Deck 10: Strategy: Planning For Competitive Advantage

Question 1

Market-based modes refers to knowledge on how to do something but is not written down or codified.

Answer 1

False

Question 2

Entrepreneurs have no ways of protecting their idea after the business is open to the public.

Answer 2

False

Question 3

Adverse selection occurs when people take actions that benefit themselves at the expense of others.

Answer 3

True

Question 4

A restaurant that grows its own vegetables is vertically integrated.

Question 5

Which of the following is most likely a competitive advantage?

A) Using only fresh ingredients on pizzas when competitors use canned ingredients.
B) Having the most popular comedian in town perform at your bar.
C) Staying open later then your competitors.
D) Providing a type of service that your customers like and identify with your business.
E) None of the Above

Question 6

A franchised restaurant is an example of a hierarchical mode of business.

Question 7

Causal ambiguity is defined as a piece of intellectual property that can be patented.

Question 8

A business that is totally owned by an entrepreneur is known as a hierarchical mode type of business.

Question 9

A patent is a type of monopoly.

Question 10

Self-efficacy refers to ones confidence in his or her own abilities.

Question 11

Which of the following could an entrepreneur use to make it more difficult for some other business to exploit the same opportunity that the entrepreneur has?

A) Use legal means to block imitation.
B) Control resources that are needed to exploit the opportunity.
C) Develop loyal customers.
D) All of the above (a, b, and c) are correct.
E) A and b are correct.

Question 12

The authors suggest that a franchisee often has more ambition than a typical general manager of a store.

Question 13

One way to deal with uncertainty in starting a new business is to start on a small scale.

Question 14

Franchising,a market-based mode,usually requires less capital than a hierarchical mode business .

Question 15

Suppose you wanted to open up a pizza place in Chestnut,AZ. This is a small town with no existing restaurants. You,as the entrepreneur,would be considered which of the following business structures?

A) Monopoly.
B) Joint Venture.
C) Sole proprietorship.
D) Trade Secret.
E) Alliance.

Question 16

Tacit knowledge is the hardest information for competition to obtain.

Question 17

A potential disadvantage of establishing alliances with an established firm as part of an entrepreneurial strategy is that the alliance partner might use its size and power to control the business relationship.

Question 18

By developing a competitive advantage,the entrepreneur makes it tougher for others to imitate the business idea perfectly and allows the entrepreneur to the capture the profits.

Question 19

No strategies are powerful enough to manage the technical,market,and competitive uncertainty and information asymmetry that new ventures face.

Question 20

Writing goals as part of a comprehensive business plan can help an entrepreneur to be more successful.

Question 21

Which of the following is true about advantages for the entrepreneur when he or she forms an alliance or partnership with an established firm?

A) The entrepreneur can take advantage of the established facilities.
B) The entrepreneur can imitate the firm's existing production functions.
C) The entrepreneur can take advantage of the firm's brand name.
D) All of the above are advantages.
E) None of the above are advantages.

Question 22

Which of the following does not relate to secrecy of an entrepreneur idea?

A) Tacit Knowledge.
B) Causal Ambiguity.
C) Monopoly.
D) Trade Secret.
E) All of the Above.

Question 23

An entrepreneur starts a business but he doesn't know whether other companies producing a similar product will capture the market to the extent that there is very little left for his business. This is known as

A) technical uncertainty.
B) competitive uncertainty.
C) tacit knowledge.
D) licensing uncertainty.
E) franchising uncertainty.

Question 24

Which of the following is a reason why entrepreneurs use market mechanisms to exploit opportunity?

A) Accelerate the pace of exploitation.
B) Minimize adverse selection.
C) Minimize shirking by employees.
D) To escape defeat by competitors.
E) All of the Above.

Question 25

Which of the following statements is not true when being the first mover or the first firm to serve customers in a market?

A) When network externalities are present, being the first mover is an advantage.
B) Being the first mover gives the entrepreneur the first chance at obtaining life long customers.
C) Being the first mover is advantageous when there are high switching costs for customers.
D) Being the first mover will give the entrepreneur a chance to set the market standard.
E) All of the above statements are true.

