Deck 5: Industry Evolution and Strategic Change

Question 1

Competition between new start-ups and established firms is NOT limited to the early phases of the industry life cycle.

Answer 1

True

Question 2

A dominant design is one which is the most noticeable, or receives the most publicity.

Answer 2

False

Question 3

Change in an industry is the result of

A)the forces of technology, consumer preferences, and economic growth.
B)both external forces and the incumbents' competitive strategies.
C)the effect of the "5 forces" model of competition.
D)economic and psychological factors.

Answer 3

B

Question 4

The introduction to maturity phases of the industry life cycle curve is characteristically S-shaped.

Question 5

Change in industries is driven chiefly by the forces of technology, market demand, and economics.

Question 6

To respond to changes in its external environment, making incremental changes is the best approach.

Question 7

Knowledge influences the characteristics of an industry in different ways depending on the stage of the industry life cycle.

Question 8

Technical standards have the most dramatic effect in markets exhibiting network effects - that is, users not adopting the standard risk isolation.

Question 9

Over time, industry life cycles become longer and longer.

Question 10

Firms are continually trying to erode the competitive advantage of rivals, and to build and maintain their own competitive advantage.

Question 11

Two main factors drive industry evolution: demand growth and the production and diffusion of knowledge.

Question 12

Change in the industry environment faced by a firm is

A)massive and unpredictable.
B)gradual and predictable.
C)could be either a or b, depending on the industry and the prevailing conditions.
D)easier for large firms to cope with.

Question 13

A shift from radical to incremental innovation takes place when an industry coalesces around a leading technology and design.

Question 14

Emphasis often shifts from product innovation to process innovation, once a dominant design emerges.

Question 15

The ideal time to make strategic changes is when the organization is in a state of crisis.

Question 16

The industry life cycle comprises 4 stages: introduction, growth, maturity, decline - so is indistinguishable from the product life cycle.

Question 17

Massive and unpredictable changes occur in some industries, but less so in others.

Question 18

It's a good idea to reduce product innovation as soon as possible so as to precipitate a shift to the growth phase.

Question 19

The industry life cycle consists of four stages: 1)Introductory, 2)Growth, 3)Plateau, and 4)Rejuvenation.

Question 20

The duration of the industry life cycle varies greatly from one industry to another.

Question 21

The text claims that two factors are fundamental to the industry life cycle. One of these is

A)the production and diffusion of knowledge.
B)industrial production and the diffusion of knowledge.
C)demand during the growth phase.
D)demand for growth in the diffusion of knowledge.

Question 22

The essence of IBM's success in the PC industry in the 1980s was

A)IBM established a dominant design.
B)IBM had an established access to the business market, which Apple et al. did not have.
C)IBM opted to encourage 3rd parties to write software and provide additional hardware, unlike Apple.
D)all of the above.

Question 23

Firms entering a new industry who were already established in a related industry are sometimes known as

A)dallaglio entrants.
B)de aglio entrants.
C)de alio entrants.
D)de olio entrants.

Question 24

A new industry life cycle begins when

A)a very large gap in the market emerges.
B)another industry dies.
C)new knowledge manifests itself in the guise of a sufficiently radical product innovation.
D)there are sufficient entrepreneurs.

Question 25

Regarding change, a firm really needs to

A)understand and predict change.
B)understand, predict, and manage change.
C)understand, predict, manage change, and adapt its strategy to it.
D)predict and manage change.

Question 26

The decline phase of the industry life cycle is caused by

A)the emergence of a radically better substitute product, representing a new industry.
B)tired old firms running out of new ideas.
C)existing firms leaving the industry to move to a more profitable one.
D)excessive market saturation.

Question 27

The basis of entering a new industry at the Introduction phase is

A)effective product innovation.
B)effective process innovation.
C)effective promotional material.
D)effective sales people.

Question 28

The industry life cycle

A)is an extension of the concept of the product life cycle.
B)uses the same stages as the product life cycle.
C)nearly always lasts much longer than a typical product life cycle in that industry.
D)all of the above.

Question 29

A technical standard

A)only occurs in computing when there is a network effect.
B)emerges when there are interconnectivity and interface compatibility issues.
C)can emerge for safety and other reasons from standards bodies eg ISO.
D)b and c.

Question 30

Start-up firms in a new industry are also sometimes known as

A)dallaglio entrants.
B)de novo entrants.
C)de bono entrants.
D)de facto entrants.

Question 31

When IBM did enter the PC market, they

A)did so with a maverick offshoot, and by buying in sub-systems, which went against the IBM usual methods.
B)suffered slow growth since they were late to market.
C)relied on business users recognising the established IBM reputation.
D)a and c.

Question 32

An industry life cycle

A)always follows the theoretical pattern.
B)may never enter the decline phase, in some industries supplying basic essential products or services.
C)must be the same everywhere, due to globalisation.
D)can never really experience a resurgence.

Question 33

Is the PC industry in the maturity stage of the life cycle?

