Deck 11: Competitive Advantage in High-Tech Industries

Question 1

Buyer power measures the degree of power that customers have over companies in the industry.

Answer 1

True

Question 2

When determining the rivalry among existing firms, you need to examine the industry growth rate.

Answer 2

False

Question 3

The threat of substitutes is high if alternative products and services will not serve the same function as well as existing products and services.

Answer 3

False

Question 4

The degree of rivalry is high if products are commodities and cannot be easily differentiated.

Question 5

The value chain is a description of activities that are used to produce and deliver a product to customers.

Question 6

New firms tend to perform better in industries in which manufacturing and marketing account for most of the value added.

Question 7

In creatively destructive industries, entrepreneurs enter with new firms; challenge established firms on the basis on new ideas; disrupt the old ways of production, organization, and distribution; and replace the old firms.

Question 8

Telecommunications is an industry in which the process of creative destruction tends to be found.

Question 9

Computer and office equipment start-ups had the greatest percentage of new firms, entered the market between 1982 and 2000, which became Inc. 500 firms.

Question 10

New firms tend to be better at innovation in industries that are not capital intensive.

Question 11

New firms have an advantage relative to established forms in more advertising intensive industries.

Question 12

Concentration is a measure to the market share that is typically held by the top-ten firms in an industry.

Question 13

Overall the average firm size within industries rose between 1980 and 1983.

Question 14

A sustainable competitive advantage is a way of generating economic value that is difficult for other firms to replicate, purchase, or replace, and that persists over time.

Question 15

Capabilities are skills and abilities used to provide the products that generate value.

Question 16

Whether your company uses a socially complex approach to making products will depend on tacit knowledge where the relationship between cause and effect is not well understood.

Question 17

Core competencies in infrastructure management are created by joining supply chain management, inventory logistics, and information technology.

Question 18

Because companies develop core rigidities, established firms often have advantages over new ones.

Question 19

Strategic dissonance is the situation that occurs when the intent and action of entrepreneurs and managers gets aligned.

Question 20

A good process for helping to reduce strategic dissonance would be developing a willingness to invest organizational resources that were accumulated during periods of alignment in making changes to the company's strategy and competencies, and a process for making that happen.

Question 21

In general, what is required for a company to be successful?

A) develop the capabilities to transform resources into valuable products and services
B) create competitive advantage relative to business rivals
C) develop the capabilities to transform resources into valuable products and services.
D) all of the above

Question 22

When a company is analyzing an industry, which factor would lead the company to believe that they have low buyer power?

A) cannot integrate forward into production
B) face high costs to switching suppliers
C) offer supplies that add little value to later stages
D) capital cost are large

Question 23

When a company is analyzing an industry, which factor would lead the company to believe that they have low supplier power?

A) cannot integrate backward to supply themselves
B) there are few alternative products and services available
C) offer supplies that add little value to later stages in the production process
D) the number of firms in the industry are large

Question 24

Which industry had the highest profit as a percentage of sales for manufacturing industries during 2001-2005?

A) beverage and tobacco products
B) chemicals
C) food
D) computer and electronic products

Question 25

Which industry had the lowest profit as a percentage of sales for manufacturing industries during 2001-2005?

A) beverage and tobacco products
B) chemicals
C) food
D) computer and electronic products

Question 26

When a company is analyzing an industry, which factor would lead the company to believe the threat of substitutes is low?

A) if economies of scale and switching costs are high
B) there are many alternative products and services available
C) products and services will not serve the same function as well as existing products and services
D) the price-value trade-off for the alternative is very good

Question 27

When a company is analyzing an industry, which factor would lead the company to believe the threat of new entrants is low?

A) economics of scale and switching costs are low
B) learning curves are steep
C) brand name reputation is weak
D) key resources are abundant

Question 28

When a company is analyzing an industry, which factor would lead the company to believe that the degree of rivalry is high?

A) growth of sales is low
B) products are commodities and can be differentiated easily
C) the number of firms in the industry is small
D) there are few alternative products available

Question 29

Under which of Porter's five forces do you need to consider exit barriers?

