CBA 469 - Chapter 7 Notes - Business Strategy

CBA 469 - JSU - Chapter 7 Notes - Business Strategy

It can make existing products or businesses obsolete.

It can provide firms with a competitive advantage.

What statements about innovation are true?

It can make existing products or businesses obsolete.

It can provide firms with a competitive advantage.

It can never be a basis for competitive advantage.

It can only be achieved by government agencies.

True

True or False:
Innovation can create value for one firm while destroying value for another.

A large amount of revenue derived from a small number of units among almost unlimited choices

Which statement describes the long tail?

A large amount of revenue derived from a small number of units among almost unlimited choices

A large amount of revenue derived from a large number of units among a small number of choices

A small amount of revenue derived from a small number of units among almost unlimited choices

A small amount of revenue derived from a large number of units among a small number of choices

Innovation is a powerful weapon for gaining and maintaining competitive advantage.

What is the relationship between innovation and competitive advantage?

Multiple choice question.

Innovation is a powerful weapon for gaining and maintaining competitive advantage.

Innovation is the enemy of competitive advantage because it is a constant process.

Because innovation happens so quickly, it is of limited use when it comes to gaining competitive advantage.

Although innovation can help a company gain competitive advantage, it cannot help a firm maintain that advantage.

Idea, Invention, Innovation, and Imitation 

Which are the four steps of the innovation process?

Multiple select question.

imagination

innovation

instigation

idea

imitation

invention

innovation

When a company introduces a new product or process or business model with the intent of gaining a competitive advantage, that company is engaging in Blank______.

Multiple choice question.

franchising

cost control

innovation

branding

an Idea 

The four-step innovation process begins with Blank______.

Multiple choice question.

imagination

inspiration

invention

an idea

creative destruction.

The negative effect of innovative ride-sharing services, such as Uber and Lyft, on traditional taxi cab companies is an example of:

Multiple choice question.

creative destruction.

an adoption process.

peer management.

corporate social responsibility

invention 

The second step of the four-step innovation process involves the transformation of an idea into a new product or process and is known as Blank______.

Multiple choice question.

initiation

imitation

implementation

invention

the long tail 

A business model in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choice is referred to as Blank______.

Multiple choice question.

strategic entrepreneurship

the shakeout stage

the short leash

the long tail

commercializing new ideas and inventions

Entrepreneurs innovate by Blank______.

Multiple choice question.

commercializing new ideas and inventions

acquiring promising start-up companies

limiting competition in a given market

increasing demand for existing products

It has accelerated dramatically.

Which statement best describes the speed of innovation over the past hundred years?

Multiple choice question.

It has increased moderately.

It has accelerated dramatically.

It has grown at a slow but steady pace.

It has been relatively stagnant.

True

Industries often tend to follow a predictable industry life cycle.

True false question.

True

False

Idea, Invention, Innovation, Imitation

Place the four steps of the innovation process in order from first to last. Place the first step at the top.

research and development

During the introductory stage of the industry life cycle, innovators will likely devote most of their time, money, and effort to Blank______.

Multiple choice question.

human resource recruitment

operations management

management

research and development

push its industry into the growth stage

A firm that successfully leverages network effects can ______.

Multiple choice question.

eliminate competition

push its industry into the growth stage

establish a permanent competitive advantage

bring its industry life cycle to a halt

Apple combining smart phone and wristwatch technologies to create the Apple Watch

Which of the following is an example of invention?

Multiple choice question.

Apple combining smart phone and wristwatch technologies to create the Apple Watch

Walmart increasing the number of local and organic products in its stores

McDonald's cutting items from its dollar menu

Nike rereleasing an exact replica of a popular sneaker from the 1980s

growth

During the growth stage of the industry life cycle, ______ increases rapidly.

Multiple choice question.

research and development

demand

the cost of production

imitation

entrepreneurship

Taking on an economic risk in order to innovate is known as Blank______.

