BUSI 400 Homework 4 Entrepreneurial Opportunities Assignment solutions complete answers

BUSI 400 Homework 4 Entrepreneurial Opportunities Assignment solutions complete answers 

 

As a result of political interference, Airbus operations are spread across Europe, culminating in a complex web of 14 factories in a half-dozen European countries. It chose to locate its operations in countries that would maximize economic efficiency.

 

By building aircrafts in China, Airbus is risking that knowledge transfer will occur and that its secrets could be transferred to its competitors.

 

An important reason why the Canadian enforcement of intellectual property rights is considered insufficient by the United States is the lack of a central law-enforcement unit responsible for counterfeit issues.

 

The trend towards worldwide markets makes it easier to predict where competitors will spring up.

 

Because many countries are investing in countries other than their own, each country is becoming more autonomous and independent.

 

Increasing international exchange in goods and services can run into the difficulty of how to address the needs of customers at differing income levels.

 

The Michael Porter Diamond of National Advantage is a framework that explains why countries foster successful multinational corporations based on factor endowments and demand conditions only.

 

The factor endowments of a country are inherited and cannot be created.

 

With regard to factor conditions, the pool of resources that a firm (or nation) has is much more important than the speed and efficiency with which these resources are deployed.

 

Many international firms are increasing their efforts to market their products and services to countries such as India and China as the ranks of their middle class continue to increase.

 

Arbitrage opportunities are simple trading opportunities and, therefore, account for little of the success Walmart experiences.

 

Reverse innovation occurs when a company develops a product that meets the needs of a developed country and then adapts it to the needs of the developing country.

 

Two opposing pressures that managers face when they compete in foreign markets are cost reduction and adaptation to foreign markets.

 

Theodore Levitt, a marketing strategist, argued that people around the world are willing to sacrifice preferences in product features, functions, and design for lower prices and lower quality.

 

In addition to responding to pressures to lower costs, managers must strive to be responsive to global pressures to tailor their products to the demand of the local market in which they do business.

 

Industries in which proportionally more value is added in upstream activities are more likely to benefit from a global strategy than those in which more value is added downstream (closer to the customer).

 

A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle-of-the-road product that appeals to the largest number of consumers in every market.

 

The need to attain economies of scale encourages multinational firms to operate under a multidomestic strategy.

 

According to studies by Rugman and Verbeke, most of the 500 largest companies in the world are global.

 

Trading blocs and free trade zones erode the rise of international expansion.

 

A U.S. firm expands into China and Canada at exactly the same sales volume. The physical distance is the only factor that affects the true distance between the countries.

 

A franchise generally expires after a few years, whereas a license is designed to last into perpetuity.

 

Typically, joint ventures involve less control and risk than franchising.

 

Consolidating the European aerospace industry was a strategic decision to compete against Boeing because Boeing had a ________ advantage.

 

Which of the following is not a benefit of political influence for Airbus?

A) preferred access to bank loans

B) preferred access to technology transfers from state-run universities

C) preferred access to confidential and secret competitor data

D) preferred access to technology transfers from other European corporations

 

China is pressuring Airbus to increase its productions facilities in China by using which technique?

A) decreasing political risk through a multidomestic strategy

B) reducing potential loss from counterfeiting

C) using political favors in exchange for influence

D) increasing bottom line returns through outsourcing

 

Building production capacity in locations outside of Europe can threaten ________, an issue typically raised when investing in China.

A) European economic risk

B) intellectual property rights protection

C) European investment potential

D) balance of trade

 

Counterfeiting is a problem in Canada, even though it is considered to be a developed economy. The US accuses it of not properly ________ and ________ pirated goods.

A) packaging; disposing of

B) inspecting; detaining

C) disposing of; copying

D) identifying; copying

 

Coca-Cola launched more local flavors in its international markets. This is an example of a/an ________ strategy.

A) integrated

B) multidomestic

C) global

D) consumer

 

Indian Coke, a subsidiary of Coca-Cola, offers a drink called Maaza Chunky. Production required modification of the production technique and the introduction of newly designed cans. These represent aspects of a ________ strategy.

A) production

B) global

C) multidomestic

D) consumer

 

One of the reasons Ford found it difficult to increase sales in China is that

A) its cars are too expensive.

B) its cars did not meet customer expectations.

C) it kept all of the manufacturing in China.

