Deck 7: Small Business Strategies: Imitation With a Twist

Question 1

The standard industrial classification system (SIC)codes have six digits.

Answer 1

False

Question 2

Small businesses typically use the strategy of innovativeness rather than imitativeness.

Answer 2

False

Question 3

In the decline stage,sales and profits of the firms in an industry begin a falling trend.

Answer 3

True

Question 4

Funds left over after deducting the cost of goods sold are referred to as the net profit.

Question 5

Patents and trademarks are popular strategic actions for protecting a firm from competition.

Question 6

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

Question 7

The first step of the strategic planning process for small businesses is considering your customers and the benefits you want to offer them.

Question 8

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

Question 9

Second sourcing provides customers with greater certainty of supplies or services.

Question 10

Generally,benefits do not influence a firm's strategy process.

Question 11

Shake-out is a type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time.

Question 12

The new NAICS covers more industries than the SIC.

Question 13

Cost benefits include scale and scope savings.

Question 14

Differentiation strategies target a niche segment of the market.

Question 15

Pure innovation is an overall strategic approach in which a firm patterns itself on other firms,with the exception of one or two key areas.

Question 16

Market scale refers to the geography of the target market.

Question 17

The supra-strategy of a classic imitator small business start-up is single-mindedness.

Question 18

Tactical actions are competitive responses with low resource requirements.

Question 19

Imitation minus one degree of similarity is the business equivalent of an innovative strategy.

Question 20

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

Question 21

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

A) pure innovation
B) niche strategy
C) incremental innovation
D) blue ocean strategy

Question 22

In an imitative strategy,an entrepreneur:

A) creates a new product or service which has no competitors.
B) considers prospective customers before creating a product or service.
C) seeks to do something that is very different from what others are doing.
D) does more or less what others are already doing.

Question 23

The fourth step of a small business' strategic planning process involves:

A) considering the customers and the benefits to offer them.
B) refining the firm's capabilities in order to maintain a competitive advantage.
C) determining the best strategic direction and strategy for the firm.
D) studying the dynamics and trends of the industry.

Question 24

Most small businesses are more _____ than _____.

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

Question 25

An imitative business that competes locally with others in the same industry is referred to as _____.

A) incremental competition
B) niche business
C) linear competition
D) parallel competition

Question 26

Magic number is defined as:

A) the number of employees hired by a start-up in the first year.
B) the post-tax income the entrepreneur personally seeks from the business.
C) the number of loyal customers.
D) the income a start-up is able to generate from quarterly sales.

Question 27

Industry analysis is defined as the technique used to:

A) determine the magic number in a particular industry.
B) determine the extent to which a product is similar to another product.
C) study the dynamics and trends of an industry.
D) study the effects of low cost on an industry.

Question 28

_____ is the general name for the line of product or service being sold,or the firms in that line of business.

A) Industry
B) Market
C) Scope
D) Niche group

Question 29

The first step of the strategic planning process for a small business is:

A) performing a SWOT analysis.
B) reviewing and confirming the goals that define the firm.
C) mapping the prospective customers.
D) studying the dynamics and trends of the industry.

Question 30

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

A) It allows entrepreneurs to do something that is very different from what others are doing.
B) It allows business owners to buy existing technologies.
C) It allows entrepreneurs to fit their businesses to their own ideas and preferences.
D) It allows business owners to create unique settings.

Question 31

North American industry classification system (NAICS)codes have _____ digits.

A) three
B) six
C) eight
D) nine

Question 32

Standard industrial classification system (SIC)codes have _____ digits.

A) four
B) six
C) seven
D) nine

Question 33

Imitation minus one degree of similarity:

A) would be the business equivalent of cloning.
B) is equivalent to the blue ocean strategy.
C) leads to pure innovation.
D) helps in the creation of a unique setting.

Question 34

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

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

Question 35

Which of the following are the two major classification systems that code industries?

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

Question 36

As a new entrepreneur,Anthony's magic number for 2013 is $42,000.If the current tax rate for his business is 30 percent,calculate the amount that Anthony's firm would need to sell for him to get his magic number.

