Strategic Management Creating Competitive Advantages 5Th Canadian Edition By Gregory – Test Bank

Strategic Management Creating Competitive Advantages 5Th Canadian Edition By Gregory – Test Bank

Chapter 08

Industry Change and Competitive Dynamics

Multiple Choice Questions

1. The automotive industry is considered to be at the _______ stage in the industry life cycle.
   A.maturity
   B. decline
   C. growth
   D. re-birth

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-05 Industry Life Cycle: Strategies in the Maturity Stage

2. During the introductory stage of the life cycle, firms tend to depend on
   A.tight management control systems.
   B. research and development activities
   C. low cost leadership.
   D. production efficiency.

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-01 The importance of considering the industry life cycle and determining the relative forces shaping the competitive landscape.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

3. Low to moderate emphasis on process design tends to occur during the _______ stage in the industry life cycle.
   A.preliminary
   B. decline
   C. introductory
   D. growth

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

4. According to the text, the overall objective of defending the market share and extending the product life cycle tends to be typical of the __________ stage in the industry life cycle.
   A.growth
   B. decline
   C. maturity
   D. mortality

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

5. The most intense level of competition within an industry tends to occur during the _________ stage in the industry life cycle.
   A.introductory
   B. growth
   C. competitive
   D. maturity

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

6. The life cycle idea used to describe industries is analogous to a living organism that experiences birth, growth, maturity, and death. This comparison
   A.provides clear insight into how organizations change over time.
   B. has some limitations and does not always hold true.
   C. is appropriate because firm rarely experience renewal.
   D. perfectly explains the cereal industry.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

7. In general, the industry life cycle model implies an evolutionary change and
   A.rapid transition from stage to stage.
   B. applies primarily to larger, older companies.
   C. is concerned primarily with new entrants.
   D. gradual progression from one stage to the next.

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

8. By far the most potent forces for industry change are
   A.technology and venture capital.
   B. the bargaining power of buyers.
   C. competitive rivalry.
   D. technology and innovation.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

9. All of the following are examples of disruptive technology, except:
   A.The personal computer
   B. Smart phones.
   C. Fuel-injected engines.
   D. Just in time inventory systems.

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

10. All of the following represent evolutionary trajectories of industry change, except:
    A.creative change.
    B. regressive change.
    C. radical change.
    D. progressive change.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

11. ________ change occurs when core assets are not threatened but core activities are.
    A.Creative change
    B. Intermediating change
    C. Radical change
    D. Progressive change

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

12. ________ change occurs when core activities and core assets both face the threat of obsolescence
    A.Creative change
    B. Intermediating change
    C. Radical change
    D. Progressive change

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

13. The overnight delivery system is experiencing which type of change as a result of technological advances?
    A.Creative change
    B. Intermediating change
    C. Radical change
    D. Progressive change

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

14. The automobile industry is one facing _______ change as customers get all the information they need online.
    A.Creative change
    B. Intermediating change
    C. Radical change
    D. Progressive change

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

15. Disruptive innovations
    A.allow a company to charge high prices for innovative products
    B. allow consumers at the bottom of the market access to a product historically they did not have access to
    C. allow for demanding consumers at the top of the market to access a product
    D. are often simpler but more expensive for the consumer

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-03 How disruptive innovation can completely revolutionize and industry and permanently upset the competitive order.
Topic: 08-02 Disruptive Innovation and the Innovator’s Dilemma

16. Success in the introduction stage requires an emphasis on research and development and marketing activities to enhance awareness of the product or service. The challenge involves
    A.conflict with existing products.
    B. dealing with high sales volumes.
    C. keeping production costs low.
    D. developing the product and getting people to try it.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-03 Industry Life Cycle: Strategies in the Introduction Stage

17. Building a recognizable brand, gaining customer loyalty, and setting the standards for the industry are all potential benefits of being
    A.the first mover in the market.
    B. a follower in the market.
    C. a late mover able to overcome barriers to entry.
    D. a late mover in a market.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-03 Industry Life Cycle: Strategies in the Introduction Stage

18. During the growth stage, revenues increase at an accelerating rate because new consumers are trying the product and
    A.product differentiation is more difficult
    B. products become regarded as rare or unique.
    C. there are infrequent purchases.
    D. a growing number of satisfied customers are making repeat purchases.

