Deck 6: Crafting Business Strategy of Dynamic Contexts

Question 1

Successful dynamic strategies reward firms for avoiding risky decisions.

Answer 1

False

Question 2

Competitive actions generate a narrow range of predictable competitive responses.

Answer 2

False

Question 3

Competitive advantage is facilitated by possessing resources and capabilities that fulfill the VRINE criteria.

Answer 3

True

Question 4

Competitive advantage is developed when a firm can create value in similar ways to their rivals.

Question 5

Successful strategies increasingly require that firms change the rules of the game.

Question 6

Strategies for dealing with stable markets must pay special attention to the arenas and staging elements of the strategy diamond.

Question 7

Phase 3 of competitive interaction is characterized by customer reactions.

Question 8

A firm's strategy should be consistent with its strengths and its ability to seize opportunities.

Question 9

Challenges to sustained competitive advantage include anything that threatens VRINE resources and capabilities.

Question 10

Dynamic strategies require firms to make coherent tradeoffs between the economic logic of low cost and differentiation.

Question 11

Complex and unpredictable aggressive moves lead to improved market positions for successful attackers.

Question 12

Competitive interactions are composed of the interactions between incumbents and the interactions of new entrants and incumbents.

Question 13

Strategic-positioning decisions should be supported by only a select few tactical decisions made to implement and reinforce the firm's strategy.

Question 14

Major actions taken by one firm are usually noticed by competitors.

Question 15

A rapid and unpredictable environment requires firms to pursue dynamic strategies.

Question 16

Stable markets move at a much faster pace than dynamic markets.

Question 17

Interactions caused by new entrants in an industry are a severe source of dynamism when the entrants introduce a strategy that varies significantly from those used by incumbents.

Question 18

With regard to competitive unpredictability, strategy research shows that challengers must launch many assaults on the industry leader in a short period of time.

Question 19

A challenger can gain a competitive market position to the extent that they can catch the leader unaware.

Question 20

Because it must be externally oriented to be effective, strategy should always be static.

Question 21

Technological disruptions cause leading firms to fall by the wayside.

Question 22

To create new market space, companies must remain focused on their existing rivals and actively try to match what they are offering customers.

Question 23

Incumbents who use new-market strategies shift competitive focus to the task of redefining the business model for a part of the existing market.

Question 24

Commoditization is the process by which industry wide sales depend more on price and less on unique product features.

Question 25

Disruptive technologies are those that change the face of the business environment by altering who the leaders are.

Question 26

Southwest Airlines is a very successful low-end disrupter.

Question 27

If new technology is introduced by a new entrant, it stands a good chance to attain market dominance.

Question 28

Reacting to change means foreseeing the emergence of complementary technologies.

Question 29

High-end disruptions rarely offer features that satisfy the best customers in the industry.

Question 30

A successful low-cost strategy requires different resources and capabilities than a differentiation strategy.

Question 31

The value curve is a convenient tool to help managers visualize how new disruptions might be targeted.

Question 32

Technological change is particularly risky when it primarily affects business processes.

Question 33

New-market creation emphasizes actions and capabilities that are determined by competitors' moves.

Question 34

Over time, a change in the basis of competitive advantage will cause advantage to shift from firms favored by industry conditions to those with obsolete resources and capabilities.

Question 35

New firms' business models cannot be imitated quickly by incumbents because of tradeoffs with value-chain activities that are essential to the incumbents.

Question 36

A technological discontinuity is an innovation that dramatically advances an industry's price-versus-performance frontier.

Question 37

When new technology is developed by new entrants, incumbent firms face the very real possibility that they will be marginalized or eliminated.

Question 38

Change drivers are not impacted by the speed of change.

Question 39

Discontinuities that affect product technology rarely favor differentiation strategies.

Question 40

The speed of change is a critical factor in keeping up with the basis of competition in an industry.

Question 41

In some cases, a first-mover strategy can actually be a liability.

Question 42

Large firms may use funding to pursue shaping strategies.

Question 43

The purpose of the containment strategy is to minimize the risks entailed by being a first mover.

Question 44

As part of the absorption strategy, an incumbent may try to leverage a buyout by taking control of industry distribution channels.

