Question 1

Entrepreneurial firms are often in a strong position to use combination strategies,because they have the flexibility to approach situations uniquely.

Accepted Answer

Entrepreneurial firms are often in a strong position to offer a combination strategy, because they have the flexibility to approach situations uniquely. For example, holding down expenses can be difficult for big firms, because each layer of bureaucracy adds to the cost of doing business across the boundaries of a large organization.

Question 2

Cutting prices or increasing marketing efforts are examples of tactical competitive actions.

Accepted Answer

Two broadly defined types of competitive action include strategic actions and tactical actions. Tactical actions include refinements or extensions of strategies. Examples of tactical actions include cutting prices, improving gaps in service, or strengthening marketing efforts. Such actions typically draw on general resources and can be implemented quickly.

Question 3

Because new ventures typically are small,they usually do not have high economies of scale relative to competitors.

Accepted Answer

Because new ventures typically are small, they usually do not have high economies of scale relative to competitors. This means that new firms must seek a different approach, if they wish to pursue a cost-leadership strategy.

Question 4

Warby Parker makes eyeglasses.It keeps costs low through several means and has a social mission.This is an example of a firm that uses a combination strategy.

Accepted Answer

Entrepreneurial firms, by contrast, can often create high-value products and services through their unique differentiating efforts. In the case of Warby Parker, two entrepreneurs found a recipe to sell fashionable eyeglasses to demanding customers while also cutting costs and serving a social mission.

Question 5

According to the text,for an entrepreneurial start-up to be successful,three ingredients are critical.What are they?
A) good ideas, a team of investors, and a business plan
B) a viable opportunity, available resources, and a qualified and motivated founding team
C) an opportunity, a marketing plan, and office space
D) management, marketing, and money

Accepted Answer

Beyond merely identifying a venture concept, the opportunity recognition process also involves organizing the key people and resources that are needed to go forward. The three factors that are needed, therefore, to successfully proceed are opportunity, resources, and entrepreneur(s).

Question 6

Once an adaptive entrant has achieved initial success,the company is safe from copycat competition.

Accepted Answer

Once an adaptive entrant achieves initial success, the challenge is to keep the idea fresh. If the attractive features of the new business are copied, the entrepreneurial firm must find ways to adapt and improve the product or service offering.

Question 7

Market commonality refers to the extent to which competitors are vying for the same customers in the same markets.

Accepted Answer

Market commonality is whether or not competitors are vying for the same customers and how many markets they share in common. For example, aircraft manufacturers Boeing and Airbus have a high degree of market commonality because they make very similar products and have many buyers in common.

Question 8

Co-opetition,where competitors work together behind the scenes,is a form of illegal tacit collusion.

Accepted Answer

Co-opetition is a term that was coined by Novell network software company founder and former CEO, Raymond Noorda, to suggest that companies often benefit most from a combination of competing and cooperating. Close competitors that differentiate themselves in the eyes of consumers may work together behind the scenes to achieve industrywide efficiencies.

Question 9

In the context of competitive dynamics,tactical actions involve major commitments of distinctive and specific resources to strategic initiatives.

Accepted Answer

Two broadly defined types of competitive action include strategic actions and tactical actions. Strategic actions represent major commitments of distinctive and specific resources. Such actions require significant planning and resources and, once initiated, are difficult to reverse.

Question 10

The success of an adaptive new entrant can be limited,if the value proposition is perceived as being unique.

Accepted Answer

There are several pitfalls that might limit the success of an adaptive new entrant. First, the value proposition must be perceived as unique. Unless potential customers believe a new product or service does a superior job of meeting their needs, they will have little motivation to try it.

Question 11

A focus strategy must not include elements of differentiation and overall cost leadership in order to be successful.

Accepted Answer

Focus strategies are often associated with small businesses because there is a natural fit between the narrow scope of the strategy and the small size of the firm. A focus strategy may include elements of differentiation and overall cost leadership, as well as combinations of these approaches. To be successful within a market niche, the key strategic requirement is to stay focused.

Question 12

Running Press created a line of palm-sized mini books that were sold as point-of-sale impulse items.The company grew rapidly,even though it had a small fraction of the sales in the publishing industry.They used a pure overall cost leadership strategy to capture market share.

Accepted Answer

Focus strategies are often associated with small businesses because there is a natural fit between the narrow scope of the strategy and the small size of the firm. A focus strategy may include elements of differentiation and overall cost leadership, as well as combinations of these approaches. To be successful within a market niche, the key strategic requirement is to stay focused. Even though these books represent just a tiny fraction of total sales in the $23 billion publishing industry, they have been a mainstay for Running Press. As the Running Press example indicates, many new ventures are successful even though their share of the market is quite small.

Question 13

Refinements or extensions of existing strategies are often referred to as tactical actions.

Accepted Answer

Two broadly defined types of competitive action include strategic actions and tactical actions. Tactical actions include refinements or extensions of strategies. Examples of tactical actions include cutting prices, improving gaps in service, or strengthening marketing efforts. Such actions typically draw on general resources and can be implemented quickly.

Question 14

Pandora,launched in 2000,radically changes the radio business with its Music Genome Project system that analyzes music for its underlying traits.This is an example of a pioneering new entry strategy.

Accepted Answer

New entrants with a radical new product or highly innovative service may change the way business is conducted in an industry. This kind of breakthrough of creating new ways to solve old problems or meeting customer needs in a unique new way is referred to as a pioneering new entry. If the product or service is unique enough, a pioneering new entrant may actually have little direct competition.

Question 15

Entrepreneurial new entry is often perceived as a competitive threat because most market needs are being met,either directly or indirectly,by an existing firm.

Accepted Answer

New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is true in part because nearly every market need is already being met, either directly or indirectly, by existing firms. As a result, the competitive actions of a new entrant are very likely to provoke a competitive response from companies that feel threatened. This, in turn, is likely to evoke a reaction to the response.

Question 16

Market commonality is the extent to which rivals draw from the same types of resources.

Accepted Answer

Market commonality is whether or not competitors are vying for the same customers and how many markets they share in common. Resource similarity is the degree to which rivals draw on the same types of resources to compete.

Question 17

When attacked,older and larger firms tend to respond more quickly,but their responses are often more predictable.

Accepted Answer

Older and larger firms may have more resources and a repertoire of competitive techniques they can use in a counterattack. Large firms, however, tend to be slower to respond. Older firms tend to be predictable in their responses because they often lose touch with the competitive environment and rely on strategies and actions that have worked in the past.

Question 18

Entrepreneurial competitive dynamics refers to a cycle of actions and responses between firms competing for the same customers.

Accepted Answer

Competitive dynamics is intense rivalry, involving actions and responses, among similar competitors vying for the same customers in a marketplace.

Question 19

Smell-O-Vision created an invention that would pump odors into movie theatres.It did not make it to market.This was an attempt to be an adaptive entry strategy.

Accepted Answer

An adaptive new entry approach does not involve reinventing the wheel nor is it merely imitative either. It involves taking an existing idea and adapting it to a particular situation. Smell-O-Vision created a new invention to meet customer needs and therefore was an attempted pioneering new entry strategy.

Question 20

Forbearance is a particularly aggressive type of competitive attack.

Accepted Answer

There may be many circumstances in which the best reaction is no reaction at all. This is known as forbearance, refraining from reacting at all as well as holding back from initiating an attack.

Quiz 8: Entrepreneurial Strategy and Competitive Dynamics