Question 1

In developed economies,the electric car industry is in the introduction stage,and the industry for MP3 players is in the shakeout phase.What does this imply?
A) The mode of competition in the electric car industry will be based on price, whereas in the MP3 player industry, the mode of competition will be non-price based.
B) The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation.
C) The electric car industry will move to the maturity stage, whereas the industry for MP3 players will enter the growth stage next.
D) The industry for electric cars will primarily pursue an integration strategy, whereas in the MP3 players industry, the focus will be on differentiation.

Accepted Answer

The industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation. Following the emergence of a standard during the growth stage, the importance of process innovation increases rapidly and the importance of product innovation diminishes quickly.

Question 2

In which of the following stages of the industry life cycle is a standard first established?
A) maturity stage
B) growth stage
C) shakeout stage
D) introduction stage

Accepted Answer

As the size of a market expands and the industry enters the growth stage, a standard signals the market's agreement on a common set of engineering features and design choices. Standards can emerge bottom-up through competition in the marketplace, or be imposed top-down by government or other standard-setting agencies.

Question 3

To be successful and to survive the shakeout stage of the industry life cycle,a firm should
A) charge higher prices than its competitors.
B) focus on product innovation rather than process innovation.
C) gain economies of scale.
D) shift from price to non-price competition.

Accepted Answer

Key success factors during the shakeout stage are the manufacturing and process engineering capabilities that can be used to drive costs down. Generally, the larger firms enjoying economies of scale are the ones that survived the shakeout phase as the industry consolidated and most excess capacity was removed.

Question 4

The strategic objective of businesses during the shakeout phase of the industry life cycle will primarily be to
A) move toward product innovations and away from process innovations.
B) survive by drawing on "deep pockets."
C) achieve market acceptance.
D) reduce the barriers to entry in the industry.

Accepted Answer

During the shakeout stage, firms begin to compete directly against one another for market share, rather than trying to capture a share of an increasing pie. As rivals vie for a shrinking pie and competitive intensity is increasing, the weaker firms are forced out of the industry.

Question 5

Process innovation is more important than product innovation during the growth stage because
A) companies produce very few products during the growth stage, often just prototypes or beta versions.
B) technological and commercial uncertainties about a new product still exist during this stage.
C) it is more crucial to adopt the integration strategy during this stage.
D) a standard, in terms of engineering features and design choices, has been set across the industry.

Accepted Answer

During the growth stage, most of the technological and commercial uncertainties about a new product are gone. After the market accepts a product innovation, and a standard for the new technology has emerged, process innovation rapidly becomes more important than product innovation.

Question 6

Which of the following best illustrates a process innovation as opposed to product innovation?
A) a consumer electronics company developing a new generation of tablet computers
B) an automobile company using computer-aided design in its production
C) a consumer electronics company launching 3-D televisions
D) an automobile company commercializing electric cars

Accepted Answer

Process innovations are new ways to produce existing products or to deliver existing services. Process innovations are made possible through advances such as the Internet, lean manufacturing, Six Sigma, biotechnology, nanotechnology, and so on.

Question 7

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle,tablet computers are in the growth stage.In the context of this scenario,which of the following statements is true?
A) The industry for cell phones with holographic keyboards will face greater competition than the tablet industry.
B) While the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation.
C) While the industry for cell phones with holographic keyboards can reap the benefits of economies of scale, the tablet industry will experience no such benefits.
D) The industry for cell phones with holographic keyboards will face price competition, whereas, in the tablet industry, the mode of competition will be non-price.

Accepted Answer

In the given scenario, while the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation. In the introductory stage, the level of product innovation is at a maximum because new features increasing perceived consumer value are critical to gaining traction in the market. During the growth stage of the industry life cycle, a standard is established in an industry, due to which the basis of competition tends to move away from product innovations toward process innovations.

Question 8

Which of the following is a feature of the growth stage of the industry life cycle?
A) The consumer demand increases.
B) The prices of goods begin to rise.
C) The basis of competition moves away from process innovation.
D) The number of competitors decreases.

