Question 1

Within a business ecosystem, the migrates of value between groups f firms is the result of external forces such as technology, regulation, and changing customer preferences.Individual firms have little power to influence value migration.

Accepted Answer

Individual firms can influence value migration by adapting to external forces and addressing changing customer preferences through innovation, strategic partnerships, and other initiatives.

Question 2

The Schumpeterian view of competition emphasizes the role of innovation and entrepreneurship

Accepted Answer

The Schumpeterian view of competition is focused on innovation and entrepreneurship as the driving forces behind economic growth and development. Schumpeter believed that entrepreneurs create new markets through innovation, and that competition is driven by the constant search for new and better ways of doing things.

Question 3

Unlike most strategic management concepts, there is little ambiguity over what a business model is.

Accepted Answer

The concept of a business model is often ambiguous and subject to different interpretations, with various scholars and practitioners defining it in slightly different ways.

Question 4

In hypercompetitive markets, the quest for sustainable competitive advantage is the overwhelmingly important priority for firm strategy.

Accepted Answer

The answer of In hypercompetitive markets, the quest for sustainable...

Question 5

Where different firms supply different products that link together to form a system, power typically resides with the form that supplies the platform-the interface between the different component products.

Accepted Answer

When different firms supply different products that form a system, the interface or platform that links these different products together becomes critical. The firm that supplies the platform holds more power because it controls the flow of information and sets the standards for how the different products interoperate. This is known as the 'platform owner's curse' where the platform owner has to balance the competing demands of different component suppliers while also keeping the platform users happy.

Question 6

Deterrence is effective when it imposes costs upon other players, but s costless for the initiating firm.

Accepted Answer

Deterrence is most effective when it not only imposes costs on other players but also involves some costs for the initiating firm, as this demonstrates commitment and increases the credibility of the deterrent threat.

Question 7

The profitability of making inkjet cartridges depends critically upon their complementary relationship with between inkjet printers.

Accepted Answer

Inkjet cartridges are designed to be used in inkjet printers, and the profitability of producing these cartridges depends on the demand for them as a complement to inkjet printers. Without the demand for inkjet printers, there would be no demand for inkjet cartridges and therefore, no profitability.

Question 8

The suppliers of video game consoles (Sony, Microsoft and Nintendo) are less able to appropriate the profits generated by the sales of video game systems because of d the growing size and power of the video game developers and publishers.

Accepted Answer

Video game developers and publishers have become more powerful in the industry over time, and they are better equipped to negotiate with console suppliers to ensure that they receive a larger share of the profits. As a result, console suppliers such as Sony, Microsoft and Nintendo have become less able to appropriate profits from the sales of their video game systems.

Question 9

In the world of business, competition and cooperation seldom coexist.

Accepted Answer

In the world of business, competition and cooperation can coexist. While businesses compete for market share and customers, they may also collaborate with each other through partnerships, joint ventures, or strategic alliances. Additionally, competition can drive innovation and improvement, ultimately benefiting the industry as a whole.

Question 10

The value of a product to its consumers tends to be reduced by availability of close substitutes.Similarly, the value if a product to its consumers is reduced by the availability of complements.

Accepted Answer

The value of a product to its consumers tends to be reduced by the availability of close substitutes because substitutes offer alternative options that can fulfill the same need, leading to potential competition on price and features. However, the availability of complements typically increases the value of a product because complements are goods that are used together with the primary product, enhancing its utility and desirability.

Question 11

When products A and B are complements, the division of profit between the supplier of A and the supplier of B will depend upon which builds the stronger market position and is better able to reduce the value contributed by the other.

Accepted Answer

When products are complements, the suppliers depend on each other's success. The profit will be divided based on who builds a stronger market position and is better at reducing the value contributed by the other. This is because the demand for one product affects the demand for the other, and suppliers need to work together to maximize overall profit.

Question 12

A "winner-take-all industry" is one in which the market leader earns the great majority of the industry's total profits.

Accepted Answer

In a winner-take-all industry, the market leader has a significant competitive advantage, which allows them to earn the majority of the industry's total profits, leaving little space for other players to compete effectively.

Question 13

Game theory seeks to predict the outcome of competitive situations by modeling the interactive decisions by firms,

Accepted Answer

This statement accurately describes the main purpose of game theory.

Question 14

Porter's five forces model offers a rigorous, empirically-validated approach to explaining the variation in profitability across industries

Accepted Answer

Porter's Five Forces model is a conceptual framework for analyzing industry structure and competitive intensity, but it is not empirically validated to explain variations in profitability across industries.

Question 15

After arriving in Mexico in 1519, the destruction by Hernan Cortes of his own ships was a signal, in game theory terminology, of "commitment" for his troops to the conquest of the Aztec empire

Accepted Answer

The destruction of the ships eliminated the possibility of retreat and signaled to his troops that they were fully committed to the conquest, increasing their motivation and likelihood of success.

Question 16

In common with the Porter five forces framework, the Schumpeterian approach views competitive behavior as the outcome of industry structure.

Accepted Answer

The Schumpeterian approach focuses on innovation and creative destruction as the drivers of competition, rather than viewing competitive behavior primarily as an outcome of industry structure, which is the focus of the Porter five forces framework.

Question 17

Business models can assist strategy formulation for firms that are located within complex business ecosystems.

Accepted Answer

Business models provide a framework for understanding the relationships between the different players and factors within a complex business ecosystem, and can help firms identify opportunities for value creation and competitive advantage.

Question 18

Industry membership is the single most important source of profitability differences between firms.

Accepted Answer

While industry membership can influence profitability, firm-specific factors such as strategy, operations, and management are more significant in determining the differences in profitability between firms.

Question 19

Empirical studies on hypercompetition show unanimously that industries are becoming increasingly turbulent and competitive advantage increasingly short-lived

Accepted Answer

While many empirical studies on hypercompetition suggest that industries are becoming more turbulent and that competitive advantages can be short-lived, there is not unanimous agreement on this matter. Some research indicates that certain industries may experience periods of stability and that firms can sustain competitive advantages for longer periods through various strategies.

Question 20

The propensity for similar businesses to cluster in the same locality (e.g.IT companies in Silicon Valley, fashion houses in Milan) is evidence of the intensity of the competitive instincts that drive the owners of these businesses.

Accepted Answer

This clustering is more accurately attributed to the benefits of agglomeration economies, where businesses in similar industries locate near each other to take advantage of shared resources, talent pools, and knowledge spillovers, rather than purely competitive instincts.

Quiz 4: Further Topics in Industry and Competitive Analysis