Question 1

It can be seen in the opening vignette for the chapter that the introduction of MP3 players has caused a decline in the sales of CDs but has had few other effects.

Accepted Answer

The introduction of MP3 players not only caused a decline in CD sales but also transformed the music industry, affecting music distribution, consumption, and the way artists release music.

Question 2

The stages of the industry life cycle are introduction, growth, maturity, and decline or renewal.

Accepted Answer

The industry life cycle typically includes these stages: introduction, growth, maturity, and decline. Some models also consider a renewal or transformation stage as industries adapt to changes.

Question 3

Value creation in the introduction stage of the industry life cycle occurs internally through product design and externally by building upstream and downstream relationships.

Accepted Answer

Value creation in the introduction stage involves developing a unique product design internally and establishing relationships with suppliers and distributors externally to support the product's market entry.

Question 4

Standardization is an industry condition in which companies tend to adopt identical manufacturing processes because of intense rivalry.

Accepted Answer

Standardization refers to the process of establishing common standards or norms across industries, which can be driven by various factors, not just intense rivalry.

Question 5

In the maturity stage of the industry life cycle companies shift value creation activities toward identifying cost efficiencies.

Accepted Answer

In the maturity stage, market growth slows, competition intensifies, and companies focus on cost efficiencies to maintain profitability and competitive advantage.

Question 6

As an alternative to decline, the renewal of an entire industry depends solely on its ability to shift to complementary products or services.

Accepted Answer

The renewal of an industry depends on various factors, including innovation, market demand, competition, and adaptability, not solely on shifting to complementary products or services.

Question 7

Products or services that come bundled with another product at no extra charge--such as a trial size sample of a consumer product--are called complements.

Accepted Answer

Products or services that come bundled with another product at no extra charge are typically called "bundled products" or "promotional items," not complements. Complements are products that are often used together, like printers and ink cartridges.

Question 8

The passage of industries through the life cycle stages has become significantly faster for all industries in the past two or three decades.

Accepted Answer

The speed at which industries move through life cycle stages can vary significantly depending on the industry, technological advancements, market dynamics, and other factors. Not all industries have experienced a uniformly faster progression through these stages.

Question 9

The success of a focused differentiation strategy in a consolidated industry in part depends upon the existence of mobility barriers.

Accepted Answer

Mobility barriers prevent competitors from easily imitating or entering the niche market, allowing a company to maintain its unique position and competitive advantage.

Question 10

Fragmented industries behave much more like perfectly competitive markets than other types of industries and, therefore, there are few opportunities to earn superior profits.

Accepted Answer

Fragmented industries have many small firms with no single firm having significant market power, leading to competition similar to perfectly competitive markets, where profits are minimal.

Question 11

The consolidation of an industry that occurs when many small competitors are combined into a larger company is called an industry roll-up.

Accepted Answer

An industry roll-up refers to the process of acquiring and merging multiple smaller companies in the same industry to create a larger entity, often to achieve economies of scale and increase market share.

Question 12

The organizational life cycle has the same stages as the industry life cycle.

Accepted Answer

The organizational life cycle and the industry life cycle have different stages, as they pertain to different entities; organizations focus on individual company growth, while industry life cycles focus on the broader market or industry trends.

Question 13

Founders of a company in the conception stage of the organizational life cycle face the tasks of having a product or service that works, developing a market entry strategy, and obtaining financial capital.

Accepted Answer

In the conception stage, founders focus on creating a viable product or service, strategizing market entry, and securing financial resources to support the business.

Question 14

In the commercialization stage of the organizational life cycle the company must develop a prototype product or service.

Accepted Answer

The commercialization stage involves launching the product or service to the market, not developing a prototype, which typically occurs in earlier stages like development or testing.

Question 15

In the growth stage of the organizational life cycle flaws in the systems and processes developed by the business are exposed.

Accepted Answer

During the growth stage, as the business expands, the increased scale and complexity can reveal inefficiencies or weaknesses in existing systems and processes that were not apparent during the earlier stages.

Question 16

As revenue growth slows in the maturity stage of the organizational life cycle, profitability growth depends on innovation and creating routines that allow employees to work without direction.

Accepted Answer

The answer of As revenue growth slows in the maturity...

Question 17

First mover advantages can be classified as stemming from either timing or size.

Accepted Answer

First mover advantages can arise from being the first to enter a market (timing) or from achieving a significant scale or market share (size).

Question 18

Microsoft's approach to selling the Xbox 360 illustrates the first mover advantage that comes from creating an installed base and the existence of buyer switching costs.

Accepted Answer

Microsoft's early entry into the market with the Xbox 360 helped establish a large user base, creating switching costs for consumers who invested in games and accessories, illustrating first mover advantage.

Question 19

Fast-growth organizations often find themselves challenged to implement the right kind of organizational structure to support their strategic approaches.

Accepted Answer

Fast-growth organizations may struggle to adapt their organizational structure quickly enough to support rapid changes in strategy, leading to potential inefficiencies or misalignments.

Question 20

An options approach to organizational renewal relies on the incentives provided by awarding stock options to managers at different levels of the firm.

Accepted Answer

An options approach to organizational renewal refers to strategic flexibility and the ability to adapt to changes, not specifically to awarding stock options to managers.

Quiz 8: Strategy Issues in Industries and Life Cycle Stages