Deck 7: Small Business Strategies: Imitation With a Twist

Question 1

Most entrepreneurs initially do an industry analysis to find out what the profits are in an industry in order to better estimate possible financial returns.

Answer 1

True

Question 2

Customization,super-support,and single-mindedness are three cost-driven strategies offered by Porter for small businesses.

Answer 2

False

Question 3

There are three classic strategies for businesses of all types: differentiation,imitation,and focus.

Answer 3

False

Question 4

In SWOT analysis,where strengths match the opportunities,you have the winning combination and you should fight it.

Question 5

Benefits can focus on value added to the products or services or on the cost of the products or services.

Question 6

There are two major classification systems that code industries: NAICS and SIC.

Question 7

Funds left over after deducting the cost of goods sold is called net profit.

Question 8

Transformational competencies come from combining tangible and intangible resources in ways superior to the competition.

Question 9

The tool used in the first step of strategic planning is the SWOT analysis.

Question 10

Imitation minus one degree of similarity would be the business equivalent of incremental innovation.

Question 11

Demand shortage and second sourcing are two of the seven entry wedges suggested by Karl Vesper for small businesses pursuing an imitation strategy.

Question 12

Objective is the idea and actions that explain how a firm will make its profits.

Question 13

Strategy in small business is special because most small businesses are more innovative than imitative.

Question 14

There are two types of resources: tangible and intangible.

Question 15

Market scale refers to the geography of your target market.

Question 16

When the sales and profits actually start to fall,it is a sign that the industry is in its decline stage.

Question 17

Typically with a new product or service,you also have a unique setting.

Question 18

Cost benefits include scale and scope savings.

Question 19

In much the same way that families and societies are living things,industries can be considered living too.

Question 20

Patents and trademarks are popular ways of protecting key information and discouraging competitors.

Question 21

An overall strategic approach in which a firm seeks to do something that is very different from that of what others in the industry are doing is called a(n)

A)cost-leadership strategy.
B)imitative strategy.
C)grand strategy.
D)innovative strategy.

Question 22

Most small businesses are more _____ than _____.

A)cost-directed;profit-directed
B)imitative;innovative
C)customer-driven;employee-driven
D)innovative;imitative

Question 23

The key benefit of an imitation strategy comes from the

A)customers.
B)employees.
C)competition.
D)government agencies.

Question 24

Which are the two major classification systems that code industries?

A)NAICS and SIC
B)SCALE and SCOPE
C)SWOT and VRIO
D)SIC and SWOT

Question 25

The second step of the small business strategy planning process is considering with _____

A)customers;benefits.
B)competitive advantage;value chain analysis.
C)prestrategy;VRIO analysis.
D)benefits;industry analysis.

Question 26

What is the key benefit of rule changes by the government?

A)Place
B)Delivery
C)Quality
D)Technology

Question 27

The fourth step of the small business strategy planning process

A)is where you consider your customers and the benefits you want to offer them.
B)aims to refine your firm's capabilities in order to maintain a competitive advantage.
C)involves determining the best strategic direction and strategy for the firm.
D)is to study the dynamics and trends of your industry.

Question 28

An opportunity that makes it possible for a new business to gain a foothold in a market refers to

A)parallel competition.
B)incremental innovation.
C)entry wedge.
D)altruism.

Question 29

Which of the following statements about NAICS and SIC codes is true?

A)SIC covers more industries
B)NAICS covers more of the newer types of industries
C)SIC codes have six digits
D)NAICS codes have four digits

Question 30

When does market relinquishment occur?

A)When there are rule changes by the government
B)When business firms leave a market
C)When a customer is willing to sign a contract with a small business to ensure a product
D)When a new product is in demand

Question 31

An overall strategic approach in which the entrepreneur does more or less what others are already doing is called a(n)

A)cost-leadership strategy.
B)imitative strategy.
C)grand strategy.
D)innovative strategy.

Question 32

_____ occurs because government agencies,government-sponsored commercial contracts,and many big businesses have policies that provide for quotas for purchases from small businesses.

A)Second sourcing
B)Favored purchasing
C)Market relinquishment
D)Customer contracting

Question 33

Which of the following is a key benefit of customer contracting?

