopters have very different customer needs from the early majority.
TRue
The goal for a company in the growth stage of the industry life cycle is to maintain its relative competitive position in a rapidly expanding market.
True
A divestment strategys success is often dependent upon good timing.
True
A fragmented industry is composed of a large number of small- and medium-sized companies.
True
A harvest strategy requires the company to halt all new investments in capital equipment, advertising, research and development (R&D), and other activities that require cash flow.
True
A leadership strategy aims at growing in a declining industry by picking up the market share of companies that are leaving the industry.
True
A limit price strategy involves charging a price that is lower than that required to maximize profits in the short run to signal to new entrants that the incumbent has a low-cost structure that the entrant likely cannot match.
True
A new products relative advantage refers to the degree to which a new product is perceived as being better at satisfying customer needs than the product that it supersedes.
True
A product proliferation strategy involves filling the niches or catering to the needs of customers in all market segments to deter entry by competitors.
True
A technology upgrading strategy is utilized by incumbent companies in a mature industry to deter entry by investing in costly technology upgrades that potential entrants would have trouble matching
True
Both innovators and early adopters are customers in the market while the industry is in its embryonic stage.
True
Explicit price leadership, when companies jointly set prices, is illegal under antitrust law
True
Market development involves finding new market segments for a companys products
True
New strategies are often required to strengthen a companys business model as a market develops over time.
True
One characteristic of embryonic industries is specialized distribution channels.
True
