Deck 8: Industry Evolution and Strategic Change

Question 1

Over time,industry life cycles have become increasingly compressed.

Answer 1

True

Question 2

The firm which sets the dominant product design usually goes on to be the most profitable firm in the industry.

Answer 2

False

Question 3

Long-term change within most industries is achieved through the birth and death of companies rather than through adaptation by existing companies.

Answer 3

True

Question 4

Organizations tend to prefer exploration for new opportunities over exploitation of existing knowledge.

Question 5

Technical standards are usually associated with network effects,dominant designs are usually not.

Question 6

Ford's assembly-line,mass production system and Toyota's system of lean production were the two process innovations that transformed the manufacture of automobiles during the 20^th century.

Question 7

During the introduction phase of the industry life cycle,different technologies and design configurations compete for market acceptance.

Question 8

The industry life cycle follows different phases from the product life cycle.

Question 9

For aircraft manufacturers,the jet engine was a threat since it was a "competence destroying" innovation.

Question 10

The establishment of a dominant design in an industry requires convergence around a common technical standard.

Question 11

"Punctuated equilibrium" refers to the tendency for organizations to follow a gradual process of transition from one equilibrium to another

Question 12

According to Charles Darwin it is the strongest of a species that survives.

Question 13

The establishment of a dominant design is usually associated with an industry's transition from the maturity phase to the decline phase.

Question 14

Start-up companies tend to be better at exploiting architectural innovations than established companies.

Question 15

The main drivers of industry evolution are growth of demand and the production and diffusion of knowledge.

Question 16

With the onset of maturity,industries often experience a "shake-out" period.

Question 17

With the onset of maturity,industries often migrate from advanced industrial countries to emerging countries.

Question 18

The emergence of a dominant product design tends to coincide with a shift from process innovation to product innovation

Question 19

The field of organizational ecology (a.k.a.organizational demography)proposes that a key factor encouraging the entry of new firms during an industry's early phases of development is the increasing legitimacy of the industry.

Question 20

Firms that develop high levels of capability tend to find change easy because they are also able to develop new capabilities.

Question 21

Firm entry rates tend to be highest during the growth stage of an industry life cycle because:

A)Shortage of production capacity keeps margins attractive
B)The propensity for entrepreneurs and venture capitalists to imitate one another
C)Growing legitimacy of the industry attracts resources to the industry
D)Both (a)and (c).

Question 22

The transition from the introduction to growth phase of the industry life cycle features:

A)Increasing product differentiation
B)Declining innovation
C)Offshoring of production
D)Product innovation giving way to process innovation

Question 23

Organizational ambidexterity refers to the ability of a single organization to possess more than one organizational capability

Question 24

Organizations are like people: their essential characteristics-including their capabilities-are formed in their early stages of development.

Question 25

A dominant design is best described as:

A)A technical standard
B)The product design chosen by the leading firm in an industry
C)A common product architecture
D)The culmination of the process of commodification that accompanies industry evolution

Question 26

Steve Jobs' insistence that Apple's development teams commit to "insanely great products" that combined seemingly-impossible performance attributes is an example of how "stretch goals" can combat organizational inertia.

Question 27

Which of the following developments is not a typical feature of the transition from the "introductory" to the "growth" phase of the industry life cycle?

A)The emergence of a dominant design
B)The shift from product to process innovation
C)The shift of production from advanced to emerging countries
D)Rapid market penetration

Question 28

A technical standard tends to emerge in an industry if:

A)Economies of scale are present
B)The industry has converged around a dominant design
C)The industry is subject to economies of learning
D)Network effects exist

Question 29

The duration of the industry life cycle:

A)Typically extends over a century or more
B)Is determined by the longevity of the firms within the industry
C)Has become compressed as the pace of technological change has accelerated
D)Depends upon the ability the industry to sustain innovation

Question 30

The different stages of the industry life cycles are defined primarily on the basis of:

A)The rate of growth of industry sales
B)The characteristics of competition within the industry
C)The pace of innovation within the industry
D)None of the above

Question 31

IBM's decision in the late 1970s to establish its new personal computer division in Florida,rather than close to its headquarters in New York state is an example of "contextual ambidexterity."

Question 32

Knowledge management is the application of information technology to management processes.

Question 33

The main forces driving industry evolution are:

A)Technology and demand
B)Technology and globalization
C)The quest for cost and differentiation advantage
D)Government policies and global financial flows.

Question 34

Multiple scenario analysis is an approach to forecasting that relies heavily upon applying advanced statistical analysis to "big data."

Question 35

The steam engine was a disruptive innovation for the builders of ocean-going sailing ships because steam ships were initially slower and less reliable than sailing ships.

Question 36

A major challenge for businesses that rely upon individual,tacit knowledge is that,unless that knowledge can be systematized and embodied in standardized processes,the growth prospects of the business are limited.

Question 37

Dynamic capabilities are "higher order" capabilities that orchestrate change among operational capabilities.

Question 38

Which statement best describes the extent to which different industries conform to the same life cycle pattern?