Multiple choice question.

disruptive innovation

strategic objectivization

entrepreneurship

intrapreneurship

growth 

During which stage does a standard develop?

Multiple choice question.

introduction

growth

decline

maturity

industry life cycle

The Blank______ identifies how industries tend to develop and change over time.

Multiple choice question.

VRIO strategy

AFI framework

industry life cycle

network effect

process innovations 

New methods for producing existing products or delivering existing services are known as Blank______.

Multiple choice question.

process innovations

business-level strategies

product innovations

industry standards

capital

The introductory stage of the industry life cycle is often a ______-intensive process.

Multiple choice question.

profit

sales

capital

leisure

shakeout 

Benny's Baos had an edge in the market, but other companies began to enter the market. Benny is now losing customers even though he has launched an aggressive marketing campaign in an attempt to attract customers. Benny's Baos is likely in the Blank______ stage of the industry life cycle.

Multiple choice question.

growth

decline

shakeout

introduction

network effects 

Increases in the value of a product or service that result from a corresponding increase in the number of users are known as Blank______.

Multiple choice question.

strategic objectives

network effects

core competencies

harvest strategies

flattens or even declines

In the maturity stage of the industry life cycle, industry growth Blank______.

Multiple choice question.

increases slightly

flattens or even declines

increases dramatically

maintains the same pace as during the growth stage

growth

At which stage of the industry life cycle does the size of the market expand rapidly?

Multiple choice question.

growth

decline

maturity

introduction

shakeout

decline

Demand falls most rapidly in the Blank______ stage of the industry life cycle.

Multiple choice question.

introduction

maturity

shakeout

decline

by being imposed by government or other agencies

through market competition

Which of the following are ways in which standards can emerge? (More than one answer may be correct.)

Multiple select question.

by being imposed by government or other agencies

by letting consumers vote for their preferred standard

by having firms purchase the license for a standard

through market competition

the crossing-the-chasm framework

Simone was the first among her peers to try the new unicorn hair dye. For months she was the only person with unicorn hair. After some time, though, the product became available everywhere, and nearly every other person began sporting unicorn hair, even Simone's mom. This situation describes which of the following?

Multiple choice question.

the exit strategic option of the industry life cycle

the shakeout stage of the industry life cycle

process innovation

the crossing-the-chasm framework

electric vehicle ; biotechnology 

Product is to ______ and process is to _________.

early adopters and the early majority.

According to the crossing-the-chasm framework, the largest difference in consumer expectations is between:

Multiple choice question.

the late majority and laggards.

early adopters and the early majority.

technology enthusiasts and early adopters.

the early majority and the late majority.

all but the most efficient firms

During the shakeout stage of the industry life cycle, profits degrade for ______.

all firms in the industry

the most efficient firms only

all but the most efficient firms

a few of the weakest firms

Technology enthusiasts

Which term is used for the customer segment in the introductory stage of the industry life cycle?

Multiple choice question.

The late majority

The early majority

Technology enthusiasts

Early adopters

Laggards

maturity 

In the ______ stage of the industry life cycle, a few number of large firms compete for a share of a market that has reached its maximum size.

Multiple choice question.

growth

shakeout

introduction

decline

maturity

early adopters are interested in how a new technology will improve their lives, rather than in the details of the technology itself

A significant difference between technology enthusiasts and early adopters is that Blank______.

Multiple choice question.

technology enthusiasts have much more disposable income

early adopters are primarily interested in technical details rather than practical applications

early adopters dominate the decline stage of the industry life cycle

early adopters are interested in how a new technology will improve their lives, rather than in the details of the technology itself

decline 

In the Blank______ stage of the industry life cycle, falling demand leads to a reduction in market size.

Multiple choice question.

growth

shakeout

consolidation

decline

introduction

They have a strong sense of practicality.

They weigh benefits and costs carefully.

Which of the following are characteristics of the early majority?

Multiple select question.

They have a strong sense of practicality.

They are quick to commit to new products.

They weigh benefits and costs carefully.

