Question 1

Building customers' switching costs decreases barriers to entry for other firms.

Accepted Answer

Building customers' switching costs actually increases barriers to entry for other firms, as it becomes more difficult for customers to switch to a new provider due to the time, effort, and money invested in the current provider.

Question 2

A narrow scope strategy reduces the risks associated with competition.

Accepted Answer

Narrow scope strategy focuses on a specific market niche or customer segment, which reduces the risks associated with competition. By targeting a smaller market, companies can focus on meeting the unique needs of their customers and develop a strong competitive advantage. This strategy also enables firms to specialize in a specific area and build expertise, which can make it difficult for competitors to replicate their offerings.

Question 3

Adaptations necessary to meet changes in market demand are difficult because an organization resists change.

Accepted Answer

Organizations often have established routines and ways of doing things, making it challenging to adapt to changes in market demand as it requires a shift in mindset and behavior.

Question 4

Key success factors are the requirements that any firm must meet to successfully compete in a particular industry.

Accepted Answer

Key success factors are critical to a firm's ability to compete successfully in a specific industry. These factors include things such as market share, pricing strategy, product quality, customer service, brand reputation, and distribution channels. Meeting these requirements is crucial to a company's long-term success and growth.

Question 5

Technological uncertainty is eliminated by a superior technology.

Accepted Answer

Technological uncertainty refers to the unpredictability in the development, outcomes, and impacts of technologies, which is not necessarily eliminated by the emergence of a superior technology, as new uncertainties can arise with its adoption and integration.

Question 6

To overcome customer uncertainty,the venture should educate customer through demonstration and documentation on how to use the product.

Accepted Answer

Educating customers on how to use the product is an effective way to overcome their uncertainty and increase their confidence in the product. Demonstrations and documentation are two common methods of educating customers.

Question 7

The late mover is able to operate in the industry for a grace period under conditions of limited competition.

Accepted Answer

A late mover typically enters an industry where competition already exists, and they may face challenges in gaining market share against established competitors.

Question 8

By overestimating demand,the entrepreneur will suffer the costs of undercapacity.

Accepted Answer

Overestimating demand typically leads to overcapacity, where the entrepreneur incurs costs for resources that are not fully utilized, rather than undercapacity.

Question 9

A narrow scope strategy offers a small product range to a small number of customer groups.

Accepted Answer

A narrow scope strategy is focused on serving a small product range to a specific customer group. This allows companies to specialize and differentiate themselves in a niche market rather than trying to compete with larger companies across broader markets.

Question 10

The decision to exploit or not to exploit a new entry opportunity depends on whether the entrepreneur has sufficient information,and on whether the window of opportunity is still open.

Accepted Answer

The statement is correct. The decision to enter a new market or undertake a new venture opportunity depends on various factors, including the availability of sufficient information and the timeline of the opportunity. If the entrepreneur has the necessary information and the window of opportunity is still open, they are more likely to exploit the opportunity. Otherwise, they may miss the chance, and the market might become saturated with competitors.

Question 11

A narrow scope strategy is better than a broad scope strategy in an environment high in uncertainty.

Accepted Answer

The answer of A narrow scope strategy is better than...

Question 12

Emerging industries are industries that have been around for years but are just starting to experience explosive growth.

Accepted Answer

Emerging industries are typically new or developing sectors that are in the early stages of growth and innovation, not necessarily industries that have been around for years.

Question 13

Entrepreneurs that delay entry have the advantage of more information about market demand.

Accepted Answer

Entrepreneurs who delay entry into a market have the advantage of gathering more information about market demand, competition, and consumer behavior before making a decision, thus reducing the risk of failure.

Question 14

If a company has a superior product,customers will always be willing to pay a higher price for higher value.

Accepted Answer

While having a superior product can definitely justify a higher price, customers may not always be willing to pay more for it. Factors such as competition, consumer preference and their budget can also play a role in their purchasing decision.

Question 15

Environmental changes are highly unlikely in emerging industries.

Accepted Answer

Emerging industries are often subject to rapid and unpredictable changes in their operating environment. These changes may be driven by technological advancements, regulatory changes, or shifts in consumer behavior, among other factors. As a result, businesses in emerging industries must be prepared to adapt quickly to new circumstances in order to survive and thrive.

Question 16

If there is a poor fit between its resources and the external environment,then the firm will not enjoy superior performance.

Accepted Answer

This statement is true. If a firm's resources do not match the needs of the external environment (such as customer demands, technological trends, or market conditions), it will struggle to compete with other companies and achieve higher levels of performance. In order to succeed, a firm must understand the external environment and adapt its strategy and resources accordingly.

Question 17

Using a broad scope strategy helps to reduce the risk of market uncertainty.

Accepted Answer

A broad scope strategy involves diversifying a company's operations across multiple industries, markets, and products/services. By doing so, the company is less vulnerable to market fluctuations in any one area, reducing the risk of uncertainty. Therefore, the statement is true.

Question 18

Competition within an industry always has a negative effect on industry growth.

Accepted Answer

It is actually false. Competition within an industry can lead to increased innovation, improved quality of products and services, lower prices, and ultimately, industry growth. It also forces companies to constantly improve and differentiate themselves from competitors, which can benefit consumers and the industry as a whole.

Question 19

Customers always embrace change in products and services.

Accepted Answer

Customers may resist change in products and services, especially if they are loyal to a particular brand or have developed a habit of using the product or service in a certain way. Introducing changes may require marketing efforts to communicate the benefits of the new features or improvements to convince customers to accept and adopt them.

Question 20

First movers can monitor changes in the market that might be difficult or impossible to detect for those firms not participating in the market.

Accepted Answer

As first movers are the earliest entrants into the market, they have a unique advantage of monitoring changes in the market more closely and quickly. They can detect changes that other firms might miss, giving them an edge in adapting to the changes and gaining a competitive advantage.

Quiz 3: Generating and Exploiting New Entries