Question 1

First-mover disadvantages (or late-mover advantages) rarely ever arise when

Accepted Answer

When the market response is strong and the pioneer gains a monopoly position, it can recover its investment, thus avoiding first-mover disadvantages.

Question 2

In which of the following instances is being a first-mover NOT particularly advantageous?

Accepted Answer

In this scenario, being a first-mover may not be particularly advantageous because markets are slow to accept the innovative product offering of a first-mover, and fast followers possess sufficient resources and marketing muscle to overtake a first-mover. This means that the first-mover may bear the costs of developing the product, while fast followers reap the benefits of a more receptive market.

Question 3

Mergers and acquisitions

Accepted Answer

Research has shown that a significant number of mergers and acquisitions fail to produce the expected outcomes, including increased profitability and market share. Factors such as cultural clashes, lack of integration, and overpayment can contribute to the failure of a merger or acquisition.

Question 4

For every emerging opportunity there exists

Accepted Answer

The statement suggests that each emerging opportunity follows a market penetration curve, which has an inflection point or a turning point where the business model comes together. This implies that option A is the most appropriate choice as it clearly states the existence of a market penetration curve that can define growth in the market.

Alternatively, option B might also seem relevant but it suggests only the analysis of competitive status curve and obtaining first-mover status based on that, which might not always be applicable to every opportunity. Therefore, option A is a better choice than option B.

Options C, D, and E do not fit the context of the statement and hence are not the best choices.

Question 5

Merger and acquisition strategies

Accepted Answer

Merger and acquisition strategies may offer considerable cost-saving opportunities and can also be beneficial in helping a company try to invent a new industry. While forming alliances or partnerships can also be beneficial, merger and acquisition strategies have the potential to create a more integrated and unified organization, leading to greater efficiencies and synergies. However, it is important to consider the financial implications and potential risks before pursuing a merger or acquisition strategy.

Question 6

The race among rivals for industry leadership is more likely to be a marathon rather than a sprint when

Accepted Answer

The factors mentioned in option C, such as the need for complementary products, high switching costs, and influential rivals, can slow down the race for industry leadership since it becomes difficult for a first-mover to establish themselves in such an environment. Additionally, the presence of such barriers can also make it harder for fast followers to leapfrog the pioneer with better products. Options A, B, D, and E do not necessarily slow down the race for industry leadership.

Question 7

Being first to initiate a particular strategic move can have a high payoff in all of the following EXCEPT when

Accepted Answer

When market uncertainties make it difficult to ascertain what will eventually succeed, being the first to initiate a strategic move may not necessarily have a high payoff, as there is a high risk of failure or the market may evolve in a direction that does not favor the pioneering firm.

Question 8

Which of the following is NOT a typical strategic objective or benefit that drives mergers and acquisitions?

Accepted Answer

Facilitating a company's shift from a broad differentiation strategy to a focused differentiation strategy is not a typical strategic objective or benefit that drives mergers and acquisitions. The other options, such as gaining quick access to new technologies or extending a company's business into new product categories, are common reasons for mergers and acquisitions.

Question 9

The difference between a merger and an acquisition is that

Accepted Answer

A merger is the combination of two or more companies into a single corporate entity, while an acquisition involves one company purchasing and absorbing the operations of another company. In other words, a merger is a fusion of equals, while an acquisition involves one company taking over another.

Question 10

Market conditions and factors that tend NOT to favor first movers include

Accepted Answer

The option D states that growth in demand depends on the development of complementary products or services that are not currently available and new industry infrastructure that is needed before buyer demand can surge. This means that first movers may not have a significant advantage in such conditions, as there are certain limitations to the growth of the market. Therefore, this factor does not favor first movers. Other options such as A and C state that first movers have an advantage in attracting new customers and loyalty, which is not always true. Option B talks about absolute cost advantages, which are rare and usually do not last long. Option E relates to pouring fewer resources, which is not necessarily a factor that does not favor first movers.

Question 11

The extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system is known as

Accepted Answer

The extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system is known as vertical scope. Vertical scope refers to the range of activities a firm encompasses within the same industry, from raw materials to final product delivery to customers.

Question 12

Mergers and acquisitions are often driven by such strategic objectives as

Accepted Answer

Expanding a company's geographic coverage or extending its business into new product categories are common strategic objectives for mergers and acquisitions. This allows companies to gain market share, access new customer segments and increase their profitability by leveraging economies of scale and scope.

Question 13

The difference between a merger and an acquisition relates to

Accepted Answer

The difference between a merger and an acquisition relates to the details of ownership, management control, and the financial arrangements. In an acquisition, one company purchases another company and becomes the new owner, while in a merger, two companies combine to form a new entity. The difference in ownership, management control, and financial arrangements is what distinguishes the two types of transactions.

Question 14

First-mover advantages are unlikely to be present in which one of the following instances?

Accepted Answer

Rapid market evolution can quickly make a first-mover's product obsolete, allowing later entrants to offer more attractive next-version products, therefore nullifying any first-mover advantage.

Question 15

Which of the following is NOT among the intended outcomes of horizontal merger and acquisition strategies?

Accepted Answer

Supressing a rival's breakthroughs in management or technology is not an intended outcome of horizontal merger and acquisition strategies. It is considered unethical and anti-competitive behavior. The other options, such as expanding geographic coverage, gaining quick access to new technologies, and extending business into new product categories, are all potential benefits of horizontal mergers and acquisitions. Leading the convergence of industries is also a possible outcome when merging with a company in a related industry.

Question 16

The range of product and service segments that the firm serves within its market is known as the firm's

Accepted Answer

Horizontal scope refers to the range of product and service segments that the firm serves within its market. Vertical integration refers to the degree to which a firm owns its supply chain. Vertical scope refers to the range of activities that a firm engages in within a specific industry. Product outsourcing and joint venture partnership refer to specific business strategies, rather than the range of product and service segments.

Question 17

In which of the following cases are late-mover advantages (or first-mover disadvantages) NOT likely to arise?

Accepted Answer

Late-mover advantages are not likely to arise when opportunities exist for a blue-ocean strategy, as this involves creating a new market space with little competition, allowing the first-mover to establish a strong position.

Question 18

Because when to make a strategic move can be just as important as what move to make, a company's best option with respect to timing is

Accepted Answer

The best option is to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly. This allows the company to consider its resources, the market conditions, consumer behavior, and potential competition before making a move. Being a first mover can offer advantages such as establishing brand recognition and market share, but it also involves risks such as high costs and uncertainty. On the other hand, being a late mover can allow a company to imitate successful moves and avoid errors but may also mean missing out on opportunities and losing market share. A company must consider all factors and make a strategic move when conditions are favorable.

Question 19

A primary reason for why mergers and acquisitions sometimes fail is due to the

Accepted Answer

Misinterpretation of cultural differences, employee disenchantment, and low morale, differences in management styles and operating procedures, and operational integration decision mistakes can all lead to the failure of mergers and acquisitions. The other options listed do not address the primary reason for failure.

Question 20

What does the scope of the firm refer to?

Accepted Answer

The scope of the firm refers to the range of activities the firm performs internally and the breadth of its product offerings, the extent of its geographic market, and its mix of businesses. This includes decisions around diversification, integration, and international expansion. Option A refers to external activities and social responsibility, which is not necessarily a component of the scope of the firm. Option B refers to location strategy, which is related to the scope of the firm but not a complete definition. Option C refers to one specific strategy but does not encompass the full scope of the firm. Option E refers to preventing foreign competition but does not relate to the scope of the firm.

Quiz 6: Supplementing the Chosen Competitive Strategy: Other Important Business Strategy Choices