Question 26

Kathleen had developed and designed a new,innovative product which will allow hotels to more efficiently manage their room service orders. Before Kathleen informs the Hilton Suites of her new product,it is best that she take which of the following precautions?

A) Place a patent on the technology.
B) Have the company sign a non-disclosure agreement.
C) Be cautious on what product details to disclose.
D) Make sure no trade secrets are revealed prior to signing a contract.
E) All of the above.

Question 27

Which of the following leads people to have doubt that an entrepreneur's new business idea is legitimate?

A) Investors have less information about a product that do entrepreneurs.
B) More small businesses fail than succeed.
C) People have bias against uncertainty and failure.
D) All of the Above.
E) None of the Above.

Question 28

Which of the following is least likely to be related to a hierarchical mode of market exploitation?

A) Hold-up of outlet operators.
B) Disclosure of knowledge.
C) Tacit business idea.
D) Adverse selection of potential employees.
E) None of the Above.

Question 29

Assume that there is an idea that has a high chance to be turned into a successful product. However,the person with the idea cannot do everything that is necessary fast enough in order to not miss the opportunity window. Therefore,she contracts with different functional experts in order get the product to market in the opportunity window. This situation is known as

A) accelerating the pace to market.
B) market constraints.
C) making use of the best capabilities.
D) All of the above.
E) Non of the above.

Question 30

Dr.Vaughan discovered a secret recipe for barbeque sauce which everyone really liked. He began selling this in grocery stores. While others tried,no one can seem to master this sauce like Dr.Vaughan. What advantage does Dr.Vaughan have?

A) Secrecy.
B) Monopoly.
C) Causal Ambiguity.
D) Trade Secret.
E) Franchise.

Question 31

Which of the following is an entrepreneurial barrier to competition?

A) Obtaining control of resources.
B) Obtaining a legal monopoly.
C) Establishing a Reputation.
D) Innovation.
E) All of the Above.

Question 32

Beverly Stack,an independent agent for State Farm Insurance,held an annual bike rodeo in Edwardsville,IL,in which bike safety was taught to children. However,there are four other State Farm agents in this town who did not want to sacrifice their Saturday afternoon to help. Due to Beverly's success at the bike rodeo,twenty families switched to State Farm,but ten of those families went to the other four agents in town. Those four agents who received business due to Beverly's success are known as....

A) hold-ups.
B) free Riders.
C) passive entrepreneurs.
D) second-hand helpers.
E) None of the Above.

Question 33

An entrepreneur who is in direct control of all business components,marketing,production,finance,human resource,etc.is probably using which of the following types of business mode for exploiting opportunities?

A) Hierarchical.
B) Market-based.
C) Monopoly.
D) Franchise.
E) None of the Above.

Question 34

Through advertisements and word of mouth,Xerox has established a mindset in which consumers believe Xerox is the best copier machine company in the United States. This mindset will keep customers from defecting to its competitors. To which type of competition barrier does this refer?

A) Control of Resources.
B) Legal Barriers to Imitation.
C) Reputation.
D) Innovation.
E) Marketing Advantage.

Question 35

Which of the following are concerns for an entrepreneur during the pursuit of an opportunity?

A) Technical uncertainty.
B) Competitive uncertainty.
C) Market uncertainty.
D) Information asymmertry.
E) All of the above are concerns.

Question 36

A situation in which something has increasing value as more people use it is referred to as __________?

A) a patent.
B) network externalities.
C) hold-ups.
D) first mover.
E) licensing.

Question 37

What term defines the following situation? An individual called up a possible vendor and explained in detail the scope and design of her new invention. However,when the entrepreneur didn't hear from the company in two weeks about getting this product to market,she called the company and it had already used her idea. It was being sold under the vendor's name.

A) Arron's paradox.
B) Arrow's paradox.
C) Disclosure Rule.
D) Established Business Advantage.
E) None of the Above.