D) it kept all engineering and design in China.

 

Narayana Health (an Indian hospital group) is able to offer various types of heart surgeries at a fraction of U.S. prices. How is it that Indian hospitals are able to provide health care at such low prices while maintaining high quality?

A) Their most sophisticated equipment and specialized doctors are located in each hospital.

B) Smaller hospitals in the system act as spoke facilities to urban hubs and reach the underserved in rural areas.

C) Smaller hospitals focus on major medical interventions.

D) Advanced technologies are only available in the smaller spoke facilities.

 

Community hospitals in Mississippi can video conference with the specialists at the University of Mississippi Medical Center thus lowering health care delivery costs and increasing the quality of medical care. This system mirrors that of the Indian health care delivery system for reaching rural areas. This is an example of

A) vertical innovation.

B) forward innovation.

C) reverse innovation.

D) arbitrage.

 

Multinational firms are constantly faced with the decision of choosing between ________ adaptation and ________ integration.

A) local; local

B) local; global

C) global; local

D) global; global

 

The rise of ________ capitalism around the world creates tremendous business opportunities for multinational corporations.

A) social

B) multinational

C) market

D) democratic

 

Globalization opens the doors for companies to attract new customers. One of the challenges is to determine how to meet the needs of these customers who have ________ income levels.

A) different

B) low

C) high

D) steady

 

When the GE wind energy business tapped into worldwide talent, it was able to expand using a(n) ________ strategy.

A) focus

B) diversification

C) unrelated

D) generic

 

Statistics indicate that over half of the world’s output now comes from emerging markets. This is leading to a(n) ________ of living standards across the globe and is changing the face of business.

A) divergence

B) convergence

C) expansion

D) contraction

 

According to the textbook, globalization involves international exchange. Included in this exchange is trade in goods and services as well as the exchange of ________, ________, and ________ across countries.

A) habits; values; ideas

B) traditions; legal systems; history

C) money; ideas; information

D) statistics; personnel; purchasing power

 

In Fortune's annual list of the 500 biggest companies in the world, 156 firms were from emerging markets in 2015 compared to 18 in 1995, owing to

A) the lower living standards throughout the world.

B) traditional purchasing habits.

C) a rapid rise in global capitalism.

D) a divergence in world living standards.

 

In the Porter diamond-of-national-advantage framework, which of the following factors does not affect competitiveness of a nation?

A) the position of the nation in factors of production necessary to compete in a given industry

B) the presence or absence in the nation of internationally competitive supplier industries

C) the conditions in the nation governing the nature of foreign rivalry

D) the nature of home-market demand of the products or services of the industry

 

Rivalry is intense in nations with conditions of ________ consumer demand, ________ supplier bases, and ________ new entrant potential from related industries.

A) weak; weak; high

B) strong; strong; low

C) weak; weak; low

D) strong; strong; high

 

According to Michael Porter, firms that have experienced intense domestic competition are

A) unlikely to have the time or resources to compete abroad.

B) more likely to demand protection from their governments.

C) most likely to design strategies aimed primarily at the domestic market.

D) more likely to design strategies that will allow them to successfully compete abroad.

 

Which of the factors below has not made the software services industry in India extremely competitive on a global scale?

A) large pool of skilled workers

B) large, growing market and sophisticated customers

C) tax and antitrust legislation that protects the dominant players in the industry

D) large network of public and private educational institutions

 

In reviewing the Indian software industry and the diamond of national advantage, which of the following is a relatively weak set of factors in the national competitive advantage in this industry?

A) U.S. demand conditions

B) factor endowments

C) domestic rivalry

D) domestic demand conditions

 

Countries with demanding consumers, like environmentally concerned Denmark, drive ________ to meet the demand.

A) worldwide innovation

B) in-country innovation

C) foreign manufacturing

D) global exchange

 

Related industries create the probability that new companies will enter the market. This ________ competition and forces existing firms to improve ________.

A) decreases; innovation

B) decreases; efficiency

C) increases; efficiency

D) decreases; sales

 

Which of these points on Porter’s diamond of national advantage is the strongest indicator of global competitive success?

A) foreign rivalry

B) domestic rivalry

C) global rivalry

D) international rivalry

 

Which of the following is not a motivation for a company to pursue international expansion?

A) It wishes to increase the size of the potential markets for its products and services.