A)The duration of the life cycle varies from industry to industry
B)The same stages exist whatever the industry
C)All industries have experienced a shortening of the stages of their life cycle
D)Different go through a renewal of their fife cycle at different stages of their development

Question 39

The characteristic profile of an industry life cycle has an 'S' shaped curve because:

A)It is modeled on the Product Life Cycle,which is also 'S' shaped
B)It is generated by a quadratic function
C)It reflects the changing pace at which technology is diffused
D)It is the result of changes in rates of growth of market demand.

Question 40

If a firm pays closely to the needs of its existing customers,it is unlikely to be blindsided by disruptive technologies.

Question 41

The capabilities of "craft enterprises" are based upon the tacit knowledge of skilled employees.The capabilities of "industrial enterprises" are based upon systematized knowledge located within processes.The key advantage of industrial enterprises over craft enterprises is that:

A)They can replicate their capabilities at low cost in multiple locations
B)They are less vulnerable to shortages of skilled workers
C)They can standardize their offerings
D)They can automate their production.

Question 42

The history of the retail sector over the past 150 years points to:

A)The tendency for retailing to follow the same pattern of growth,maturity and decline as most other industries
B)Increasing globalization
C)Revitalization through continuous strategic innovation
D)Increasing commoditization as differentiation declines.

Question 43

The main reason why a firm's distinctive capabilities reflect the conditions that the firm faced during the early years of its development is because:

A)Most managers adhere to the old adage: "If it ain't broke,don't fix it"
B)Capabilities that develop early become embedded in a firm's organizational culture
C)Exploitation tends to dominate exploration
D)Managers' bounded rationality

Question 44

The field of "organizational ecology" studies:

A)Companies' contributions to environmental sustainability
B)Changes in the population of firms in an industry
C)The process of competition between different types of firm
D)Management practices that promote the evolutionary adaptation of firms.

Question 45

Changing a company's organizational structure can facilitate strategic change because:

A)It can help break down established power centers
B)It provides a means for CEOs to centralize decision making power
C)It can convince investment analysists that real change is taking place
D)It can improve the alignment of organizational capabilities with organizational units.The managers which head different organizational capabilities need to have clear lines of reporting

Question 46

IBM,3M,and General Electric are companies that demonstrate,over periods of several decades,the capacity to adapt to multiple changes in their external environment.These companies are characterized by:

A)Dynamic,entrepreneurial CEOs
B)Corporate cultures that value and celebrate risk taking
C)Business processes that sense and seize opportunities
D)Embracing diversity

Question 47

The experience of Xerox Corporation with its Palo alto research Center and GM with its Saturn division points to:

A)The disadvantages of geographically-separated business units
B)The folly of mixing contextual and structural ambidexterity
C)The difficulty of transferring innovation developed in a separate exploration unit back to the main company
D)The need for chief executives to be more closely involved in R&D.

Question 48

An organizational routine is:

A)A stable,repeatable,pattern of coordinated activity among organizational members
B)A lower-level,operational capability,as opposed to a dynamic capability which tends not to be routinized
C)The resource needed to create a new capability
D)A new capability after it has been institutionalized within an organization

Question 49

When a company places its new businesses or new products into separate organizational units from its established business activities,this is an example of:

A)Contextual ambidexterity
B)Structural ambidexterity
C)Both contextual and structural ambidexterity
D)Effective change management

Question 50

With the onset of the maturity stage,the number of firms in most industries:

A)Remains stable
B)Decreases significantly,then stabilizes
C)Rises
D)Rises sharply until shake-out is triggered

Question 51

Which of the following is not a source of organizational inertia?

A)The tendency for organizations to limit themselves to local search
B)Organizational routines
C)Complementarities between the different activities of a firm
D)The hierarchical structure of large firms

Question 52

When an industry is subject to technological change,the ability of new entrants to displace incumbent firms will be increased if:

A)The technological change represents an architectural innovation rather than component innovation
B)The technological change is competence enhancing rather than competence destroying
C)Incumbent firms are insufficiently attentive to the industry's largest customers
D)Incumbent firms are geographically dispersed.

Question 53

The reluctance of shipping companies to switch from sail to steam propulsion can be attributed to the fact that:

A)The owners of shipping company were resistant to new technology
B)For several decades after the introduction of steam ships,sailing ships were faster,cheaper,and more reliable
C)Complementary resources such as engineers and coaling stations were scarce
D)Shipping company owners were over the environmental impact of coal burning ships

Question 54

"Shakeout"--a period when many firms exit from an industry following a period of intense competition-characterizes an industry's transition from:

A)Introduction to growth stage
B)From growth to maturity
C)From maturity to decline
D)From product innovation to process innovation.

Question 55

According to institutional sociologists,the propensity for organizations to adopt similar structures ("institutional isomorphism")is primarily a result of

A)Common key success factors within an industry
B)Bounded rationality
C)The complementarity among different managerial practices within firms' "activity systems"
D)The propensity of firms to imitate one another as they seek legitimacy.

Question 56

Industries change mainly as a result of:

A)Government policies
B)The death of existing firms and the birth of new firms
C)Continuous adaptation by a constant population of firms
D)Changing customer preferences.