Question 1

Research on strategy in hypercompetitive environments is typically anchored in all of the following except the ________.
A) systems theory
B) chaos theory
C) adaptation theory
D) complexity theory

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Question 2

Define the concepts of reacting to and anticipating change.

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Question 3

The process of maximizing the upside or limiting the downside of an investment opportunity by uncovering and quantifying the options and discussion points embedded within it is referred to as ________.
A) value curve analysis
B) new-market analysis
C) chaotic analysis
D) real-options analysis

Accepted Answer

Real-options analysis is the process of identifying and quantifying the options and discussion points embedded within an investment opportunity, which enables maximizing the upside or limiting the downside of the investment. It is a strategic tool used for decision making in situations of uncertainty and can help companies to make more informed investment decisions.

Question 4

What are the four underlying phases of competitive interaction?

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Question 5

What are the five types of revolutionary strategies that can introduce dynamic change into an industry?

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Question 6

The advantage of a real option investment is that a firm can ________ when the competitive environment shifts.
A) be the industry leader
B) preserve flexibility to be well positioned
C) be stronger financially
D) be positioned to neutralize threats from smaller firms

Accepted Answer

Real option investments provide firms with the flexibility to adapt to changing competitive environments. By preserving this flexibility, firms can position themselves better to take advantage of new opportunities or mitigate potential threats. Real options can also help firms avoid costly sunk decisions that could hinder their ability to respond to changing circumstances. A, C, and D are not accurate advantages of real option investments.

Question 7

With ________ options, serving markets on two continents by building two plants instead of one gives a firm the option of switching production from one plant to the other as conditions dictate.
A) waiting-to-invest
B) growth
C) flexibility
D) learning

Accepted Answer

Flexibility options refer to a firm's ability to adjust its production options as market conditions change. Building two plants instead of one gives a firm the flexibility option to switch production from one plant to the other as needed. This can help a firm to better manage risk and respond to changing market conditions.

Question 8

Name the three dimensions that cause dynamic contexts.

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Question 9

What can firms do to avoid or withstand a technological discontinuity?

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Question 10

In the context of a firm's industry evolution, arenas must fit with all but which of the following?
A) resources
B) capabilities
C) customer base
D) dynamic capabilities

Accepted Answer

Arenas in the context of a firm's industry evolution refer to the areas in which a firm competes, such as product or service markets, geographic regions, and segments. These arenas should align with the firm's resources (what it owns), capabilities (what it can do well), and dynamic capabilities (how it can adapt to changes in the environment). The customer base, while important, is not something arenas need to fit with; instead, arenas are chosen based on how well they align with the firm's internal strengths and adaptability, and then the firm targets its customer base within those arenas.

Question 11

The strategist always makes important and reasoned choices about the firm's mix of all except ________.
A) customers/noncustomers
B) products
C) services
D) competitors

Accepted Answer

The strategist always makes important and reasoned choices about the firm's mix of customers/noncustomers, products, and services. However, the strategist does not make choices about competitors as they are external factors that the firm has little control over.

Question 12

When a firm uses the ________ strategy, it identifies and acquires new entrants or establishes an alliance with them.
A) containment
B) shaping
C) annulment
D) absorption

Accepted Answer

The absorption strategy involves identifying and acquiring new entrants or establishing an alliance with them, which aligns with the given description. The other options (containment, shaping, and annulment) do not involve this approach.

Question 13

With ________ options, an entry investment may create opportunities to pursue valuable follow-up projects.
A) waiting-to-invest
B) growth
C) flexibility
D) learning

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Question 14

All of the following may cause a turbulent environment except ________.
A) short product life cycles
B) long product design cycles
C) new technologies
D) incumbent repositioning

Accepted Answer

Long product design cycles typically lead to a stable environment with little volatility or uncertainty. Short product life cycles, new technologies, and incumbent repositioning are all factors that can contribute to a turbulent environment.

Question 15

What are the four ways that competitive action may be initiated in phase 1?

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Question 16

The annulment strategy is less about quashing the competition than about making it ________.
A) irrelevant
B) marginalized
C) complementory
D) a partner

Accepted Answer

The word "annulment" means invalidation or cancellation. Therefore, the annulment strategy aims to invalidate or cancel the competition, ultimately making it irrelevant.

Question 17

The opportunity to take action that will either maximize the upside of limit the downside of a capital investment is referred to as ________.
A) net present value
B) a real option
C) a learning option
D) a value option

Accepted Answer

This is the definition of a real option, which refers to the flexibility to take certain actions (such as expanding or abandoning a project) in the future based on market conditions or other factors. Net present value is a calculation that measures the value of future cash flows in today's dollars, while learning option and value option are not commonly used terms in finance.

Question 18

Instead of retaliation, incumbent firms may strategically decide that ________ is the best course of action.
A) ignoring new competition
B) waiting for uncertainty to clear
C) cutting off growth possibilities
D) cooperation

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Question 19

All of the following are categories of real options except ________.
A) new-market options
B) growth options
C) flexibility options
D) exit options

Accepted Answer

New-market options are not a standard category of real options. Real options typically include growth options, flexibility options, and exit options, which allow businesses to adapt their strategies based on changing market conditions.

Question 20

Real-option investments are attractive to managers in industries that are characterized by ________ and ________.
A) low capital investments; low degrees of uncertainty
B) large capital investments; high degrees of uncertainty
C) small market share; lots of research and development data
D) large market share; little research and development data

Accepted Answer

Real-option investments involve significant capital investments and are attractive to managers in industries that are characterized by high degrees of uncertainty, such as technology or pharmaceutical industries. Option investments are valued based on the potential for future growth and flexibility, which these industries are often poised to offer. Therefore, option investments require significant capital investment, and the potential for future growth is high.

Quiz 6: Crafting Business Strategy of Dynamic Contexts

Research on strategy in hypercompetitive environments is typically anchored in all of the following except the ________.

Define the concepts of reacting to and anticipating change.

The process of maximizing the upside or limiting the downside of an investment opportunity by uncovering and quantifying the options and discussion points embedded within it is referred to as ________.

What are the four underlying phases of competitive interaction?

What are the five types of revolutionary strategies that can introduce dynamic change into an industry?

The advantage of a real option investment is that a firm can ________ when the competitive environment shifts.

With ________ options, serving markets on two continents by building two plants instead of one gives a firm the option of switching production from one plant to the other as conditions dictate.

Name the three dimensions that cause dynamic contexts.

What can firms do to avoid or withstand a technological discontinuity?

In the context of a firm's industry evolution, arenas must fit with all but which of the following?

The strategist always makes important and reasoned choices about the firm's mix of all except ________.

When a firm uses the ________ strategy, it identifies and acquires new entrants or establishes an alliance with them.

With ________ options, an entry investment may create opportunities to pursue valuable follow-up projects.

All of the following may cause a turbulent environment except ________.

What are the four ways that competitive action may be initiated in phase 1?

The annulment strategy is less about quashing the competition than about making it ________.

The opportunity to take action that will either maximize the upside of limit the downside of a capital investment is referred to as ________.

Instead of retaliation, incumbent firms may strategically decide that ________ is the best course of action.

All of the following are categories of real options except ________.

Real-option investments are attractive to managers in industries that are characterized by and .