Question 1

Laggards are the customers who are the first ones to try and adopt a new technology.

Accepted Answer

Laggards are actually the last group of customers to adopt new technology, as they are resistant to change and need more time and convincing to adapt to new products or services.

Question 2

Relish Inc.created the first national chain of fast-food restaurants in a previously fragmented industry.This is called divestment.

Accepted Answer

Divestment is the opposite of creating a chain. It involves selling off or getting rid of assets, businesses, or investments. Creating a national chain of fast-food restaurants would be an example of consolidation or expansion in the industry, rather than divestment.

Question 3

The franchisor typically owns and funds each of its franchisees.

Accepted Answer

Franchisees are independent business owners who pay a fee to use the franchisor's business model, brand, and support system. They are responsible for funding and managing their own individual franchise locations.

Question 4

A fragmented industry is composed of a large number of small and medium-sized companies.

Accepted Answer

A fragmented industry is characterized by numerous small and medium-sized companies that compete with one another rather than a few large players dominating the market.

Question 5

Fragmented industries typically have high barriers to entry.

Accepted Answer

Fragmented industries are characterized by a large number of small or medium-sized firms, indicating low barriers to entry, as opposed to concentrated industries where a few large firms dominate and barriers to entry are typically high.

Question 6

Horizontal mergers often lead to industry fragmentation.

Accepted Answer

Horizontal mergers involve the combination of companies operating in the same industry, which can result in market concentration and decreased competition. This often leads to industry consolidation rather than fragmentation.

Question 7

Alpha corporation owns and controls several retail outlets and is pursuing a strategy called franchising.

Accepted Answer

Franchising involves granting others the right to operate under your business model and using your brand name, trademarks, and products in exchange for fees and royalties. It is not about owning and controlling retail outlets.

Question 8

Different strategies are often required to support and strengthen a company's business model as a market develops over time.

Accepted Answer

As markets evolve and change, companies often need to adjust or adapt their strategies in order to remain competitive and successful. This may involve developing new products or services, entering new markets or segments, optimizing operations, or redefining the company's overall business model. Staying agile and responsive is key to long-term success in any business.

Question 9

The challenge in a fragmented industry is to figure out the best set of strategies to overcome a fragmented market so that the competitive advantages associated with pursuing one of the different business models can be realized.

Accepted Answer

In a fragmented industry, it is important to identify the right strategies to effectively compete in the market and capitalize on the various business models. Thus, the statement is true.

Question 10

Innovators and early adopters have very different customer needs from the early majority.

Accepted Answer

Innovators and early adopters are often willing to take risks and try new products, whereas the early majority may need more assurance and evidence of a product's usefulness before adopting it. Therefore, their customer needs may differ significantly.

Question 11

A new product's relative advantage refers to the degree to which a new product is perceived as better at satisfying customer needs than the product that it supersedes.

Accepted Answer

Relative advantage is a key component of the Innovation Diffusion Theory and refers to the perceived superiority of a new product compared to the existing products in the market.

Question 12

Both innovators and early adopters are customers in the market while the industry is in its embryonic stage.

Accepted Answer

Both innovators and early adopters are the first to embrace a new product or technology in the market during its early stage. They are the ones who set trends and influence the future direction of the market.

Question 13

Early adopters are customers who purchase a new technology or product only when they are convinced that it will be around for a long time.

Accepted Answer

Early adopters are customers who are the first to try out a new technology or product, without being convinced that it will necessarily be successful or long-lasting. They are often eager to try new things and stay ahead of the curve.

Question 14

Franchisees essentially pursue independent strategies and do not use the business model of the franchisor.

Accepted Answer

Franchisees operate under the business model and guidelines provided by the franchisor, hence they do not pursue independent strategies.

Question 15

By their choices of competitive actions and decisions about product attributes,managers can speed up or slow down the rate of progress of an industry through the stages of the industry life cycle.

Accepted Answer

Managers can affect the rate of progress of an industry through their competitive actions and decisions about product attributes, influencing whether the industry moves quickly or slowly through the different stages of the industry life cycle.

Question 16

Through chaining,companies increase their buying power,which allows them to negotiate large price reductions with their suppliers,which in turn promotes their competitive advantage.

Accepted Answer

Chaining is a strategy in which companies consolidate their purchasing power to negotiate larger discounts from suppliers, thereby increasing their competitive advantage.

Question 17

One characteristic of embryonic industries is unconventional and specialized distribution channels.

Accepted Answer

Embryonic industries are still in their early stages of development and often have limited distribution channels. They may rely on non-traditional methods to reach their customers, such as online marketplaces, specialty stores, or direct-to-consumer sales.

Question 18

The late majority customers are typically reached through specialized distribution channels,and products are often sold by word of mouth.

Accepted Answer

The late majority customers are typically reached through more mass-market channels and advertising, not specialized distribution channels or primarily by word of mouth. Word of mouth is more characteristic of the earlier adopter categories, such as innovators and early adopters.

Question 19

Laggards are technologically sophisticated customers willing to tolerate the limitations of the product.

Accepted Answer

Laggards are customers who resist adopting new technologies or products, and are not necessarily technologically sophisticated. They are typically the last group to adopt a new product, and may only do so once it has become widely accepted and mainstream.

Question 20

Development of a mass market is the stimulus for an industry to change from growth to embryonic.

Accepted Answer

The change from growth to embryonic stage of an industry is caused by factors such as market saturation, technological advancements or changing consumer preferences. The development of a mass market, on the other hand, is a characteristic of the growth stage where there is a rapid increase in demand and sales.

Quiz 6: Business Level Strategy and the Industry Environment