B) It wishes to take advantage of arbitrage opportunities to increase profit.

C) It wishes to optimize value-chain activities to enhance performance, reduce costs, and reduce risk.

D) It wishes to increase foreign market penetration by developing products for the home market.

 

According to Euromoney magazine's 2018 semiannual "Country Risk Rating," which evaluates political, economic, and other risks that entrants to international markets potentially face, which of the following countries has the highest overall country rating for risk?

A) Norway

B) Hong Kong

C) Bahrain

D) Argentina

 

According to Euromoney magazine's 2018 semiannual "Country Risk Rating" (an evaluation of political, economic, and other risks that entrants to international markets potentially face), which one of the following countries has the highest country economic risk?

A) South Africa

B) Singapore

C) Libya

D) Colombia

 

According to s’s 2018 semiannual “Country Risk Rating” (shown in Exhibit 7.2), which of these countries would have the lowest political risks for a new entrant?

A) Argentina

B) Hong Kong

C) Norway

D) China

 

According to Euromoney's 2018 semiannual "Country Risk Rating," which evaluates political, economic, and other risks that entrants to international markets potentially face, which of the following countries have the next to the highest country financial system risk?

A) South Africa and Canada

B) Singapore and China

C) Argentina and South Korea

D) Kazakhstan and Russia

 

Which of the following is not a source of political risk in many countries?

A) the presence of social unrest

B) the presence of the rule of law

C) the presence of military turmoil

D) the presence of violent conflict

 

Which of the following is a source of economic risk in many countries?

A) good intellectual property law

B) counterfeiting

C) good enforcement of property rights

D) political unrest

 

When the U.S. dollar appreciates against other currencies, U.S. goods can be ________ to consumers in foreign countries but can have ________ implications for American companies with branch operations overseas.

A) less expensive, positive

B) more expensive, negative

C) less expensive, negative

D) more expensive, positive

 

If the U.S. dollar appreciates relative to foreign currency, what is likely to be the result for the U.S. company that has branches abroad?

A) Profits will increase, when measured in U.S. dollars.

B) Profits will decrease, when measured in U.S. dollars.

C) Foreign exports to the United States will decrease.

D) Foreign demand for U.S. goods and services will decrease.

 

Greeks reacted negatively to Coca-Cola advertising using Coke bottles as pillars for the Parthenon. This is a form of ________ risk.

A) currency

B) management

C) economic

D) environmental

 

If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision?

A) performance enhancement

B) cost reduction

C) political risk reduction

D) life-cycle enhancement

 

The sale of Boeing commercial aircrafts and Microsoft operating systems in many countries enables these companies to benefit from

A) higher prices in their domestic markets.

B) reducing their exposure to currency risks.

C) economies of scale.

D) optimizing the location for many activities in their value chain.

 

________ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house.

A) Offshoring

B) A global strategy

C) Outsourcing

D) A transnational strategy

 

In considering the decision to offshore, which of the following generally is not one of the hidden costs?

A) total wage costs and indirect costs

B) wage deflation

C) reduction in intellectual property rights

D) increased inventory and coordination costs

 

Wages in developing markets can be volatile and spike dramatically. The United States can be ________ on a wage basis if its average wages decline.

A) less competitive

B) more competitive

C) more risky

D) more volatile

 

L'Oreal acquired two U.S. firms that developed and sold hair care products to African-American customers. This permitted it to build a new ethnic hair care division in Europe and Africa. This represents an advantage of international expansion using

A) arbitrage.

B) optimization of the location of value-chain activities.

C) performance enhancement.

D) learning opportunities.

 

Exemplifying the phenomenon of ________, companies like GE have committed significant resources to developing products that meet the needs of developing nations, products that deliver adequate functionality at a fraction of the cost. Interestingly, these products have subsequently found considerable success in value segments in wealthy countries as well.

A) total wage costs and indirect costs

B) risk reduction

C) reverse innovation

D) the optimization of value-chain activity locations

 

For years O.R.T. Technologies resisted moving any operations outside Israel. However, when faced with a sharp rise in the value of the shekel, the maker of specialized software for managing gas stations froze all local hiring and decided to transfer some developmental work to Eastern Europe. This is an example of ________ risk.