A) threat of new entrants
B) rivalry among existing firms
C) threat of substitute products
D) determination of supplier power

Question 30

Under which of Porter's five forces do you need to consider product differentiation?

A) threat of new entrants
B) threat of substitute products
C) rivalry among existing firms
D) determination of buyer power

Question 31

Under which of Porter's five forces do you need to consider switching costs to buyers?

A) threat of new entrants
B) determination of buyer power
C) determination of supplier power
D) threat of substitute products

Question 32

Under which of Porter's five forces do you need to consider sellers' threat of forward integration?

A) threat of new entrants
B) determination of supplier power
C) determination of buyer power
D) threat of substitute products

Question 33

Under which of Porter's five forces do you need to consider the industry growth rate?

A) threat of new entrants
B) determination of supplier power
C) determination of buyer power
D) rivalry among existing firms

Question 34

What is the description of activities that are used to produce and deliver a product to customers called?

A) concentration rate
B) value chain
C) core rigidities
D) core competencies

Question 35

In the wireless phone business, which element of the value chain would be occupied by companies like Cingular and Nextel?

A) wireless platforms
B) handset manufactures
C) content providers
D) wireless operators

Question 36

In the wireless phone business, which element of the value chain would be occupied by companies like CNN and Disney?

A) wireless platforms
B) application providers
C) content developers
D) wireless operators

Question 37

How will examining the value chain help you with your technology strategy?

A) help to figure out where most of the value added is created in an industry
B) help to determine whether it makes sense to focus on a different stage of the value chain if the locus of value creation in an industry changes
C) offers insight into whether new or established firms will be more effective at innovation
D) all of the above

Question 38

What would be likely to found in an industry that operates through dynamics of creative destruction?

A) established firms defend their old ways of production, organization, and distribution
B) new firms tend to fail
C) old firms are replaced
D) all of the above

Question 39

Which industry is most likely to operate under a regime of creative destruction?

A) organic chemicals
B) telecommunications
C) computer disk drives
D) all of the above

Question 40

Which industry is most likely to operate under a regime of creative accumulation?

A) telecommunications
B) chemical processes
C) machine tools
D) lighting

Question 41

Which industry is most likely to operate under a regime of creative accumulation?

A) organic chemicals
B) telecommunications
C) electronics
D) all of the above

Question 42

Which industry had the highest proportion of new firms between 1982 and 2000 that became Inc. 500 firms?

A) video tape rental
B) legal services
C) computer and office equipment
D) drugs

Question 43

Which industry had the lowest proportion of new firms between 1982 and 2000 that became Inc. 500 firms?

A) video tape rental
B) legal services
C) computer and office equipment
D) drugs

Question 44

What is the measure of the importance of capita as opposed to labor in the production process called?

A) return on equity
B) labor intensity
C) capital intensity
D) return on assets

Question 45

Why are new firms at a disadvantage in industries that are capital intensive?

A) they lack internal cash flow
B) capital from financial markets is less expensive than internally generated cash flow
C) the greater the amount of capital required the less the risk premium
D) all of the above

Question 46

What generally happens when advertising is initially introduced?

A) significant effect
B) diminishing effect
C) no effect
D) little effect

Question 47

What is the measure of the market share that is held by the largest companies in an industry called?

A) concentration
B) capital intensity
C) industry intensity
D) industry complexity

Question 48

How many firms are typically used in determining an industry's concentration rate?

A) 2
B) 4
C) 10
D) top 10 percent

Question 49

New firms are typically better innovators in which of the following situations?

A) concentrated
B) advertising intensive
C) small size
D) capital intensive

Question 50

Which industry has the largest average firm size?

A) construction
B) transportation, communications, and public utilities
C) retail trade
D) manufacturing

Question 51

Which industry has the smallest average firm size?

A) agriculture
B) mining
C) manufacturing
D) retail trade

Question 52

Which industry had the most significant decline in average firm size from 1980 to 1993?

A) wholesale trade
B) retail trade
C) manufacturing
D) finance, insurance, and real estate

Question 53

Which industry had the most significant increase in average firm size from 1980 to 1983?