A) $50,000
B) $50,495
C) $60,000
D) $60,854

Question 37

Imitation plus one degree of similarity results in:

A) patterning a business on existing firms.
B) creating previously unseen products or services.
C) creating products or services that have no competitors.
D) characterizing a business based on the returns it offers.

Question 38

Which of the following is the second step of a small business' strategic planning process?

A) Reviewing and confirming the goals that define the firm
B) Knowing the magic number
C) Studying the dynamics and trends of the industry
D) Considering the customers and the benefits to offer them

Question 39

Which of the following is true of imitation?

A) It does not involve patterning a business on existing firms.
B) It does not match the precision or completeness of copying seen in franchising.
C) It involves the creation of new products or services which have no competitors.
D) It results in the creation of previously unseen products or services.

Question 40

Which of the following is the advantage of knowing the magic number?

A) It helps in evaluating if the proposed business can deliver the desired return.
B) It helps in retaining customers.
C) It seeks out customers who are already being serviced by another firm.
D) It helps in making incremental product improvements.

Question 41

Which of the following is an advantage of picking customer-desired benefits that a business owner's competitors do not offer?

A) They results in lower pricing.
B) They help business owners to set realistic goals.
C) They help a business owner in identifying the magic number.
D) They make the firm stand out from the competition.

Question 42

Which of the following is a value benefit?

A) Scale savings
B) Cost savings
C) Learning
D) Technology

Question 43

Which of the following is true of a blue ocean strategy?

A) It results in a new product or service.
B) It is the business equivalent of cloning.
C) It involves patterning a business on existing firms.
D) It matches the precision of copying as seen in franchising.

Question 44

_____ refers to the size of the market,whereas _____ refers to the geographic range covered by the market.

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

Question 45

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

A) niche market
B) mass market
C) primary market
D) parallel market

Question 46

Market scope is important because:

A) it helps business owners in determining the size of the target market.
B) it helps business owners to decide where to focus their sales and advertising efforts.
C) it helps business owners in designing a product.
D) it helps business owners in calculating their magic number.

Question 47

In the goal step of the strategic planning process,the key is to:

A) focus on the kind of customers the business wants to deal with.
B) bring together the decisions that underlie the business plan.
C) offer state-of-the-art or leading-edge technology.
D) build a brand reputation through the products or services.

Question 48

Which of the following 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 49

_____ is a value benefit that can come from the products or services that a business owner offers,or from his or her firm's reputation.

A) Brand
B) Scale savings
C) Learning
D) Scope savings

Question 50

Which of the following is true of niche markets?

A) They are broad markets.
B) They target all the customers in the entire market.
C) They are specific and narrow.
D) They involve large portions of the population.

Question 51

Value benefits are important because:

A) they lead to scope savings.
B) they lead to higher prices.
C) they result in scale savings.
D) they lead to reduced costs.

Question 52

As a firm gets more experience,it can often work with fewer mistakes and greater efficiencies,thereby lowering costs.This leads to the cost benefit of _____.

A) personalization
B) scope savings
C) learning
D) altruism

Question 53

Which of the following is a cost benefit?

A) Brand
B) Altruism
C) Personalization
D) Organizational practice

Question 54

A perceptual map is:

A) a chart that maps changes in competitors,sales and profits in an industry over time.
B) a graphic display which positions products according to their scores on important strategic dimensions.
C) a chart that indicates the changes in the magic number of a business owner.
D) a graphic display which indicates the various stages of the lifecycle of a product.

Question 55

A _____ displays characteristics related to the nature of a product or service itself.

A) value benefit
B) cost benefit
C) scale saving
D) cause and effect diagram

Question 56

A(n)_____ is the business term for the population of customers for a business owner's products or services.

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

Question 57

Amy plans to open a laundromat with a gym.She got the idea from the laundromat with a bar and game rooms,which she visits regularly.She wants to test her idea by starting out in a small space with the focus on the laundromat and a small space allocated for gym equipments.Amy's idea is an example of _____.

A) a blue ocean strategy
B) a pure innovation
C) an altruistic approach
D) an incremental innovation

Question 58

Buying in volume usually produces savings.This leads to the cost benefit of _____.