A) political

B) economic

C) currency

D) management

 

A report issued by the World Trade Organization described the production of a particular U.S. car. The study showed that 30 percent of the car value goes to Korea for assembly, 17.5 percent to Japan for components and advanced technology, 7.5 percent to Germany for design, 4 percent to Taiwan and Singapore for minor parts, 2.5 percent to U.K. for advertising and marketing services, and 1.5 percent to Ireland and Barbados for data processing. This is an example of

A) outsourcing and offshoring.

B) outsourcing and on-shoring.

C) insourcing and offshoring.

D) insourcing and outsourcing.

 

Renault paid 1 billion USD to acquire a 25 percent ownership stake in the Russian automaker AvtoVAZ in 2008. Just one year later, Russian Prime Minister Vladimir Putin threatened to dilute the Renault ownership stake unless it contributed more money to prop up AvtoVAZ, which was then experiencing a significant slide in sales. This is an example of ________ risk.

A) currency

B) economic

C) political

D) management

 

According to Euromoney's 2018 semiannual "Country Risk Rating," which one of the following countries has the highest economic risk?

A) South Korea

B) China

C) Colombia

D) Libya

 

Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy?

A) Consumers are willing to pay more for specific product features.

B) Customer needs and interests are becoming more dissimilar.

C) MNCs can successfully compete globally by aggressively pricing products at the sacrifice of product features.

D) If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved.

 

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a(n) ________ strategy or ________ strategy in order to compete in the global marketplace.

A) global; transnational

B) global; multidomestic

C) international; multidomestic

D) international; transnational

 

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to adapt locally, companies should choose a(n) ________ strategy or ________ strategy in order to compete in the global marketplace.

A) global; transnational

B) global; multidomestic

C) international; global

D) transnational; multidomestic

 

To be responsive to local pressures, companies must ________ their offerings and strategies from country to country to reflect local consumer preferences.

A) internationalize

B) globalize

C) differentiate

D) standardize

 

When differentiating products and services to local markets, strategies and tactics are likely to ________ company costs.

A) decrease

B) increase

C) obliterate

D) decentralize

 

In the quest to achieve competitive advantage in global markets, competitive pressures require that firms do what they can to ________ unit costs so that consumers will not perceive their product and service offerings as too expensive.

A) raise

B) decentralize

C) define

D) lower

 

Which would be the appropriate strategy for companies to use to compete in the global marketplace if both the pressures to lower costs and adapt locally are low?

A) international strategy

B) global strategy

C) multidomestic strategy

D) transnational strategy

 

High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy?

A) global strategy

B) multidomestic strategy

C) transnational strategy

D) overall cost leadership strategy

 

In considering the transnational strategy, Nestle evaluates the limits of decentralization. The closer they are to the consumer in activities such as branding and pricing, the more they tend to decentralize. The more they deal with production and logistics, the more they centralize decision making. The production and logistics decisions involve ________ activities.

A) upstream

B) in its infrastructure

C) downstream

D) midstream

 

Industries in which proportionally more value is added in ________ activities are more likely to benefit from a global strategy.

A) downstream

B) upstream

C) marketing

D) sales

 

Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy?

A) firms that compete in industries in which consumer preferences vary substantially in each country

B) firms in industries that are expanding very rapidly

C) firms in industries that have value added by sales and marketing departments

D) firms in industries that have much value added in research and design or manufacturing

 

Trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following except

A) customer needs, interests, and tastes becoming increasingly homogenized.

B) consumers around the world increasingly willing to trade preferences in product

features for lower price.

C) manufacturing trends allowing a decline in the minimum volume required to reach

acceptable levels of production efficiency.

D) fluctuating exchange rates.

 

Firms following a global strategy strive to offer ________ products and services as well as locate manufacturing, research and development, and marketing activities in a limited number of locations.

A) widely differentiated

B) more expensive local

C) internationally differentiated

D) standardized

 

As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by

A) increased freedom of individual business units to adapt to local tastes.

B) the creation of a worldwide network to achieve consistent service regardless of location.

C) flexibility in applying research and development to meet country-specific needs.

D) tailoring products to meet country-specific needs.

 

Which of the following is not a risk associated with a global strategy?

A) A firm with only one manufacturing location must export its product, sometimes at great distance from the operation.

B) The geographic concentration of any activity may also tend to isolate that activity from the targeted markets.

C) Concentrating an activity in a single location makes the rest of the firm dependent on that location.

D) The pressures for local adaptation may elevate the cost structure of the firm.

