Deck 8: Entrepreneurial Strategy and Competitive Dynamics

Question 1

Opportunity recognition is the process of identifying,selecting,and developing entrepreneurial opportunities.

Answer 1

True
Explanation: To determine which ideas are strong enough to become new ventures, entrepreneurs must go through a process of identifying, selecting, and developing potential opportunities. This is the process of opportunity recognition.

Question 2

An entry wedge,according to the text,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

Because of the Small Business Administration and government regulations,small businesses are rarely allowed to bid on government contracts.

Answer 3

False
Explanation: A key area of support for small business is in government contracting. Programs sponsored by the SBA and other government agencies ensure that small businesses have the opportunity to bid on contracts to provide goods and services to the government.

Question 4

Founders using a pioneering new entry strategy look for opportunities to capitalize on proven market successes.

Question 5

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

Question 6

Opportunity recognition involves two phases of activity: discovery and execution.

Question 7

Spandex,founded in 2000,created footless pantyhose and other undergarments for women.This is an example of an imitative new entry strategy.

Question 8

The majority of entrepreneurial start-ups are financed with personal savings and the contributions of family and friends.

Question 9

Venture capitalists and angel investors regard the management team as the most important asset of an entrepreneurial venture.

Question 10

The majority of entrepreneurial firms are started with financing from venture capitalists and banks.

Question 11

As investors,venture capitalists rarely provide any help or services to entrepreneurial firms other than financing.

Question 12

To obtain venture capital financing,business founders often have to give up some ownership and control of their business.

Question 13

Venture capital funding for entrepreneurial ventures is usually available only after the start-up has become a going concern and established a track record.

Question 14

Angel investors are private individuals who provide equity investments for seed capital during the later stages of a new venture.

Question 15

The evaluation phase of opportunity recognition occurs when an entrepreneur has an insight about a new business venture,often based on prior knowledge.

Question 16

Entrepreneurship refers to new value creation and can include activities in major corporations.

Question 17

The term,angel investors,refers to private individuals who provide seed capital to young ventures.

Question 18

Venture capital is a form of public equity financing used to help young firms grow rapidly.

Question 19

Choosing which new entry strategy is best depends on competitive financial and marketplace considerations with the greatest opportunities most likely to be in existing markets,rather than in new markets.

Question 20

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

Question 21

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

Question 22

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

Question 23

Because new ventures typically are small,they usually do not have high economies of scale relative to competitors.

Question 24

Warby Parker makes eyeglasses.It keeps costs low through several means and has a social mission.This is an example of a firm that uses a combination strategy.

Question 25

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 26

Once an adaptive entrant has achieved initial success,the company is safe from copycat competition.

Question 27

Market commonality refers to the extent to which competitors are vying for the same customers in the same markets.

Question 28

Co-opetition,where competitors work together behind the scenes,is a form of illegal tacit collusion.

Question 29

In the context of competitive dynamics,tactical actions involve major commitments of distinctive and specific resources to strategic initiatives.

Question 30

The success of an adaptive new entrant can be limited,if the value proposition is perceived as being unique.

Question 31

A focus strategy must not include elements of differentiation and overall cost leadership in order to be successful.

Question 32

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 33

Refinements or extensions of existing strategies are often referred to as tactical actions.

Question 34

Pandora,launched in 2000,radically changes the radio business with its Music Genome Project system that analyzes music for its underlying traits.This is an example of a pioneering new entry strategy.

Question 35

Entrepreneurial new entry is often perceived as a competitive threat because most market needs are being met,either directly or indirectly,by an existing firm.

Question 36

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

Question 37

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

Question 38

Entrepreneurial competitive dynamics refers to a cycle of actions and responses between firms competing for the same customers.

Question 39

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 40

Forbearance is a particularly aggressive type of competitive attack.

Question 41

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 _____________.

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

Question 42

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

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

Question 43

Vision is an important element of entrepreneurial leadership because _____________.

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

Question 44

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

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

Question 45

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) discovery; evaluation
D) global search; valuation

Question 46

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

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

Question 47

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

A) Strategic alliances
B) Bootstrappers
C) Lone wolf entrepreneurs
D) Research & development

Question 48

The process of identifying,selecting,and developing new venture opportunities is known as _____________.

A) innovativeness
B) bootstrapping
C) opportunity recognition
D) brainstorming

Question 49

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

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

Question 50

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

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

Question 51

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

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

Question 52

Private individuals who provide seed capital to young ventures are known as _____________.

A) angels
B) gazelles
C) cash cows
D) rising stars

Question 53

When an opportunity is attractive long enough for it to be successfully developed and deployed,it is said to be _____________.

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

Question 54

Which of the following is NOT a common new entry strategy according to the text?

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

Question 55

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

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

Question 56

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

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

Question 57

Which of the following statements about venture capital is not true?

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

Question 58

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 59

Based on statistics reported in the text,which of the following statements is not true?

A) Firms that obtain venture-capital funding receive an average of over $1 million each.
B) Total investment in start-up firms averages about $80,000 in the first year of the activity of the firm.
C) Among the 100 fastest-growing new businesses identified by Entrepreneur magazine, 61 percent obtained start-up funding from personal savings.
D) Ninety percent of the companies financed with venture capital funds fail.

Question 60

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

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

Question 61

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 62

When an industry is mature,a ______________ strategy is considered to be one of the most effective approaches for a new entrant.

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

Question 63

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) pioneering
C) adaptive
D) differentiated

Question 64

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 65

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

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

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

Question 67

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) adaptive
D) differentiated

Question 68

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.It used which new entry strategy to enter the market initially?

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

Question 69

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 70

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 capitalize on growing demand
D) to find new sources of raw materials

Question 71

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

A) Incumbent firms are constantly seeking opportunities to specialize in market niches.
B) Differentiation strategies are often expensive to enact.
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 72

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) market commonality
C) first mover advantages
D) equity funding

Question 73

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

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

Question 74

The Wall Street Journal and the 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) increased market commonality
C) erosion of first mover advantages
D) the choice of tactical over strategic actions

Question 75

In 2005,Plum Organics entered the market with organic baby food and snack foods for children.It now has over 20 products and is listed at number 63 on the Inc 500 list of fastest growing private companies.It used which new entry strategy in 2005?

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

Question 76

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

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

Question 77

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 78

One of the ways entrepreneurs achieve success is by using resources more efficiently.This is an example of how entrepreneurs use ______________ strategy.

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

Question 79

Intense rivalry involving actions and responses among similar competitors vying for the same customers in a marketplace is known as _____________.

A) competitive dynamics
B) resource similarity
C) threat of substitutes
D) pioneering new entry

Question 80

Pandora entered the radio business in 2000 using the Music Genome Project system that analyzes music for its underlying traits as a means to distinguish itself.It was using ______________ entry strategy.

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