Ch 7 Business Strategy, Vertical Integration and Diversification

What is an invention?

the transformation of an idea into a new product or process

When Monopar Therapeutics released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug’s cover. However, any attempts by competitors to copy the chemical composition would result in infringement of Monopar Therapeutics’ intellectual property rights. Thus, the drug is protected by a

patent.

The typical four-step innovation process begins with

the presentation of an idea as findings derived from basic research.

Feran is the founder of an innovative “impromptu catering” business that provides elegant, healthy party food and decorations on less than 24 hours’ notice. The company has grown by over 150 percent in the past year. Feran credits some of the company’s success to studying the strategies of prominent social entrepreneurs, such as Wikipedia’s Jimmy Wales. What can Feran do to exemplify the social entrepreneurship model?

Provide free weekly catered meals for the unhoused.

Which of the following conditions prevail when an industry is at the end of its life cycle?

Innovation efforts along both product and process dimensions cease.

The key objective for firms during the ________phase is to stake out a strong strategic position not easily imitated by rivals.

growth

In developed economies, the gene-editing therapy industry is in the introduction stage, and the traditional desktop computer industry is in the shakeout phase. What does this imply?

The gene-editing therapy industry emphasizes product innovation, while the desktop computer industry increasingly emphasizes process innovation after a dominant standard has emerged.

Lumina Electronics operates in the solar panel industry, which has moved past rapid growth and is now facing slower demand, intense price competition, and industry consolidation. Several smaller firms have already exited the market. Which of the following strategies is most likely to give Lumina Electronics a competitive advantage at this stage?

Invest in automation and supply chain efficiencies to reduce manufacturing and operating costs.

Which of the following is true about the decline stage of an industry life cycle?

Product and process innovation efforts end.

Which of the following lists the stages of the industry life cycle in the correct order?

introduction, growth, shakeout, maturity, and decline

Afya Limited is a new firm that entered the smartwatch industry during the growth stage of the industry life cycle. It managed to become one of the top-three smartwatch manufacturers during the shakeout stage due to its low-cost structure. What features should Afya Limited emphasize in its product marketing to ensure it successfully crosses the chasm into the maturity stage?

ease of use

Which of the following is a drawback of using the industry life cycle as a framework to guide strategic choice?

The framework does not explain everything about changes in industries.

Which of the following statements accurately brings out the difference between technology enthusiasts and early adopters?

Unlike technology enthusiasts, early adopters’ demand is fueled more by intuition and vision rather than technology concerns.

Which of the following most accurately describes a difference between incremental innovation and radical innovation?

Incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base.

A radical innovation leverages ________markets, while incremental innovations are based on ________markets.

new; existing

Bright PAD introduced a tablet that could run completely on solar energy and was less expensive than competitors’ tablets. On the downside, it required more frequent charging than the competition’s tablets. However, the technology of the Bright PAD tablet improved rapidly, thereby improving its recharge frequency. This example describes ________innovation.

disruptive

Which of the following describes organizational inertia?

a firm’s resistance to changes in the status quo

Which of the following businesses is most likely to disrupt an existing industry?

Black Rock developed an earphone that receives emails and text messages and converts them to voice messages. The first models had poor reception, but they rapidly improved over time.

Uber has become one of the largest transportation companies in the world, valued at more than $100 billion in 2021, without owning a single car. Uber is an example of a

platform business.

Amina wants to create a networking site that would connect local artists to homeowners who are looking for unique and original art. She knows that network effects will play a big role in her success and doesn’t want to build her business using a linear value chain. Amina would best be served by employing a(n)

platform business model.