Question 45

Sometimes the time period between first movers and second movers may be several weeks or several years.

Question 46

A firm that is a second mover is also a late mover.

Question 47

Effective second movers are sometimes referred to as fast followers.

Question 48

A strategy that depends on rapid change requires that a firm's resources and capabilities support stability and continuity.

Question 49

First movers always attain dominant market positions.

Question 50

A position in which the exploitation of a resource makes that resource stronger and more resilient is called resource management.

Question 51

The absorption strategy works well when the firm has identified the threat at an early stage.

Question 52

Incumbents adopting the annulment strategy improve their own products.

Question 53

Slotting fees are the fees that suppliers pay for access to retailers' shelf space.

Question 54

A common neutralization tactic is the threat or use of legal action.

Question 55

Strategies are most effective when firms leverage unique, firm-specific resources and capabilities.

Question 56

The shaping strategy is all about making the competition irrelevant.

Question 57

The industry life cycle can predict how quickly the drivers of industry demand will evolve.

Question 58

A firm contemplating a second-mover strategy should consider the inimitability of its new product.

Question 59

Antitrust laws make it easier to contain or neutralize the growth of a new product.

Question 60

When complementary assets are tightly held and the first mover has weak protection from imitation, the value-creating opportunities favor the holders of the complementary assets.

Question 61

If a regional firm wants to grow into a premier national company, all but which of the following might be in its sequence of activities?

A) sell off parts of the company that are profitable
B) enter into adjacent regional markets
C) develop differentiators designed to build brand awareness
D) rapidly expand through acquisitions funded by increasingly valuable stock price

Question 62

All of the following are phases of competitive interaction except ________.

A) customer reaction
B) competitor reaction
C) discovery and competitive new action
D) competitive unpredictability

Question 63

Which of the following is a characteristic of new entrants' disruptive strategies?

A) These firms emphasize product standardization.
B) These firms start out as high-margin businesses.
C) These new models are easily imitated.
D) These firms can take away market share.

Question 64

Change leaders are consistently able to do all of the following except ________.

A) develop new technologies
B) decrease the pace of product cycles
C) raise industry standards
D) develop new markets

Question 65

The five competitive strategies for use in a dynamic environment are purely defensive strategies.

Question 66

As industry products become perceived as undifferentiated, the ability of firms to generate premium pricing ________.

A) increases
B) stabilizes
C) decreases
D) becomes more critical

Question 67

Any firm that invests in resources and capabilities that support innovation and not retaliation may be only prolonging its inevitable demise.

Question 68

Exit options give firms the option to walk away from a project in response to new information.

Question 69

The annulment strategy may entail considerable risk.

Question 70

A turbulent environment is characterized by bold dynamic moves on the part of competitors.

Question 71

Reacting to change involves responding to all of the following except ________.

A) unexpected customer demands
B) the development of new market segments
C) new government regulations
D) competitors' actions

Question 72

An innovation that dramatically advances an industry's price-versus-performance frontier is called ________.

A) service innovation
B) process innovation
C) technological discontinuity
D) technological disruptions

Question 73

Competitive interaction theory suggests that ________.

A) competitive actions will generate reactions
B) competitors and suppliers must learn to cohesively interact
C) competitive actions will always interact with industry conditions
D) competitors must interact with each other to survive

Question 74

Detecting and responding quickly to unexpected customer demands is called ________.

A) anticipating change
B) speed of change
C) reacting to change
D) market segment change

Question 75

Managers can use all but which tool to formulate a strategy and hammer out a strategic position?

A) dynamic multiplier model
B) industry-structure analysis
C) strategy diamond
D) VRINE model

Question 76

In phase 1, competitive action can be initiated in all of the following ways except ________.

A) competitive aggressiveness
B) predictability
C) delay tactics
D) complexity of the competitive-action repertoire

Question 77

There is a close connection between tactical moves and strategy evolution.

Question 78

Firms need some degree of ability to thrive in chaotic environments in order to survive.

Question 79

All of the following are possible types of technological disruptions except ________.

A) process innovations
B) service innovations
C) application innovations
D) business model innovations

Question 80

All of the following are dimensions causing dynamic contexts except ________.

A) competitive interactions
B) industry evolution
C) technological disruptions
D) staging elements