 

Which one of the following is not a limitation of a global strategy?

A) limited ability to adapt to local markets

B) the ability to locate activities in optimal locations

C) the concentration of activities may increase dependence on a single facility

D) single locations may lead to higher tariffs and transportation costs

 

Green tea Oreos in China, chocolate and peanut butter Oreos in Indonesia, and banana dulce de leche Oreos in Argentina are examples of Kraft using ________ strategy.

A) an international

B) a multidomestic

C) a single country

D) a transnational

 

To meet market needs companies sometimes change product names so that the name in the local language is culturally meaningful. This is an example of a company using ________ strategy.

A) an international

B) a multidomestic

C) a single country

D) a transnational

 

Panasonic entered the market in China and found that it needed to balance global integration with local adaptation. It set up a Lifestyle Research Center in China to interpret data on customer wants and needs. This is an example of a company using ________ strategy.

A) an international

B) a multidomestic

C) a single country

D) a transnational

 

Which one of the following is not a strength of transnational strategies?

A) ability to attain economies of scale

B) ability to adapt to local markets

C) ability to locate activities in optimal locations

D) ability to decrease knowledge flows and learning

 

Limitations of transnational strategies include all the following except

A) unique challenges in determining optimal locations of activities to ensure cost.

B) unique managerial challenges in fostering knowledge transfer.

C) unique ability to adapt to local markets.

D) unique challenges in determining optimal locations of activities to ensure quality.

 

Which of the following is a reason for the rise in regional expansion?

A) increase in the number of trading blocs and free trade zones

B) decrease in the number of trading blocs and free trade zones

C) increasing national trade restrictions

D) increasing local taxes and tariffs

 

Which one of the following explains why so few firms are global?

A) Culture, language, and religion are similar between countries.

B) Legal and political systems are similar between countries.

C) Governments are increasing trade restrictions in general.

D) Geographic distance is multiplied by distance in culture, language, religion, and legal and political systems.

 

Which one of the following is not a Western hemisphere trade bloc?

A) NAFTA (now known as USMCA)

B) MERCOSUR

C) ASEAN

D) Latin American Integration Association

 

Canada and Mexico are the same distance from the United States, but trade is higher between the United States and Canada than with Mexico because

A) true distance is smaller between the United States and Canada.

B) all three countries share the same legal system.

C) there are few immigration problems with Mexico.

D) Americans prefer Canadian food to Mexican food.

 

Regionalization is most important because it permits companies to organize their activities based upon

A) physical distance between the home country and the foreign country.

B) the extrinsic distance between the home country and the foreign country.

C) the true distance between the home country office and the foreign country.

D) shareholder expectations.

 

Similarity of culture, laws, rules, and norms encourages

A) regionalization.

B) globalization.

C) transnationalization.

D) ethnocentric expansion.

 

According to the textbook, ________ economic integration has progressed at a faster pace than ________ economic integration.

A) global; international

B) international; regional

C) regional; global

D) regional; inter-regional

 

Regions represent the outcomes of centuries of political and cultural history that results in not only ________ but also mutual ________.

A) differences; expectations

B) similarities; expectations

C) commonalities; losses

D) commonalities; affinities

 

Shared Spanish colonialism is one reason that explains regionalism tendencies in

A) Asia.

B) South America.

C) the United States.

D) Africa.

 

Shared Arabic language and the Muslim religion is one reason that explains regionalism tendencies in

A) South America.

B) North Africa.

C) European Union.

D) North America.

 

________ are groups of countries that agree to increase trade among them by lowering trade barriers.

A) Black zones

B) Trading blocs

C) Exchange partners

D) Open zones

 

Which of the following describes the most typical order of entry into foreign markets?

A) franchising, licensing, exporting, joint venture, and wholly owned subsidiary

B) exporting, franchising, licensing, joint venture, and wholly owned subsidiary

C) licensing, exporting, franchising, joint venture, and wholly owned subsidiary

D) exporting, licensing, franchising, joint venture, and wholly owned subsidiary

 

A domestic corporation considering international expansion for the first time typically will follow which of these paths?

A) It will start by implementing a wholly owned foreign subsidiary.

B) It will implement a low-risk, low-control strategy such as exporting.

C) It will license or franchise its operations.

D) It will form a joint venture with a reputable foreign producer.

