Deck 8: Entrepreneurial Strategy and Competitive Dynamics

Question 1

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

Answer 1

True
Explanation: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.

Answer 2

True
Explanation: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.

Answer 3

False
Explanation: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.

Question 5

Forbearance is a particularly aggressive type of competitive 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.

Question 7

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

Question 8

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

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.

Question 10

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

Question 11

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

Question 12

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

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.

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.

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.

Question 16

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

Question 17

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

Question 18

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

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.

Question 20

Market commonality is the extent to which rivals draw from the same types of resources.

Question 21

________ is a value required when an opportunity is attractive long enough for it to be successfully developed and deployed.

A) Value creating
B) Durable
C) Achievable
D) Affordable

Question 22

According to the text,new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by

A) established corporations.
B) lone wolf entrepreneurs.
C) bootstraps.
D) individual investors.

Question 23

Which of the following terms is used to refer to opportunities that are practical and physically possible?

A) durable
B) valuable
C) sustainable
D) achievable

Question 24

Generally speaking the opportunity recognition process consists of two phases of activity.They are ________ and ________.

A) global search; recycling profits
B) value creation; affordability
C) global search; valuation
D) discovery; evaluation

Question 25

The majority of entrepreneurial start-ups are financed through monies from

A) bank financing.
B) SBA loans.
C) personal savings and the contributions of family and friends.
D) venture-capital financing.

Question 26

The U.S.Small Business Administration supports small business through all the following except

A) government contracting.
B) investing venture capital.
C) underwriting loans.
D) training and counseling.

Question 27

________ are private individuals who provide seed capital to young ventures.

A) Gazelles
B) Angels
C) Cash cows
D) Rising stars

Question 28

According to a study by the Kauffman Foundation,which of the following is the largest source of funding for businesses that have been operating at least five years?

A) public financing
B) venture capital
C) loans
D) angel financing

Question 29

________ is the process of identifying,selecting,and developing new venture opportunities.

A) Innovativeness
B) Bootstrapping
C) Opportunity recognition
D) Brainstorming

Question 30

________ provide(s)a key avenue for growth for many young and small firms through partnering to obtain resources and to expand into new markets.

A) Strategic alliances
B) Funding
C) Banking
D) Research and development

Question 31

Vision is an important element of entrepreneurial leadership because

A) a vision statement is part of the documentation used to obtain venture financing.
B) the entrepreneur has to envision realities that do not yet exist.
C) organizations cannot function without a detailed and operational vision.
D) banking institutions require it.

Question 32

Which of the following is not one of the characteristics of an entrepreneurial opportunity?

A) affordable
B) attractive
C) achievable
D) value creating

Question 33

Which of the following is the most important resource for a start-up activity?

A) social recognition
B) land
C) personnel
D) money

Question 34

Opportunities can be found through a structured search process.The example of Ancient Ales with their innovative line of craft beers demonstrates which of the following types of structured search?

A) Identify frustrations with current products or processes.
B) Talk to people who know including suppliers, customers, frontline employees.
C) Borrow ideas from other markets.
D) Find historical ideas and re-purpose them.

Question 35

Jeannine Fradelizio noticed that at parties she hosted,guests would set down their wine glasses and forget which one was their glass.She designed the Wine Glass Writer to solve this problem.She used the process of

A) differentiation.
B) entrepreneurial resources.
C) opportunity recognition.
D) focus strategy.

Question 36

Which of the following is not one of the three characteristics of entrepreneurial leadership mentioned by the text?

A) clarifying job responsibilities
B) dedication and drive
C) commitment to excellence
D) vision

Question 37

Which of the following is not a primary source of financing for entrepreneurial start-ups?

A) investments by family and friends
B) public equity
C) private investors
D) personal savings

Question 38

Which of the following is not a common source of new business opportunities?

A) current or past work experiences
B) suggestions by family or friends
C) chance event
D) future work

Question 39

Which of the following statements about venture capital is false?

A) Entrepreneurs raise venture capital by selling shares of ownership in their business.
B) Venture capital groups can often provide helpful management advice.
C) Venture capital is used to finance rapid growth or large capital expenditures.
D) Venture capital is a form of public equity financing.

Question 40

According to the text,for an entrepreneurial start-up to be successful,three ingredients are critical.What are they?

A) good ideas, a team of investors, and a business plan
B) a viable opportunity, available resources, and a qualified and motivated founding team
C) an opportunity, a marketing plan, and office space
D) management, marketing, and money

Question 41

One of the ways entrepreneurs achieve success is by using resources more efficiently.This is an example of how entrepreneurs use a(n)________ strategy.

A) imitative
B) low-cost leader
C) differentiation
D) combination

Question 42

When launching a new venture,finding a way to begin doing business must ________ generate cash flow,build credibility,attract good employees,and overcome the liability of newness.

A) slowly
B) quickly
C) steadily
D) painlessly

Question 43

Tom Monahan,a business creativity coach,says that every new idea is merely a spin of an old idea.A company that enters the market by offering a product or service that is somewhat new and sufficiently different in order to create value for customers by capitalizing on current trends is using which new entry strategy?