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-04 Industry Life Cycle: Strategies in the Growth Stage

19. In the maturity stage, aggregate industry demand begins to slow and the markets are becoming
    A.less competitive.
    B. less equally balanced.
    C. saturated.
    D. attractive to new adopters.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-05 Industry Life Cycle: Strategies in the Maturity Stage

20. Although all decisions in all phases of an industry life cycle are important, they become particularly critical in the _____ stage. stage.
    A.decline
    B. introduction
    C. growth
    D. maturity

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-06 Industry Life Cycle: Strategies in the Decline Stage

21. Four basic strategies that are available in the decline stage are maintaining, harvesting, exiting, or
    A.eliminating competitors.
    B. consolidating.
    C. minimizing office expenses.
    D. reducing business travel.

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-06 Industry Life Cycle: Strategies in the Decline Stage

22. Which of the following is not a characteristic of a turnaround strategy?
    A.it can occur at any stage in the life cycle.
    B. it is most likely to occur during the maturity or decline stage.
    C. it can be used to reverse decline.
    D. it is not possible at the introduction stage.

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-05 How turnaround strategies can reinvigorate a firm.
Topic: 08-07 Turnaround Strategies

23. Most successful turnarounds begin with
    A.external analysis.
    B. internal analysis.
    C. both internal and external analysis.
    D. a change in leadership.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-05 How turnaround strategies can reinvigorate a firm.
Topic: 08-07 Turnaround Strategies

24. The turnaround strategy used by Stephen M. Bennett at Intuit could be described as
    A.streamlining operations.
    B. selective product and market pruning.
    C. piecemeal productivity improvements.
    D. asset and cost surgery.

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-05 How turnaround strategies can reinvigorate a firm.
Topic: 08-07 Turnaround Strategies

25. Which of the following is not a tactic that falls within the piecemeal productivity improvements turnaround strategy?
    A.speeding up collection of receivables.
    B. improving business processes by re-engineering them.
    C. reducing R&D and marketing expenses.
    D. increasing capacity utilization.

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-05 How turnaround strategies can reinvigorate a firm.
Topic: 08-07 Turnaround Strategies

26. Which of the following decline stage strategies refers to keeping a product going without significantly reducing marketing support, technology development, or other investments, in the hope that competitors will exit the market?
    A.Consolidation
    B. Exiting
    C. Harvesting
    D. Maintaining

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-06 Industry Life Cycle: Strategies in the Decline Stage

27. Which of the following decline stage strategies is used when a firm takes as much profit as possible from the business and makes absolutely minimal investments?
    A.Consolidation
    B. Exiting
    C. Harvesting
    D. Maintaining

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-06 Industry Life Cycle: Strategies in the Decline Stage

28. Which of the following decline stage strategies involves dropping the product from a firm’s portfolio
    A.Consolidation
    B. Exiting
    C. Harvesting
    D. Maintaining

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-04 How different strategic responses may be more effective over the phases of the industry life cycle.
Topic: 08-06 Industry Life Cycle: Strategies in the Decline Stage

29. All of the following describe tactics employ within the ‘asset and cost surgery turnaround strategy,’ except:
    A.deferring investment in new plants and equipment.
    B. outsourcing the production of various inputs.
    C. cutting administrative expenses.
    D. benchmarking specific activities against industry leaders.

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-05 How turnaround strategies can reinvigorate a firm.
Topic: 08-07 Turnaround Strategies

30. Competitive dynamics may be understood as
    A.intense rivalry among similar competitors.
    B. strong buyer power.
    C. a strong threat of substitutes.
    D. strong supplier power.

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-06 How competitive actions; such as the entry of new competitors into a marketplace; may launch a cycle of actions and reactions among close competitors.
Topic: 08-08 Competitive Dynamics

31. One of the most common reasons that a cycle of competitive actions and reactions get started is
    A.electronic data interchange.
    B. globalization.
    C. economic recession.
    D. the emergence of new entrants.

