Question 1

Entrepreneurial firms are often in a strong position to use combination strategies,because they have the flexibility to approach situations uniquely.

Accepted Answer

Entrepreneurial firms are often in a strong position to offer a combination strategy, because they have the flexibility to approach situations uniquely. For example, holding down expenses can be difficult for big firms, because each layer of bureaucracy adds to the cost of doing business across the boundaries of a large organization.

Question 2

An entry wedge is a type of entrepreneurial strategy firms can use to enter into business.

Accepted Answer

One of the most challenging aspects of launching a new venture is finding a way to begin doing business that quickly generates cash flow, builds credibility, attracts good employees, and overcomes the liability of newness. The idea of an entry strategy or entry wedge describes several approaches that firms may take to get a foothold in a market.

Question 3

A focus strategy must not include elements of differentiation and overall cost leadership in order to be successful.

Accepted Answer

Focus strategies are often associated with small businesses because there is a natural fit between the narrow scope of the strategy and the small size of the firm. A focus strategy may include elements of differentiation and overall cost leadership, as well as combinations of these approaches. To be successful within a market niche, the key strategic requirement is to stay focused.

Question 4

The evaluation phase of opportunity recognition occurs when an entrepreneur has an insight about a new business venture,often based on prior knowledge.

Accepted Answer

The discovery phase refers to the process of becoming aware of a new business concept. Many entrepreneurs report that their idea for a new venture occurred to them in an instant in which they had some insight or epiphany, often based on their prior knowledge, and that gave them an idea for a new business.

Question 5

Forbearance is a particularly aggressive type of competitive attack.

Accepted Answer

There may be many circumstances in which the best reaction is no reaction at all. This is known as forbearance, refraining from reacting at all as well as holding back from initiating an attack.

Question 6

Running Press created a line of palm-sized mini books that were sold as point-of-sale impulse items.The company grew rapidly,even though it had a small fraction of the sales in the publishing industry.They used a pure overall cost leadership strategy to capture market share.

Accepted Answer

Focus strategies are often associated with small businesses because there is a natural fit between the narrow scope of the strategy and the small size of the firm. A focus strategy may include elements of differentiation and overall cost leadership, as well as combinations of these approaches. To be successful within a market niche, the key strategic requirement is to stay focused. Even though these books represent just a tiny fraction of total sales in the 23 billion USD publishing industry, they have been a mainstay for Running Press. As the Running Press example indicates, many new ventures are successful even though their share of the market is quite small.

Question 7

Opportunity recognition is the process of identifying and selecting entrepreneurial opportunities.It does not involve the development of those ideas.

Accepted Answer

To determine which ideas are strong enough to become new ventures, entrepreneurs must go through a process of identifying, selecting, and developing potential opportunities. This is the process of opportunity recognition.

Question 8

New entry is among the most common reasons why a cycle of competitive actions and reactions gets started among similar competitors.

Accepted Answer

New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is true in part because nearly every market need is already being met, either directly or indirectly, by existing firms. As a result, the competitive actions of a new entrant are very likely to provoke a competitive response from companies that feel threatened. This, in turn, is likely to evoke a reaction to the response.

Question 9

Smell-O-Vision created an invention that would pump odors into movie theatres.It did not make it to market.This was an attempt to be an adaptive entry strategy.

Accepted Answer

An adaptive new entry approach does not involve reinventing the wheel nor is it merely imitative either. It involves taking an existing idea and adapting it to a particular situation. Smell-O-Vision created a new invention to meet customer needs and therefore was an attempted pioneering new entry strategy.

Question 10

Cutting prices or increasing marketing efforts are examples of tactical competitive actions.

Accepted Answer

Two broadly defined types of competitive action include strategic actions and tactical actions. Tactical actions include refinements or extensions of strategies. Examples of tactical actions include cutting prices, improving gaps in service, or strengthening marketing efforts. Such actions typically draw on general resources and can be implemented quickly.

Question 11

Adaptive new entry involves offering a radical new product or highly innovative service.

Accepted Answer

New entrants with a radical new product or highly innovative service may change the way business is conducted in an industry. This kind of breakthrough, creating new ways to solve old problems or meeting customer needs in a unique new way, is referred to as a pioneering new entry. An adaptive new entry approach does not involve reinventing the wheel nor is it merely imitative either. It involves taking an existing idea and adapting it to a particular situation.

Question 12

The majority of entrepreneurial start-ups are financed with angel financing.

Accepted Answer

The funding available to young and small firms tends to be quite limited. In fact, the majority of new firms are low-budget start-ups launched with personal savings and the contributions of family and friends.

Question 13

If similar competitors vie for the same customers in a marketplace,they are likely to escalate their competitive strategy through a reactive series of actions and responses.

Accepted Answer

New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is true in part because, except in very new markets, nearly every market need is already being met, either directly or indirectly, by existing firms. As a result, the competitive actions of a new entrant are very likely to provoke a competitive response from companies that feel threatened. This, in turn, is likely to evoke a reaction to the response. As a result, a competitive dynamic of action and response begins among the firms competing for the same customers in a given marketplace.

Question 14

The Amazon approach to selling books,using the Internet and offering superior customer service,gave it a strong entry strategy.This is an example of a focus strategy.

Accepted Answer

Amazon founder Jeff Bezos set out to use Internet technology to revolutionize the way books are sold. He garnered the ire of other booksellers and the attention of the public by making bold claims about being Earth's largest bookseller. As a bookseller, Bezos was not doing anything that had not been done before. But two key differentiating features, doing it on the Internet and offering extraordinary customer service, made Amazon a differentiated success.

Question 15

Choosing which new entry strategy is best depends on competitive financial and marketplace considerations.The greatest opportunities most likely will be in existing markets,rather than in new markets.

Accepted Answer

Considering these choices, an entrepreneur or entrepreneurial team might wonder which new entry strategy is best. The choice depends on many competitive, financial, and marketplace considerations and may stem from being willing to enter new markets rather than seeking growth only in existing markets.

Question 16

New entry into markets,whether by start-ups or by incumbent firms,rarely threatens existing competitors.

Accepted Answer

New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is true in part because, except in very new markets, nearly every market need is already being met, either directly or indirectly, by existing firms.

Question 17

When attacked,older and larger firms tend to respond more quickly,but their responses are often more predictable.

Accepted Answer

Older and larger firms may have more resources and a repertoire of competitive techniques they can use in a counterattack. Large firms, however, tend to be slower to respond. Older firms tend to be predictable in their responses because they often lose touch with the competitive environment and rely on strategies and actions that have worked in the past.

Question 18

Small businesses create the majority of new jobs in the U.S.economy.

Accepted Answer

Small businesses, those defined as having 500 employees or fewer, create about 65 percent of all new jobs in the United States and also generate 13 times as many new patents per employee as larger firms.

Question 19

Entrepreneurial new entry is often perceived as a competitive threat to incumbent firms because most market needs are being met,either directly or indirectly,by existing firms.

Accepted Answer