A) imitative
B) pioneering
C) differentiated
D) adaptive

Question 44

According to the text,which of the following does not make it difficult for entrepreneurial firms to effectively pursue a strategy of differentiation?

A) Differentiation strategies are often expensive to enact.
B) Incumbent firms are constantly seeking opportunities to specialize in market niches.
C) It may be difficult for a young firm to establish a strong brand identity.
D) Implementing superior new technologies may be challenging for entrepreneurial firms.

Question 45

Spanx,the footless pantyhose and other undergarments for women company was founded in 2000.It combined nylon and Lycra to create a new type of undergarment that is comfortable and eliminates panty lines.It now produces over 200 products,generating over 250 million USD in annual sales.It used which new entry strategy in 2005?

A) adaptive
B) pioneering
C) differentiated
D) imitative

Question 46

Mint entered the market in 2005 with comprehensive online money management systems that tells users what they are spending by aggregating financial information from online bank and credit card accounts.Today it has over 20 million users and is helping them manage over 3 billion USD in assets.It used which new entry strategy in 2005?

A) imitative
B) adaptive
C) pioneering
D) differentiated

Question 47

Which of the following is not a factor that makes it more difficult for new ventures to be successful as differentiators?

A) The strategy is thought to be expensive to put into action.
B) Establishing a brand, important to a differentiation strategy, is thought to be expensive.
C) Superior innovation is often very costly.
D) Customer service is often costly, but it does not affect a differentiation strategy.

Question 48

The first personal computer revolutionized computing and how business is conducted.It was using a(n)________ entry strategy.

A) imitative
B) pioneering
C) adaptive
D) creative

Question 49

In 2005,Plum Organics entered the market with convenient organic baby food and snack foods for children.It now has over 20 products,saw sales grow by 44 percent in 2015,and claims over 7 percent market share in the baby food segment.It used which new entry strategy in 2005?

A) imitative
B) pioneering
C) differentiated
D) adaptive

Question 50

Entrepreneurial firms that pursue a low-cost leadership strategy use all the following to achieve lower costs except

A) cost-saving technology.
B) simple organizational structures.
C) rapid decision making.
D) extensive investment in order to achieve economies of scale.

Question 51

Shakespeare & Co.was reimagined in 2015 to meet the current needs of the market when Dan Neller purchased the NY bookstore.He provided a place to find the hottest books,the ability to print more obscure titles,and a rare level of service that made the store feel like a destination.He used which generic strategy to achieve competitive advantages?

A) overall cost leadership
B) differentiation
C) focus
D) low cost leadership

Question 52

The new entry strategy that a firm chooses is dependent upon the ________ and the ________ of the new business concept.

A) riskiness; cost
B) riskiness; potential sales
C) riskiness; innovativeness
D) idea; innovativeness

Question 53

Smell-O-Vision designed an invention to pump odors into movie theatres.It flopped,in spite of its innovativeness.What kind of new entry strategy was the company using to penetrate the market?

A) imitative
B) adaptive
C) pioneering
D) differentiated

Question 54

When an industry is mature,a(n)________ strategy is considered one of the most effective approaches for a new entrant.

A) focus
B) differentiation
C) overall low-cost
D) small business

Question 55

Founded in 1995,Under Armour,Inc.sells undershirts and other athletic gear using moisture-wicking fabric for sweaty sports.By 2016,it reached the number two athletic clothing firm spot with over 4.5 billion in sales.It used which new entry strategy in 2005?

A) imitative
B) pioneering
C) adaptive
D) differentiated

Question 56

Precision Hawk,a company using drones to do aerial data analysis reached out to Hahn Estate Winery to understand their needs in analyzing crop health.Precision Hawk was conversing with Hahn Estate Winery in order to

A) offer to build a new winery.
B) get into wine production.
C) develop a focus strategy.
D) identify an opportunity.

Question 57

According to the textbook,which of the following is not a common new entry strategy?

A) imitative new entry
B) adaptive new entry
C) pioneering new entry
D) proactive new entry

Question 58

Square provides a means for small businesses to process credit and debit card sales without signing up for a traditional credit card arrangement of monthly fees and minimum charges.When its business grew rapidly,Apple,Google,and PayPal responded with ________ actions?

A) pioneering
B) imitative
C) adaptive
D) differentiated

Question 59

Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as ________ new entry.

A) adaptive
B) imitative
C) proactive
D) pioneering

Question 60

Amazon is an example of a company that used the differentiation strategy to enter the market.The differentiation features included

A) minimal customer service.
B) traditional back office logistics.
C) exceptional customer service.
D) traditional delivery logistics.

Question 61

Telecommunication equipment providers,Huawei and Nokia,have a high degree of ________ because they have patent rights to similar technologies,high-quality engineering staffs,and global sales forces.

A) dynamic capabilities
B) resource similarity
C) market commonality
D) equity funding

Question 62

In competitive dynamics,new entrants may be forced to change their strategies or develop new ones to ________ competitive challenges by ________.

A) overcome; other new rivals
B) succumb; potential rivals
C) survive; incumbents
D) survive; former rivals

Question 63

Aircraft makers Boeing and Airbus have a high degree of ________ because they make very similar products and have many buyers in common.