Accepted Answer

Market growth accelerates in the growth stage of the industry life cycle. After the initial innovation has gained some market acceptance, demand increases rapidly as first-time buyers rush to enter the market, convinced by the proof-of-concept demonstrated in the introductory stage.

Question 9

The compact disk (CD)industry is in the maturity phase of its industry life cycle.What conditions prevail for an industry in this stage?
A) The type of buyers at this stage will be early adopters.
B) The mode of competition at this stage will be based on non-price factors.
C) The market growth is positive or high at this stage.
D) The industry structure is an oligopoly with only a few large firms.

Accepted Answer

After the shakeout is completed and a few firms remain, the industry enters the maturity stage. During the fourth stage of the industry life cycle, the industry structure morphs into an oligopoly with only a few large firms.

Question 10

Which of the conditions prevail when an industry is at the end of its life cycle?
A) The level of process innovation reaches its maximum as firms attempt to lower cost.
B) The industry structure is perfectly competitive with a large number of buyers and sellers.
C) The strategic objectives of businesses will involve gaining market acceptance.
D) The market reaches its maximum size at this stage.

Accepted Answer

At the end of a life cycle, the level of process innovation reaches its maximum as firms attempt to lower cost as much as possible, while the level of incremental product innovation reaches its minimum.

Question 11

In emerging economies,the LCD television industry is in that phase of the industry life cycle in which the previously increasing market demand becomes limited.The competitive intensity within the industry is high,and inefficient firms have begun to exit the industry.This has allowed only a few major companies to come out as cost-leaders and hold the shrinking market.Which of the following stages of the industry life cycle is the LCD television industry currently in?
A) growth stage
B) introduction stage
C) shakeout stage
D) decline stage

Accepted Answer

The LCD television industry is in the shakeout stage in emerging economies. As the industry moves into the shakeout stage of the industry life cycle, the rate of growth declines. Given the large market size achieved from the growth stage, any additional market demand in the next stage is limited. Demand now consists of replacement or repeat purchases only. This limited market demand in turn increases competitive intensity within the industry.

Question 12

Dollar Shave Club is an ecommerce start-up that delivers razors by mail.By doing this,Dollar Shave Club is using a(n)_____ to disrupt an existing market.
A) innovation ecosystem
B) architectural innovation
C) business model innovation
D) incremental innovation

Accepted Answer

As given in the Strategy Highlight 7.1, it is seen that Dollar Shave Club is using a business model innovation to disrupt an existing market. Dollar Shave Club is an ecommerce start-up that delivers razors by mail. This company identified the need in the market for serving people who don't like to go shopping for razors and certainly don't like to pay the high prices commanded by market leaders such as Gillette.

Question 13

Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?
A) There is more strategic variety in the growth stage when compared to the introduction stage.
B) The number of competitors is more in the introduction stage than the growth stage.
C) The market size for a new product or service is larger in the introduction stage when compared to the growth stage.
D) While achieving market acceptance is the strategic objective during the introduction stage, the objective in the growth stage is to pursue a harvest strategy.

Accepted Answer

Since market demand is robust in the growth stage and more competitors have entered the market, there tends to be more strategic variety: Some competitors will continue to follow a differentiation strategy, emphasizing unique features, product functionality, and reliability. Other firms employ a cost-leadership strategy in order to offer an acceptable level of value but lower prices to consumers.

Question 14

Which of the following is a feature of the shakeout phase of the industry life cycle?
A) There is rapid industry growth during this stage.
B) Market demand in this stage primarily consists of first-time adopters.
C) Competitive intensity within the industry increases.
D) The mode of competition shifts from price to non-price in this stage.

Accepted Answer

Limited market demand in the shakeout phase increases competitive intensity within the industry. Firms begin to compete directly against one another for market share, rather than trying to capture a share of an increasing pie.

Question 15

The key objective for firms during the growth phase is to
A) invest as many resources as possible in product innovations.
B) stake out a strong strategic position not easily imitated by rivals.
C) pursue a harvest strategy.
D) reduce their network effects.

Accepted Answer

The key objective for firms during the growth phase is to stake out a strong strategic position not easily imitated by rivals.