They are not concerned with cost.

each stage of the industry life cycle features a different group of customers with different preferences and demands

It is challenging for firms to "cross the chasm" because Blank______.

Multiple choice question.

transitioning between stages requires significant amounts of capital

each stage of the industry life cycle features a different group of customers with different preferences and demands

firms are not able to deal with the technological challenges required

firms have difficulty moving from process to product innovation

the late majority is not confident in using new technologies

A significant difference between the early majority and the late majority is that Blank______.

Multiple choice question.

the late majority is more adept with technology

the late majority is comfortable purchasing from new or unknown firms

the late majority is not confident in using new technologies

the early majority enjoys providing voluntary feedback to producers

True 

The chasm separating the early adopters from the early majority is the largest.

True false question.

True

False

technology enthusiasts

The customer segment known as ______ enjoy testing product prototypes and providing voluntary feedback that companies use to perfect their products.

Multiple choice question.

the early majority

early adopters

laggards

technology enthusiasts

early adopters

Customers who desire a product because it stokes their imagination and creativity are known as Blank______.

Multiple choice question.

the late majority

the early majority

early adopters

laggards

laggards

Which customer segment will only adopt a new product when it becomes absolutely necessary?

Multiple choice question.

the late majority

late adopters

laggards

technology enthusiasts

early majority

The customers coming into the market in the shakeout stage are called Blank______.

Multiple choice question.

early majority

early adopters

laggards

the late majority

the early majority

the late majority

Which two customer segments make up the largest percentage of the market potential?

Multiple select question.

early adopters

laggards

the early majority

technology enthusiasts

the late majority

architectural

radical

disruptive

incremental

Which of the following are types of innovation?

Multiple select question.

harvest

consolidation

architectural

radical

disruptive

incremental

early adopters and the early majority.

According to the crossing-the-chasm framework, the largest difference in consumer expectations is between:

Multiple choice question.

the late majority and laggards.

technology enthusiasts and early adopters.

the early majority and the late majority.

early adopters and the early majority.

incremential

The most common type of innovation is Blank______ innovation.

Multiple choice question.

technological

disruptive

radical

incremental

Technology enthusiasts

Which term is used for the customer segment in the introductory stage of the industry life cycle?

Multiple choice question.

Early adopters

The early majority

Technology enthusiasts

Laggards

The late majority

radical 

Innovations that target NEW markets and represent a major break from existing technologies or ways of thinking, such as the digital camera, the touch-screen smart phone, or the decoding of the human genome, are examples of Blank______ innovations.

Multiple choice question.

incremental

radical

disruptive

architectural

not worth the effort of pursuing

Most firms consider laggards to be Blank______.

Multiple choice question.

a valuable source of product feedback

not worth the effort of pursuing

the most prized customer segment

the most likely to purchase innovative products

a new sportswear company with a handful of employees that perform a number of loosely defined roles

Which of the following is most likely to produce a radical innovation?

Multiple choice question.

a leading toy manufacturer with a significant interest in maintaining the status quo

a new sportswear company with a handful of employees that perform a number of loosely defined roles

a financial services firm that has been in business for 75 years and has longstanding customer relationships

an established restaurant chain with a clear organizational structure and strictly defined roles for employees

the early majority

DaShawn likes to do a lot of research before he buys a new product and relies on the endorsement by others. He also wants to be sure the product will be practical. DaShawn is likely a member of which type of customer?

Multiple choice question.

the early majority

laggards

the late majority

technology enthusiasts

a new product in which existing technologies are used in a novel way to create new markets

An architectural innovation is Blank______.

Multiple choice question.

a new product in which existing technologies are used in a novel way to create new markets

an innovation that builds on an established knowledge base and steadily improves an existing product

an innovation that leverages new technologies to attack existing markets from the bottom up

an innovation that draws on novel methods or materials and is derived from an entirely different knowledge base

Does the innovation build on existing technologies or create new ones?

What question is asked along the horizontal axis of the markets-and-technology framework?