A)Delivery
B)Personalization
C)Organizational practices
D)Technology

Question 34

The first step of the small business strategy planning process

A)involves performing a SWOT.
B)involves reviewing and confirming the prestrategy decisions that define your firm and your goal for it.
C)is where you consider your customers and the benefits you want to offer them.
D)is to study the dynamics and trends of your industry.

Question 35

Which of the following,according to Vesper,is NOT an entry wedge specific to small businesses pursuing an imitation strategy?

A)Customer contracting
B)Market relinquishment
C)Government rules
D)Product differentiation

Question 36

The tool appropriate for the third step of the small business strategy process to study the dynamics and trends of your industry is the

A)value chain analysis.
B)SWOT analysis.
C)VRIO analysis.
D)industry analysis.

Question 37

_____ is the idea and actions that explain how a firm will make its profits.

A)Strategy
B)Objective
C)Mission
D)Goal

Question 38

_____ is the general name for the line of products or services being sold.

A)Strategy
B)Competitive advantage
C)Market
D)Industry

Question 39

Second sourcing

A)occurs when business firms leave a market.
B)occurs because many big businesses have policies that provide for set-asides for purchases from small businesses.
C)offers the advantage of being globally based.
D)at its best provides a competitive pressure to keep both suppliers providing the best service and prices.

Question 40

Which of the following statements about supply shortages is true?

A)Supply shortages occur when a new product is in demand
B)The target audience is the mass market
C)This is a long-term market
D)The key benefits are lower costs and scale savings

Question 41

Which of the following is an advantage of using an innovative strategy?

A)There is much opportunity to sell the business.
B)You can make your business precisely fit your own ideas and preferences.
C)There is the possibility to buy existing businesses.
D)The owner spends very little time in creating the processes.

Question 42

This type of value benefit involved can come from the products or services that you offer,or from your own firm's reputation.

A)Brand
B)Style
C)Personalization
D)Place

Question 43

Which of the following statements about value benefits is false?

A)They display characteristics related to the nature of the product or service itself.
B)Things like quality,fashion,and reputation are elements that give a product value in the eyes of the customer.
C)They are important because they are almost always what lead to higher prices and higher profits.
D)They refer to the ways by which a firm can keep costs low for the customer.

Question 44

_____ refers to the size of the market whereas _____ refers to its geographic range.

A)Scope;scale
B)Mass;niche
C)Scale;scope
D)Niche;mass

Question 45

As a firm gets more experience,it can often work with fewer mistakes and greater efficiencies,thereby lowering costs.What type of cost benefit is it?

A)Service
B)Scope savings
C)Learning
D)Organizational practices

Question 46

If your product helps the community,a group,the environment,or the world,what type of value benefit is it?

A)Assurance
B)Personalization
C)Altruism
D)Quality

Question 47

A(n)_____ is the business term for the population of customers for your products or services.

A)market
B)industry
C)strategy
D)SIC

Question 48

Imitation minus one degree of similarity would be the business equivalent of

A)incremental innovation.
B)cloning.
C)pure innovation.
D)industry analysis.

Question 49

Value benefits can include all of the following EXCEPT

A)quality.
B)style.
C)delivery.
D)learning.

Question 50

An imitation business that competes locally with others in the same industry is called

A)pure innovation.
B)entry wedge.
C)parallel competition.
D)incremental innovation.

Question 51

A customer group that involves large portions of the population is called a

A)niche market.
B)scope of market.
C)parallel competition.
D)mass market.

Question 52

There are two market decisions you need to make early in the process of going into business:

A)NAICS and SIC.
B)scale and scope.
C)make or buy.
D)imitation and innovation.

Question 53

Cost benefits can come from all of the following EXCEPT

A)credit.
B)scale savings.
C)learning.
D)organizational practices.

Question 54

Cost benefits

A)are important because they always lead to higher profits.
B)imply what the customer senses in the service.
C)display characteristics related to the nature of the service itself.
D)refer to the ways by which a firm can keep costs low for the customer.

Question 55

What types of customers are likely to generate more potential customers than any other type?

A)Loyal customers
B)Local customers
C)Passionate customers
D)Corporate customers

Question 56

Identify the incorrect observation concerning niche markets.