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-06 How competitive actions; such as the entry of new competitors into a marketplace; may launch a cycle of actions and reactions among close competitors.
Topic: 08-08 Competitive Dynamics

32. The underlying reasons that explains why companies launch new competitive initiatives is desire to
    A.obtain first mover advantages.
    B. expand production capacity.
    C. improve market position.
    D. strengthen financial outcomes.

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-07 The components of dynamics analysis—new competitive action; threat analysis; motivation and capability to respond; types of competitive actions; and likelihood of competitive reaction.
Topic: 08-09 New Competitive Action

33. Two factors that may be used to assess whether or not other companies are close competitors are
    A.Internet-based knowledge management systems and organizational learning.
    B. Market commonality and resource similarity.
    C. Online access to real-time sales and service information.
    D. Espionage and corporate spying.

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-07 The components of dynamics analysis—new competitive action; threat analysis; motivation and capability to respond; types of competitive actions; and likelihood of competitive reaction.
Topic: 08-10 Threat Analysis

34. Which of the following phrases best completes the following sentence? How strong a response an attacked rival can mount will be determined by
    A.the instructions from the Board of Directors.
    B. the personality of the CEO.
    C. its ability to access markets less expensively.
    D. that rival’s strategic resource endowments.

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-07 The components of dynamics analysis—new competitive action; threat analysis; motivation and capability to respond; types of competitive actions; and likelihood of competitive reaction.
Topic: 08-10 Threat Analysis

35. Once attacked, competitors are faced with deciding
    A.how to find a good lawyer.
    B. whether the attack is personal or “just business.”
    C. how they will respond, their reasons to respond and their capability to respond.
    D. how important the line of business that has been attacked in is to their overall strategy.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-07 The components of dynamics analysis—new competitive action; threat analysis; motivation and capability to respond; types of competitive actions; and likelihood of competitive reaction.
Topic: 08-11 Motivation and Capability to Respond

36. Two broadly defined types of competitive action include
    A.posturing and competitive moves.
    B. strategic actions and tactical actions.
    C. cost leadership and differentiation.
    D. retaliation and counterattack.

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-07 The components of dynamics analysis—new competitive action; threat analysis; motivation and capability to respond; types of competitive actions; and likelihood of competitive reaction.
Topic: 08-12 Types of Competitive Actions

37. The strategy in which the best reaction is no reaction is called:
    A.Front-ending
    B. Resistance
    C. Forbearance
    D. Remedial retaliation

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-07 The components of dynamics analysis—new competitive action; threat analysis; motivation and capability to respond; types of competitive actions; and likelihood of competitive reaction.
Topic: 08-14 Choosing Not to React: Forbearance and Co-opetition

True / False Questions

38. During the introductory stage of an industry’s life cycle research and development is a key activity.
    TRUE

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-01 The importance of considering the industry life cycle and determining the relative forces shaping the competitive landscape.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

39. The four stages of the industry life cycle include introduction, growth, maturity and revitalization.
    FALSE

Difficulty: Easy
Accessibility: Keyboard Navigation
Learning Objective: 08-01 The importance of considering the industry life cycle and determining the relative forces shaping the competitive landscape.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

40. Typically, the generic strategy of cost-leadership is adopted during the introduction stage.
    FALSE

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-01 The importance of considering the industry life cycle and determining the relative forces shaping the competitive landscape.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

41. During the introduction stage of the industry life cycle the major functional area or concern is research and development.
    TRUE

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-01 The importance of considering the industry life cycle and determining the relative forces shaping the competitive landscape.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

42. In general, the industry lifecycle implies an evolutionary change and gradual progression from one stage to the next.
    TRUE

Difficulty: Hard
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

43. The least potent forces for industry change are technology and innovation.
    FALSE

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

44. Disruptive technologies can be both product based and process based.
    TRUE

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications

45. Radical change is most likely to occur under non-threatening conditions.
    FALSE

Difficulty: Medium
Accessibility: Keyboard Navigation
Learning Objective: 08-02 How industries evolve and how different drivers influence the paths to industry change.
Topic: 08-01 Industry Life Cycle Stages: Strategic Implications