Question 16

A few efficient and strong firms in the laptop industry have remained and emerged successful from the shakeout stage.Which of the following stages of the industry life cycle will they move to next?
A) growth stage
B) introduction stage
C) maturity stage
D) decline stage

Accepted Answer

Generally, the larger firms enjoying economies of scale are the ones that survived the shakeout phase as the industry consolidated and most excess capacity was removed. After the shakeout is completed and a few firms remain, the industry enters the maturity stage.

Question 17

Which of the following is a feature of the maturity stage of the industry life cycle?
A) The competitive intensity within the industry is at its peak.
B) The market reaches its maximum size.
C) The industry structure is more monopolistically competitive.
D) The focus on product innovation is higher than that on process innovation.

Accepted Answer

During the fourth stage of the industry life cycle, the industry structure morphs into an oligopoly with only a few large firms. The market has reached its maximum size, and industry demand is likely to be zero or even negative going forward.

Question 18

In the context of industrial growth,which of the following statements is true of standards?
A) Standards emerge exclusively from bottom-up through competition in the marketplace.
B) As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices.
C) Standards are exclusively imposed top-down by government or other standard-setting agencies such as the Institute of Electrical and Electronics Engineers.
D) After a standard is established in an industry, the basis of competition tends to move away from process innovations toward product innovations.

Accepted Answer

As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices. Standards can emerge bottom-up through competition in the marketplace, or be imposed top-down by government or other standard-setting agencies.

Question 19

Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage?
A) The barriers to entry increase during this stage.
B) The firms in the industry yield the highest profits during this phase.
C) Rivalry among competitors decreases in this stage.
D) The weaker firms are forced out of the industry in this stage.

Accepted Answer

In the shakeout stage, as rivals vie for a shrinking pie and competitive intensity is increasing, the weaker firms are forced out of the industry. This is the reason why this phase of the industry life cycle is called the shakeout stage.

Question 20

While the domestic airline industry is in the maturity stage of the industry life cycle,the pet clothing industry is in its growth stage.Which of the following can be inferred from the given data?
A) Competitive intensity will be higher in the domestic airline industry than the pet clothing industry.
B) The pet clothing industry is ahead of the domestic airline industry in the industry life cycle.
C) While the domestic airline industry is free from excess capacity, the pet clothing industry will have new entrants.
D) The mode of competition will be price-based in the pet clothing industry and will be non-price-based in the domestic airline industry.

Accepted Answer

Generally, the larger firms enjoying economies of scale are the ones that survived the shakeout phase. After the shakeout is completed and a few firms remain, the industry enters the maturity stage. The numbers of competitors are fewer at this stage when compared to the growth stage.

Quiz 7: Business Strategy: Innovation and Entrepreneurship

In developed economies,the electric car industry is in the introduction stage,and the industry for MP3 players is in the shakeout phase.What does this imply?

In which of the following stages of the industry life cycle is a standard first established?

To be successful and to survive the shakeout stage of the industry life cycle,a firm should

The strategic objective of businesses during the shakeout phase of the industry life cycle will primarily be to

Process innovation is more important than product innovation during the growth stage because

Which of the following best illustrates a process innovation as opposed to product innovation?

While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle,tablet computers are in the growth stage.In the context of this scenario,which of the following statements is true?

Which of the following is a feature of the growth stage of the industry life cycle?

The compact disk (CD) industry is in the maturity phase of its industry life cycle.What conditions prevail for an industry in this stage?

Which of the conditions prevail when an industry is at the end of its life cycle?

Dollar Shave Club is an ecommerce start-up that delivers razors by mail.By doing this,Dollar Shave Club is using a(n) _____ to disrupt an existing market.

Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle?

Which of the following is a feature of the shakeout phase of the industry life cycle?

The key objective for firms during the growth phase is to

A few efficient and strong firms in the laptop industry have remained and emerged successful from the shakeout stage.Which of the following stages of the industry life cycle will they move to next?

Which of the following is a feature of the maturity stage of the industry life cycle?

In the context of industrial growth,which of the following statements is true of standards?

Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage?

While the domestic airline industry is in the maturity stage of the industry life cycle,the pet clothing industry is in its growth stage.Which of the following can be inferred from the given data?