A)Yes - growth has started to decline, and shakeout occurred years ago.
B)Yes - emphasis is on production efficiency, and the PC is being commoditised.
C)No - there is still huge growth potential in China, India, Brazil and so on.
D)a and b.

Question 34

IBM initially ignored the PC market because

A)IBM did not recognise the PC market as a separate industry.
B)IBM had seen the PC as a tiny, hobbyist's niche within the computer industry, not worth IBM's attention.
C)IBM knew they weren't innovative enough to compete against Apple.
D)IBM is not good at spotting new opportunities.

Question 35

The different stages of the industry life cycles are characterised by

A)the evolution of the industry growth rate over time.
B)the evolution of the competition in the industry.
C)the evolution of a firm's market share.
D)none of the above.

Question 36

As the industry life cycle progresses, overall strategies need to

A)stay steady and not waver; don't change anything.
B)change in every major aspect e.g., product evolution, the nature of competition.
C)primarily focus on cost-cutting.
D)none of the above.

Question 37

IBM sold its PC division to a Chinese company because

A)IBM realised that labour costs are lower in China.
B)the PC market in the developed world was saturated, so was no longer attractive to IBM.
C)the PC was increasingly becoming a multimedia consumer product, whereas IBM is a business-oriented firm.
D)b and c.

Question 38

A "born global" company is one which

A)interacts across the world from the outset - especially regarding selling.
B)is a "virtual" company.
C)is spun out of an existing global company.
D)has an international cultural appreciation.

Question 39

The PC industry clearly began in the 1970s because

A)it did not exist at all prior to this time.
B)the introduction phase was typical: no mass market, many product variants, small firms.
C)by the 1980s, the growth phase had begun, with a design standard emerging.
D)all of the above.

Question 40

A dominant design is

A)one which has won the most industrial design awards.
B)an emergent de facto industry standard broad product format.
C)the one advertised most strongly by the market leader.
D)the latest new product which gains the most media attention.

Question 41

The key success factor for firms surviving in the Maturity phase is

A)buying as many competitors as you can.
B)maintaining cost efficiency as good as competitors.
C)"two for one" deals and other special offers.
D)all of the above.

Question 42

The Decline phase of the industry life cycle is characterised by

A)ceasing of product and process innovation.
B)incumbents going out of business.
C)remnant niche-sized players may survive profitably.
D)all of the above.

Question 43

To succeed as a leading player in the Growth phase, a firm should

A)offer a product or service which is designed to be "scaled up" in volume.
B)obtain sufficient resources and build capabilities to support effective scaling-up of operations.
C)have sufficient market access or commercial muscle to sell scaled-up volume.
D)all of the above.

Question 44

To survive going into the Maturity phase of the industry life cycle, a firm needs to

A)outsource all production.
B)get rid of all research and development staff.
C)emphasise cost efficiency.
D)cut wages.

Question 45

The typical cause of the Decline phase in an industry is

A)technological substitution e.g., the horse and cart replaced by the car.
B)local regional decline due to low-cost foreign competition.
C)changing consumer tastes e.g., tobacco.
D)any of the above.

Question 46

The key success factor for leading firms in the Growth phase is

A)knowing what competitors are doing - even resorting to espionage.
B)taking business away from rivals.
C)a commission-oriented sales force.
D)being able to scale up volume production and operations effectively and efficiently.

Question 47

To survive the Growth phase profitably, a firm NOT having all the attributes of a leading player could

A)sell the company to a more well-prepared rival.
B)operate as a specialist, niche player, thus avoiding the necessity to fully "scale up".
C)find another industry to move into.
D)none of the above; without the ability to dramatically scale up, the firm will fail.

Question 48

Tools of strategic change include creating a perception of a crisis and organizational initiatives, reorganization and new blood, and

A)diversification.
B)setting objectives that are easy to achieve.
C)establishing stretch targets.
D)none of the above.

Question 49

Often, to succeed in the evolution from Introduction to Growth, a firm

A)needs to acquire an injection of cash from a venture capital company.
B)needs to be closely associated with the dominant design which emerges.
C)needs to buy a major competitor.
D)needs to pull back on product innovation.

Question 50

The key success factor in the Introduction phase of the industry is

A)effective product innovation i.e., getting new products launched and in front of customers.
B)making sure the workforce is multi-skilled.
C)having a committed workforce, e.g., prepared to work weekends for no extra wages.
D)just being creative.

Question 51

The determining factors of how calamitous the Decline phase turns out to be are

A)the way capacity is dismantled as demand declines, and how dramatic is the decline in demand.
B)whether a price war breaks out, and how many firms remain.
C)the actions of foreign competition, and how fast workers can be fired.
D)how quickly the new industry can ramp up production, and what prices they sell at.

Question 52

Barriers to change include

A)organizational routines.
B)social and political structures.
C)conformity.
D)a, b, and c.

Question 53

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

A)remains relatively stable.
B)tends to decrease significantly.
C)increases significantly.
D)decreases or increases, depending on the industry.