Multiple choice question.

Does the innovation build on existing technologies or create new ones?

Is the innovation targeted toward existing markets or new markets?

Is the innovation radical or disruptive to current technologies?

Is the innovation architectural in design or incremental?

disruptive

Which type of innovation uses new technologies to invade an existing market from the bottom up?

Multiple choice question.

disruptive

radical

architectural

incremental

incremental

Which type of innovation applies to existing markets and existing technologies?

Multiple choice question.

architectural

radical

disruptive

incremental

pipeline 

The business structure that is linear and has producers at one end and consumers at the other is known as a(n) Blank______.

Multiple choice question.

pipeline

digital disruption

innovation ecosystem

platform

radical 

Because it targeted a new market and used new technologies, the first mass-produced automobile is considered a(n) Blank______ innovation.

Multiple choice question.

disruptive

incremental

radical

architectural

False

Platform businesses are organized as traditional linear pipelines.

True false question.

True

False

organizational inertia

A company that resists change and sticks to formalized business processes and structures is likely experiencing Blank______.

Multiple choice question.

innovation ecosystems

organizational inertia

disruptive innovation

winner-take-all markets

They scale efficiently by eliminating gatekeepers.

They benefit from community feedback.

They unlock new sources of value creation and supply.

Which of the following are advantages of platform businesses compared to pipeline businesses?

Multiple select question.

They scale efficiently by eliminating gatekeepers.

They benefit from community feedback.

They unlock new sources of value creation and supply.

They own and control all their resources.

architectural

The invention of small desktop copiers to create a new consumer market using the same technology as large, stand-alone copiers is an example of a(n) Blank______ innovation.

Multiple choice question.

architectural

radical

disruptive

incremental

disruptive

Educational organizations, such as Coursera, offer massive open online courses on the web as an alternative to traditional universities. This is an example of a(n) Blank______ innovation.

Multiple choice question.

incremental

disruptive

radical

architectural

It is the traditional system of horizontal business organization.

Which of the following statements about a business pipeline is true?

Multiple choice question.

It creates value by matching external producers and consumers in a way that creates value for all participants.

It is the traditional system of horizontal business organization.

It is likely to outperform even the most successful platform business.

It relies heavily on innovation and community feedback and involvement.

platform business 

An enterprise that creates value by matching external producers and consumers in a way that creates value for all participants and that depends on the infrastructure that the platform manages is a(n) Blank______.

Multiple choice question.

herding effect

incremental innovation

linear pipeline

platform business

They can grow faster than pipeline businesses.

Which of the following statements about platform businesses is true?

Multiple choice question.

They can grow faster than pipeline businesses.

They tend to receive little to no benefits from community feedback.

They are not efficient in managing the flow of information from producer to consumer.

Growth involves time and planning and a complex supply chain.

They scale efficiently by eliminating gatekeepers.

They benefit from community feedback.

They unlock new sources of value creation and supply.

Which of the following are advantages of platform businesses compared to pipeline businesses?

Multiple select question.

They scale efficiently by eliminating gatekeepers.

They own and control all their resources.

They benefit from community feedback.

They unlock new sources of value creation and supply.

outperform

gatekeepers

leveraging

value creating

producers

In the digital age, platforms are business model innovations that use technology (such as the internet, cloud computing, etc.) to connect organizations, resources, information, and people in an interactive ecosystem where value-generating transactions can be created and exchanged. This activity is important because it highlights how some platform business models have achieved competitive advantage.

The goal of this exercise is to identify the advantages of platform business models.

Read again the definition of the platform business model in the overview. Then complete each statement with the term that correctly defines each platform strategy advantage. Note: Not all terms will be used.

Platform businesses tend to frequently ______Blank pipeline businesses.

Platforms scale more efficiently than pipelines by eliminating ______Blank.

Platform businesses ______Blank digital technology can grow much faster.

Platforms unlock new sources of ______Blank and supply.