Question 38

Constant improvement of the current product lines and always offering additional features that are better than competitors is known as which barrier to competition?

A) Control over key resources.
B) Obtaining a legal monopoly.
C) Feature contribution.
D) Innovation.
E) None of the above.

Question 39

An entrepreneur needs a comprehensive plan of action in order to achieve overall success. That is,the entrepreneur needs a

A) bankruptcy.
B) license.
C) strategy.
D) monopoly.
E) None of the Above.

Question 40

Which of the following is not a typical action for an entrepreneur to take?

A) Start up small in hopes on one day being large.
B) Putting a patent on his or her technology before going public with the novel business idea.
C) Relying on established firms for capital and brand name awareness.
D) Bearing the uncertainty that exists in the marketplace.
E) Designing a product that is so unique and unlike the norms of society.

Question 41

Explain technical uncertainty.

Question 42

Why do people tend to have such a hard time accepting an entrepreneur's business idea as legitimate? What should entrepreneurs do to convince people of their idea?

Question 43

Assume that an entrepreneur obtained a patent and produced a product based on it. Another entrepreneur purchased the product,studied it,and designed a new product that was even better than the one patented by the first entrepreneur. What the second entrepreneur did is known as

A) inventing around.
B) illegal.
C) first mover strategy.
D) arrow's paradox.
E) efficacy.

Question 44

In order to protect information about trade secrets,an entrepreneur required all of the employees of the business to sign a contract that said they would not discuss these secrets with anyone outside of the business,and this requirement would continue for a certain period after they left the business. This type of contract is known as a

A) patent.
B) non-disclosure agreement.
C) first mover advantage.
D) tacit knowledge.
E) None of the above.

Question 45

List,describe,and provide an example of the two most common market-based modes of opportunity exploitation.

Question 46

What are three reasons that lead entrepreneurs to start a small-scaled company and expand only if the business idea proves to be successful?

Question 47

An entrepreneur obtained money from investors in order to start a business. One of the early things that the entrepreneur did was to buy a new sports car,something she always wanted. This action represents

A) first mover advantage.
B) moral hazard.
C) self-efficacy.
D) franchising.
E) nondisclosure agreement.

Question 48

What is a competitive advantage and why does an entrepreneur need it?

Question 49

Which of the following would allow an entrepreneur to establish a legal monopoly?

A) Obtain a patent.
B) Become vertically integrated.
C) Get a government permit.
D) Choices a and c are correct.
E) Choices a and b are correct.

Question 50

An entrepreneur bought a franchise to operate a restaurant. The agreement says that the entrepreneur must pay the franchisor 5% of total sales per month. Now,the franchisor insists on selling another franchise in the same market area unless the entrepreneur increases the monthly payment to 7%. This is an example of

A) free riding.
B) technical uncertainty.
C) gaining legitimacy.
D) hold-up.
E) patent.

Question 51

Assume that you have developed several electronic spreadsheets that would help small business managers to keep track of information about purchases that their customers made. Your spreadsheets would help track who bought what,when,in combination with what other products,etc. The knowledge gained from this data would help the small business do a better job of overall marketing. Now you need to raise money to start your business to develop and sell your electronic spreadsheets. However,you are concerned that since you must explain your spreadsheets in order to get someone to invest in your business,others will now know how your products works and might develop their own rather than invest in your business. Your concern represents

A) causal ambiguity.
B) monopoly.
C) Arrow's Paradox.
D) a patent.
E) networks.

Question 52

Which of the following have been shown to be related to an entrepreneur's business being more successful?

A) Self-efficacy.
B) Goal setting.
C) A government permit.
D) Choices a and b are correct.
E) All are correct (a, b, and c).

Question 53

A chemist developed a way to mix three chemicals together in such a way that they result in a very strong,yet flexible glue. Only the chemist knows how to do this. It is known as a/an

A) arrow's paradox.
B) trade secret.
C) government permit.
D) franchise effect.
E) self-efficacy.