 

The form of entry strategy into international operations that offers the lowest level of control for the domestic corporation would be

A) franchising.

B) licensing.

C) joint venture.

D) exporting.

 

________ are fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology).

A) Transfer prices

B) Dividends

C) Royalties

D) Intra-corporate inflows

 

The difference between a franchise contract and a licensing contract is that a

A) franchise contract is more specific and usually longer in duration.

B) franchise contract must include a foreign government.

C) licensing contract covers more aspects of operations.

D) franchise contract involves less control and less risk.

 

The creation of a third-party legal entity is required for ________, whereas for ________ it is not.

A) licensing agreements; joint ventures

B) strategic alliances; joint ventures

C) joint ventures; strategic alliances

D) franchising agreements; strategic alliances

 

A ________ is a business in which a multinational company owns 100 percent of the stock.

A) wholly owned subsidiary

B) strategic alliance

C) joint venture

D) franchising operation

 

________ are most appropriate when a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries.

A) Joint ventures

B) Strategic alliances

C) Licensing agreements

D) Wholly owned subsidiaries

 

What agreement entails the creation of a third-party legal entity?

A) strategic alliance

B) joint venture

C) licensing

D) exporting

 

A firm can establish a wholly owned subsidiary by

A) acquiring an existing company in the home country.

B) keeping all of the activity offshore.

C) licensing intellectual property.

D) entering into a franchising agreement.

 

The most expensive and risky entry mode is

A) wholly owned subsidiaries.

B) joint ventures.

C) franchising.

D) strategic alliances.

 

 

 

 

It is wise for firms to always respond to competitive actions with competitive responses.

false

 

When breweries in Sweden cooperate in recycling used bottles but still compete for customers on the basis of taste and variety, this is closely related to forbearance.

false

 

The cycle of actions and reactions that occur in business every day is a vital aspect of entrepreneurial strategy that leads to continual new value creation and the ongoing advancement of economic well-being.

true

 

Successful entrepreneurs are usually young.

false

 

As explained in Strategy Spotlight 8.1 Pillpack originated from a need identified by a pharmacist.

true

 

Small businesses create the majority of new jobs in the U.S. economy.

true

 

Opportunity recognition is the process of identifying and selecting entrepreneurial opportunities. It does not involve the development of those ideas.

false

 

The evaluation phase of opportunity recognition occurs when an entrepreneur has an insight about a new business venture, often based on prior knowledge.

false

 

The majority of entrepreneurial start-ups are financed with angel financing.

false

 

An entry wedge is a type of entrepreneurial strategy firms can use to enter into business.

true

 

Adaptive new entry involves offering a radical new product or highly innovative service.

false

 

Choosing which new entry strategy is best depends on competitive financial and marketplace considerations. The greatest opportunities most likely will be in existing markets, rather than in new markets.

false

 

Smell-O-Vision created an invention that would pump odors into movie theatres. It did not make it to market. This was an attempt to be an adaptive entry strategy.

false

 

Entrepreneurial firms are often in a strong position to use combination strategies, because

they have the flexibility to approach situations uniquely.

true

 

The Amazon approach to selling books online, offering superior customer service, gave it a strong entry strategy. This is an example of a focus strategy.

false

 

A focus strategy must not include elements of differentiation and overall cost leadership in order to be successful.

false

 

Running Press created a line of palm-sized mini books that were sold as point-of-sale impulse items. The company grew rapidly, even though it had a small fraction of the sales in the publishing industry. They used a pure overall cost leadership strategy to capture market share.

false

 

Entrepreneurial new entry is often perceived as a competitive threat to incumbent firms because most market needs are being met, either directly or indirectly, by existing firms. 

true

 

New entry is among the most common reasons why a cycle of competitive actions and reactions gets started among similar competitors.

true

 

New entry into markets, whether by start-ups or by incumbent firms, rarely threatens existing competitors.

false

 

If similar competitors vie for the same customers in a marketplace, they are likely to escalate their competitive strategy through a reactive series of actions and responses.

true

 

Market commonality is the extent to which rivals draw from the same types of resources.

false

 

When attacked, older and larger firms tend to respond more quickly, but their responses are often more predictable.

false

 

Cutting prices or increasing marketing efforts are examples of tactical competitive actions.

true

 

Forbearance is a particularly aggressive type of competitive attack.

false

 

According to an Inc. magazine survey, the average age of entrepreneurs at the time of firm founding is between ________. For the fastest growing entrepreneurial firms the average age of the founder is ________.