Feedback loops from consumers to the ______Blank allow platforms to fine-tune their offerings and to benefit from big data analytics.

to undertake economic risk

Musk describes his early days in his first startup, Zip2, as very tight with cash. For example, he and the two other founders began the firm on a very small budget by sleeping on futons in the office. This matches which part of the text's description of entrepreneurship?

Multiple Choice

to undertake economic risk

to create new processes

to be in the growth stage

to develop an elevator pitch

to find venture capital funding

a focus on the customer experience.

Musk is a serial entrepreneur. The case compares Zip2 (his first startup) to PayPal (his second startup). He finds several similar characteristics for the firms, such as building with a small group of people, a non-hierarchical organization, and

Multiple Choice

an innovative ecosystem.

a strong sales team.

a focus on the customer experience.

a focus on patenting.

an involved board of directors.

to undertake economic risk.

Elon Musk’s approach to social entrepreneurship is quite different than that of Jimmy Wales, who founded Wikipedia, the open source, free encyclopedia funded solely by donations. However, both men looked beyond the financials to a greater social good for their organizations. The major difference in the organization Jimmy Wales founded from those started by Elon Musk is that Musk's approach was

Multiple Choice

to develop an elevator pitch.

to create new processes.

to be in the growth stage.

to undertake economic risk.

to find venture capital funding.

incremental

Suppose that a company has successfully used architectural innovation to reconfigure a product and is now the market leader. In order to improve its product offering, extend the time that it can extract profits from its products, and maintain high entry barriers for new rivals, it will most likely engage in ________Blank innovation next.

Multiple Choice

incremental

disruptive

architectural

radical

rely primarily on architectural innovation to frequently offer "reconfigured" products.

All of the following are strategies an established firm can adopt in order to protect itself from disruptive innovation by rivals except

Multiple Choice

protect the low-end market segment by creating its own low-cost innovations.

rely primarily on architectural innovation to frequently offer "reconfigured" products.

listen to more than just current customers.

disrupt itself and reverse innovate.

stay nimble and change more quickly.

Apple was using a harvest strategy for cash flow focus.

Apple’s first-generation iPad was priced at over $800 when it launched in 2010. Three years later the same model was priced at under $300. This change was supported by all of the statements below except

Multiple Choice

Apple had access to large-scale manufacturing.

the industry moved from introduction to growth stage.

Apple had improved supply-chain capabilities.

competencies were shifting to manufacturing efficiency.

Apple was using a harvest strategy for cash flow focus.

created a virtuous cycle reinforcing smartphones globally.

The use of complementary software applications (apps) for smartphones not only created a new “apps” industry but also spurred market demand for smartphones themselves. Thus, apps for smartphones largely

Multiple Choice

decreased network effects of smartphones.

moved the smartphone industry into the mature stage.

created hurdles for new software developers.

precipitated cost increases for smartphones.

created a virtuous cycle reinforcing smartphones globally.

Shift to process innovation focus.

During the growth stage of an industry life cycle, the focus is on product innovation until an industry standard or dominant design is established. Once this standard has been set, a firm should do which of the following during the growth stage in order to maintain its competitive advantage(s)?

Multiple Choice

Reinforce position as a differentiator.

Cater to late majority customers.

Shift to process innovation focus.

Consolidate with rivals.

Continue focus on product innovation.

New firms enter with features that shakeup the incumbents.

In the shakeout stage of the industry, competitive characteristics in the industry change. Which of the following is not a change expected during this stage?

Multiple Choice

New firms enter with features that shakeup the incumbents.

Smaller, weaker firms exit or are acquired.

Competitive intensity increases.

Growth rate slows for the industry.

Demand moves to repeat purchases.

Invest in a large marketing campaign.

Which of the following is not a recommended strategic option for firms competing during the decline stage of an industry life cycle?

Multiple Choice

Buy rivals to strengthen market position.

Invest in a large marketing campaign.

Reduce investments in product supports.

Maximize cash flow from current products.

Exit the market if barriers are low.