A)Most industries have both mass and niche markets.
B)In this approach,you try to target customers only in the niche.
C)They are specific and broad.
D)It comprises of a segment of the population that is likely to share interests or concerns.

Question 57

The process of creating new products or services is called

A)parallel competition.
B)incremental innovation.
C)pure innovation.
D)pure imitation.

Question 58

A _____ is a narrowly defined segment of the population that is likely to share interests or concerns.

A)niche market
B)mass market
C)degree of similarity
D)parallel competition

Question 59

An overall strategic approach in which a firm patterns itself on other firms,with the exception of one or two key areas is called

A)pure innovation.
B)differentiation focus.
C)pure imitation.
D)incremental innovation.

Question 60

Buying in volume usually produces savings.Identify the type of cost benefit involved.

A)Scope savings
B)Lower costs
C)Scale savings
D)Learning

Question 61

The amount of money left after operating expenses are deducted for the business refers to

A)net profit.
B)gross profit.
C)operating profit.
D)earnings before tax.

Question 62

A type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry is the

A)shake-out.
B)growth stage.
C)maturity stage.
D)decline stage.

Question 63

A _____ type of life cycle growth stage is marked by a very rapid increase in sales in a relatively short time.

A)decline stage
B)growth stage
C)boom
D)shake-out

Question 64

What represents the amount of money the owners take out of the firm annually and on which they pay taxes?

A)Profit before taxes
B)Gross profit
C)Net profit
D)Rate of profit

Question 65

Which of the following is NOT a key type of information needed to perform an industry analysis?

A)How profits are made
B)Regulatory oversight agency requirement
C)Target market competitor concentration
D)SIC/NAICS number and description

Question 66

In SWOT,strengths are

A)chances to make greater sales or profits in the environment.
B)characteristics of the business that give it an advantage over others in the industry.
C)elements in the environment that could cause trouble for the business.
D)characteristics that place the firm at a disadvantage relative to others.

Question 67

A research process that provides the entrepreneur with key information about the industry,such as its current situation and trends is called

A)SWOT analysis.
B)VRIO analysis.
C)value chain analysis.
D)industry analysis.

Question 68

Changes in competitors,sales and profits in an industry over time is called

A)industry dynamics.
B)retrenchment.
C)a shake-out.
D)a transformational competency.

Question 69

The strategic direction option,at the end of a SWOT analysis,where opportunities match strength is

A)flaunt.
B)fight.
C)flee.
D)fix.

Question 70

A group discussion in which criticism is suspended in order to generate the maximum number of ideas is

A)mind mapping.
B)a focus strategy.
C)brainstorming.
D)a boom.

Question 71

An organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival is called

A)retrenchment.
B)maturity.
C)growth.
D)introduction.

Question 72

A generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeal to the customers is called _____ strategy.

A)differentiation
B)integration
C)cost
D)focus

Question 73

This is the third stage in the industry life cycle which is marked by a stabilization of demand.

A)Growth stage
B)Maturity stage
C)Introduction stage
D)Decline stage

Question 74

An industry life cycle stage in which customer purchases increase at a dramatic rate is the

A)decline stage.
B)growth stage.
C)boom.
D)shake-out.

Question 75

A type of generic strategy aimed at clarifying how one product is unlike another in a mass market refers to _____ strategy.

A)differentiation
B)cost
C)integration
D)focus

Question 76

Which of the following represent the five stages of industry life cycle?

A)Introduction,growth,maturity,decline,and death.
B)Introduction,pioneers,early adopters,decline,and death.
C)Pioneers,growth,early adopters,decline,and death.
D)Pioneers,early adaptors,late adopters,early majority,and death.

Question 77

_____ strategies target a portion of the market called a segment.

A)Differentiation
B)Integration
C)Cost
D)Focus

Question 78

All of the following are classic strategies for businesses of all types EXCEPT

A)differentiation.
B)cost.
C)integration.
D)focus.

Question 79

Which of the following is NOT one of the supra-strategies identified by Shepherd and Shanley?

A)Craftsmanship
B)Tightly manage centralization
C)Elite
D)Super-support

Question 80

Which of the following refers to funds left over after deducting the cost of goods sold?

A)Profit before taxes
B)Gross profit
C)Net profit
D)Rate of profit