Deck 3: Strategy Over Time: Growth and Innovation

Question 1

Which of the following is threatened by industry evolution?

A) firms pursuing value advantage only
B) firms with all types of competitive advantage
C) firms pursuing cost advantage only
D) firms in niche markets only

Answer 1

firms with all types of competitive advantage

Question 2

The innovation life cycle implies that firms in Stage 1 of an industry's evolution grow through which two types of investments?

A) innovations that increase productivity and reduce supplier dependence
B) innovations that lower cost and stabilize firm growth
C) growth that increases firm size and innovations that increase productivity
D) none of the above

Answer 2

growth that increases firm size and innovations that increase productivity

Question 3

Why might high short-term opportunity costs slow an incumbent's response to an industry disruption?

A) incumbents are slowed down by partnerships
B) incumbents are too diverse
C) suppliers become more price sensitive
D) incumbents are focused too strongly on competing under current industry conditions

Answer 3

incumbents are focused too strongly on competing under current industry conditions

Question 4

Firms improve their market positions over time through which of the following?

A) path dependence
B) the innovation cycle
C) core rigidities
D) imitating other firms

Question 5

A dynamic capability is always:

A) central to retaining customers
B) found in capacity expansion decisions
C) important for establishing property rights
D) located in activities where key innovations occur

Question 6

The performance of small firms in niche markets is threatened by:

A) economies of scope of larger firms
B) niche-specific value drivers that are no longer effective relative to larger firms
C) neither of the above
D) both of the above

Question 7

Hypercompetition is the combination of:

A) multipoint competition and niche markets
B) an arms race and price leadership
C) multipoint competition and an arms race
D) price leadership and high sunk costs

Question 8

Which of the following determines the duration and severity of a shakeout?

A) the geographical location of dominant firms
B) the number of large competitors in the industry
C) whether firms have implemented scale-based value drivers
D) firms' expectations about future demand and the degree of sunk costs

Question 9

Which of the following is a major source of industry disruption?

A) product innovation with a low rate of return
B) deregulation
C) innovation to support a sustaining technology
D) none of the above

Question 10

Strategic pricing depends on which of the following assumptions?

A) customer switching costs are high enough to ensure a reasonable retention rate
B) scale based cost drivers are effective
C) both of the above
D) neither of the above

Question 11

Industries spend about the same amount of time in the growth stage.

Question 12

Survival is generally determined more by a firm's size than its age.

Question 13

A dominant design is the culmination of a series of innovations in a product's components and architecture.

Question 14

Investing in projects based on the learning curve is more attractive in the mature phase of industry evolution and growth has slowed.

Question 15

To counter experienced buyers, firms should invest in value drivers that raise customer search and transition costs.

Question 16

Industry concentration among large firms depends on sunk investments in cost drivers.

Question 17

Technological substitution involves the introduction of a radically new technology that has a higher marginal rate of return on investment in R&D than the current technology in the industry.

Question 18

An industry's shakeout stage tends to be longer when dominant firms lack strong mechanisms to protect their positions from rivals.

Question 19

Cost drivers vary in their effectiveness over the course of industry evolution.

Question 20

Over the industry life cycle, firms shift from process to product innovation.

Question 21

Explain the difference between a product life cycle and an industry life cycle.

Question 22

How might path dependence contribute to a firm's innovation cycle?

Question 23

Describe the difference between a sustaining technology and a disruptive technology and give one example of a disruptive technology.