A) scope savings
B) lower costs
C) scale savings
D) learning

Question 59

A customer group that involves large portions of the population is referred to as a _____.

A) niche market
B) secondary market
C) local market
D) mass market

Question 60

Which of the following types of value benefits is most likely to be offered by a product if it helps the community,a group,the environment,or the world?

A) Scope savings
B) Personalization
C) Altruism
D) Scale savings

Question 61

An opportunity that makes it possible for a new business to gain a foothold in a market is referred to as a(n)_____.

A) parallel competition
B) incremental innovation
C) differentiation strategy
D) entry wedge

Question 62

_____ is the amount of money left after deducting the operating expenses of the business.

A) Gross profit
B) Net profit
C) Profit after taxes
D) Generic profit

Question 63

_____ are classic strategies for businesses of all types and they include differentiation,cost,and focus.

A) Personalization strategies
B) Altruistic strategies
C) Retrenchment strategies
D) Generic strategies

Question 64

In which of the following stages is there an explosion of choices in terms of products and services?

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

Question 65

A research process that provides the entrepreneur with key information about other firms in the same line of business as his or her,the current situation and trends is known as:

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

Question 66

According to Shepherd,Shanley,and Porter,which of the following is a small business supra-strategy?

A) Altruism
B) Single-mindedness
C) Scope savings
D) Technology

Question 67

Differentiation strategy is a type of generic strategy aimed at:

A) clarifying how one product is unlike another in a mass market.
B) mass markets in which a firm offers a combination of cost benefits that appeals to the customers.
C) a portion of the market,called a segment or niche.
D) buying in bulk and selling or repackaging in smaller amounts.

Question 68

The life cycle stage in which a product or service is being invented is known as the _____.

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

Question 69

Changes in competitors,sales and profits in an industry over time are referred to as:

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

Question 70

Which of the following is characteristic of the boom stage in the life cycle of a product?

A) Most customers are unaware of the offerings.
B) Many firms close down.
C) Firms begin to compete on features and prices.
D) Established firms must find new approaches to improve the business.

Question 71

Growth stage is an industry life cycle stage in which:

A) customer purchases increase at a dramatic rate.
B) a product or service is being invented and initially developed.
C) sales and profits of the firms in the industry begin a falling trend.
D) an industry eventually reaches a relatively stable number of firms.

Question 72

Retrenchment is:

A) the third life cycle stage.
B) a stage marked by a stabilization of demand.
C) a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms.
D) an organizational life cycle stage in which established firms must find new approaches to improve the business.

Question 73

Gross profit is defined as:

A) what is left after deducting the cost of goods sold.
B) what is left after deducting the operating expenses of the business.
C) the amount of money the owner takes out of the firm annually.
D) the profit earned by a company when its product is in the maturity stage of the product life cycle.

Question 74

Which of the following is true of a differentiation strategy?

A) It requires a firm to offer a combination of cost benefits that appeals to the customers.
B) It is generally pursued by all small businesses.
C) It is aimed at mass markets.
D) It is used by businesses that pursue a very low cost operation.

Question 75

The _____ is marked by a stabilization of demand,with firms in the industry moving to stabilize or improve profits through cost strategies.

A) decline stage
B) maturity stage
C) growth stage
D) retrenchment stage

Question 76

Which of the following is a generic strategy that targets a portion of the market,called a segment or niche?

A) Focus strategy
B) Differentiation strategy
C) Cost strategy
D) Value strategy

Question 77

Which of the following is true of the introduction stage of a product?

A) Sales are almost always high.
B) Most customers are unaware of the offerings.
C) Firms begin to compete on features and prices.
D) Some products turn out to be extremely popular.

Question 78

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

A) Shake-out
B) Growth stage
C) Maturity stage
D) Retrenchment

Question 79

In an industry life cycle,the shake-out phase ends when:

A) the firms introduce new products or services.
B) the competition between firms increases.
C) the rapid die-off of firms stops.
D) the growth phase begins.

Question 80

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

A) maturity stage
B) retrenchment
C) shake-out
D) boom