A) dynamic capabilities
B) first mover advantages
C) market commonality
D) equity funding

Question 64

Walmart began offering low-priced extended warranties on home electronics after learning that its rivals such as Best Buy derived most of their profits from extended warranties.According to the Stalk and Lachenauer book,this is an example of the strategy to

A) plagiarize with pride.
B) deceive the competition.
C) devastate rivals profit sanctuaries.
D) unleash massive and overwhelming force.

Question 65

All the following are examples of strategic actions a firm might take except

A) partner with competitors to reduce competition.
B) expand into neglected markets.
C) tie up raw materials sources.
D) change product packaging.

Question 66

BCG authors Stalk and Lachenauer published a book in which they listed competitive strategy for winning against incumbent rivals.Which of the following is not one of their suggested strategies?

A) devastate profit sanctuaries of rivals
B) lower competitor costs
C) unleash massive and overwhelming force
D) plagiarize with pride and deceive the competition

Question 67

Competitors in a mature market typically find that a new entrant is threatening because

A) nearly all market need is already being met.
B) the new entrant might increase prices.
C) the new entrant offers the same product.
D) the new entrant is a pioneer.

Question 68

When any two firms have both a high degree of market commonality and highly similar resources,a ________ threat is present.

A) weaker competitive
B) successful marketing
C) stronger competitive
D) stronger marketing

Question 69

Which of the below best describes the competitive tendencies of small firms?

A) Small firms tend to signal their competitive actions long before they launch those actions because they lack legitimacy in the marketplace.
B) Small firms typically have more resources available as they undertake competitive attacks than do large firms.
C) Small firms are more nimble and can respond quickly to competitive attacks.
D) Small firms are more nimble and cannot respond quickly to competitive attacks.

Question 70

Running Press launched the Miniature Editions line of books in 1993.Today it has sold over 20 million copies.Which of the following most closely represents their strategy?

A) differentiation
B) overall cost leadership
C) focus
D) combination

Question 71

Unilever has taken a dominant position (65 percent market share)in the Vietnamese laundry detergent market by employing an investment and marketing campaign that decimated the market position of the local,incumbent competitors.According to the Stalk and Lachenauer book,this is an example of ________ strategy.

A) plagiarize with pride
B) deceive the competition
C) raise competitor costs
D) unleash massive and overwhelming force

Question 72

The business-to-business cleaning supply company,Ecolab,encouraged a leading competitor,Diversity,to adopt a strategy to go after low-volume,high-margin customers.What Ecolab knew that Diversity did not is that the high servicing costs involved with the segment makes it unprofitable.Ecolab bid high enough to lose the contracts to Diversity but low enough to ensure that Diversity lost money.According to the Stalk and Lachenauer book,this is an example of the strategy to

A) plagiarize with pride.
B) deceive the competition.
C) raise competitor costs.
D) unleash massive and overwhelming force.

Question 73

In designing its smartphones,Samsung copied the look,feel,and technological attributes of the Apple iPhone.By copying Apple,Samsung was able to improve its market position.According to the Stalk and Lachenauer book,this is an example of strategy to

A) plagiarize with pride.
B) deceive the competition.
C) raise competitor costs.
D) unleash massive and overwhelming force.

Question 74

The Wall Street Journal and New York Times have seen the intensity of their rivalry increase.One factor driving this is that The Wall Street Journal has moved from financial news reporting to general national and global news reporting and finally,to adding local New York news.The rivalry of these two news providers has increased due to

A) increased dynamic capabilities.
B) erosion of first mover advantages.
C) increased market commonality.
D) the choice of tactical over strategic actions.

Question 75

The best example of a tactical action that a company might use in response to a competitive attack is to

A) acquire the competitor.
B) offer price discounts and rebates.
C) expand into new geographical areas.
D) target the markets of the rival.

Question 76

Casper Sleep makes mattresses,according to Strategy Spotlight 8.3 in the textbook.Which generic strategy most closely represents theirs?

A) differentiation
B) low-cost leadership
C) focus
D) combination

Question 77

Southwest Airlines began its no frills,no meals strategy in the late 1960s as a direct assault on the major carriers of the day.What type of competitive action does this represent?

A) A strategic action because it includes a refinement of an existing strategy.
B) A tactical action because it is a refinement of an existing strategy.
C) A strategic action because it was a breakthrough innovative offer.
D) A guerrilla offensive because it is fast and will surprise its rivals.

Question 78

Which of the following is not one of the reasons a company might launch new competitive actions?

A) to obtain first mover advantages
B) to improve market position
C) to find new sources of raw materials
D) to capitalize on growing demand

Question 79

________ is the intense rivalry involving actions and responses among similar competitors vying for the same customers in a marketplace.

A) Competitive dynamics
B) Resource similarity
C) The threat of substitutes
D) Pioneering new entry

Question 80

New ventures may find it difficult to use differentiation strategies successfully because they lack ________ and ________.

A) sufficient funding; superior innovation
B) competitors; superior technology
C) sufficient funding; qualified entrepreneurs
D) innovative ideas; potential customers