A) manufacturing
B) transportation, communications, and public utilities
C) construction
D) all of these firms had reductions in average firm size

Question 54

What is a way of generating economic value that is difficult for other firms to replicate, purchase, or replace, and that persists over time called?

A) resource
B) capability
C) sustainable competitive advantage
D) strategic competency

Question 55

What are the skills and abilities used to provide the products that generate value called?

A) resources
B) capabilities
C) sustainable competitive advantage
D) strategic competency

Question 56

What are the assets that a firm employs in its efforts to generate economic value called?

A) resources
B) capabilities
C) sustainable competitive advantage
D) strategic competency

Question 57

Which of the following is a category of resources that you use to create and deliver products to generate economic value?

A) tangible
B) intangible
C) human
D) all of the above

Question 58

Under which category of resources would you classify financial reporting systems?

A) tangible
B) intangible
C) human
D) all of the above

Question 59

Under which category of resources would you classify trade secrets?

A) tangible
B) intangible
C) human
D) all of the above

Question 60

Under which category of resources would you classify employee knowledge?

A) tangible
B) intangible
C) human
D) all of the above

Question 61

When transforming resources into products what is not required in order for your business to develop a competitive advantage?

A) they are valuable
B) they are easy to imitate
C) they are nonsubstitutable
D) they are durable

Question 62

Which capability is most likely to reside in an organization's processes?

A) marketing
B) skills
C) knowledge
D) ability

Question 63

What approach to making products is most likely to rely on tacit knowledge where the relationship between cause and effect is not well understood?

A) strategic dissonance
B) socially complexity
C) core rigidity
D) causal ambiguity

Question 64

What approach to making products is most likely to rely on tacit knowledge where the approach requires the interactions of multiple people in complex ways?

A) strategic dissonance
B) social complexity
C) core rigidity
D) causal ambiguity

Question 65

How can you create the capability to innovate in a technology-intensive industry?

A) have access to resources that can be transformed into innovative products and services
B) make a systematic investment in the management, technical and other skills that help you to understand different technical areas
C) establish the right organizational boundaries
D) all of the above

Question 66

What are the capabilities that are used to generate values across many firm activities called?

A) sustainable competitive advantage
B) resources
C) core competency
D) capabilities

Question 67

If your company had a core competency of developing and bringing together advertising, what would it be classified as?

A) persuading customers
B) infrastructure management
C) technology development
D) manufacturing

Question 68

If your company had a core competency of inventory logistics, what would it be classified as?

A) persuading customers
B) infrastructure management
C) technology development
D) manufacturing

Question 69

If your company had a core competency of combining basic research, what would it be classified as?

A) persuading customers
B) infrastructure management
C) technology development
D) manufacturing

Question 70

If your company had a core competency of quality control, what would it be classified as?

A) persuading customers
B) infrastructure management
C) technology development
D) manufacturing

Question 71

What is the inability to do new things outside of the firm's core competencies called?

A) social rigidity
B) core rigidity
C) strategic rigidity
D) causal rigidity

Question 72

What is the situation that occurs called when the intent and action of entrepreneurs and managers get misaligned?

A) sustainable competitive advantage
B) core rigidity
C) strategic dissonance
D) social complexity

Question 73

List and define Porter's five forces. How can each force be used in assessing the attractiveness of an industry?

Question 74

Define a value chain and explain how the value chain can help you with your technology strategy.

Question 75

Compare and contrast the regimes of creative destruction and creative accumulation. Explain why examining the innovation regime is important for entrepreneurs when determining whether or not to enter an industry.

Question 76

Identify and explain how the industry conditions of capital intensity, advertising, concentration, and the average size of firms can pose an impediment to new firms when attempting to enter a market.

Question 77

Describe why resources are so important to a company's success. Also define and distinguish between tangible, intangible, and human resources.

Question 78

Define what a core competency is and why it is important for a company. Explain how core competencies can sometimes lead to core rigidity.

Question 79

Explain strategic dissonance and identify ways that you can limit the possibility of strategic dissonance from developing.