A) 40 to 42; 49

B) 20 to 25; 35

C) 25 to 35; 25

D) 55 to 65; 30

 

It is called ________ when a firm chooses not to react to the competitive action of a rival.

A) laziness

B) awareness

C) forbearance

D) initiation

 

________, a combination of competing and cooperating, is a strategy used often by  companies and from which they benefit.

A) Reaction

B) Forbearance

C) Likelihood

D) Co-opetition

 

As long as the benefits of ________ are enjoyed by all participants in a co-opetition system, the practice can aid companies in avoiding intense and damaging competition.

A) cooperating

B) forbearance

C) competition

D) alliance

 

A risk of co-opetition is if the companies actions are perceived as

A) forbearance.

B) partnering.

C) collusion.

D) competitive.

 

When Volkswagen, BMW, and Mercedes were accused of limiting the emission reducing technology included in their cars in order to minimize their production costs, the European Commission investigators found that they had ________ which was illegal.

A) shared technology

B) colluded

C) partnered

D) co-opted

 

Competitive actions can take many forms. Which is not likely to be one of them?

A) the entry of a start-up into a market for the first time

B) the exit of a successful business from the market

C) an attack by a lower-ranked incumbent on an industry leader

D) the launch of a breakthrough innovation that disrupts the industry structure

 

When Hollywood studios agreed to cooperate on buying movie film from Kodak, this is an example of

A) collusion.

B) co-opetition.

C) forbearance.

D) assimilation.

 

TJ Parker went through the process of opportunity recognition when he developed PillPack. This means he ________, ________, and ________ the potential opportunity that arose from customers finding it difficult to keep to their medication schedule.

A) selected; improved; altered

B) chose; altered; discounted

C) answered; analysed; rejected

D) identified; selected; developed

 

During the ________ phase, TJ Parker became aware of a new business concept to help patients keep on schedule with their medications. The result was the PillPack firm.

A) opportunity

B) entrepreneurial

C) actualization

D) discovery

 

For TJ Parker of PillPack, ________ discovery occurred as the result of a deliberate search for a creative solution to the problem his customers had with adhering to their medication schedule.

A) haphazard

B) biased

C) opportunity

D) unbiased

 

According to the text, for an entrepreneurial start-up to be successful, three ingredients are critical. What are they?

A) good ideas, a team of investors, and a business plan

B) a viable opportunity, available resources, and a qualified and motivated founding team

C) an opportunity, a marketing plan, and office space

D) management, marketing, and money

 

Which of the following is not a common source of new business opportunities?

A) current or past work experiences

B) suggestions by family or friends

C) chance event

D) future work

 

________ is the process of identifying, selecting, and developing new venture opportunities.

A) Innovativeness

B) Bootstrapping

C) Opportunity recognition

D) Brainstorming

 

Generally speaking the opportunity recognition process consists of two phases of activity. They are ________ and ________.

A) global search; recycling profits

B) value creation; affordability

C) global search; valuation

D) discovery; evaluation

 

Which of the following is not one of the characteristics of an entrepreneurial opportunity?

A) affordable

B) attractive

C) achievable

D) value creating

 

________ is a value required when an opportunity is attractive long enough for it to be successfully developed and deployed.

A) Value creating

B) Durable

C) Achievable

D) Affordable

 

Which of the following terms is used to refer to opportunities that are practical and physically possible?

A) durable

B) valuable

C) sustainable

D) achievable

 

Which of the following is not a primary source of financing for entrepreneurial start-ups?

A) investments by family and friends

B) public equity

C) private investors

D) personal savings

 

According to a study by the Kauffman Foundation, which of the following is the largest source of funding for businesses that have been operating at least five years?

A) public financing

B) venture capital

C) loans

D) angel financing

 

The majority of entrepreneurial start-ups are financed through monies from

A) bank financing.

B) SBA loans.

C) personal savings and the contributions of family and friends.

D) venture-capital financing.

 

________ are private individuals who provide seed capital to young ventures.

A) Gazelles

B) Angels

C) Cash cows

D) Rising stars

 

Which of the following statements about venture capital is false?

A) Entrepreneurs raise venture capital by selling shares of ownership in their business.

B) Venture capital groups can often provide helpful management advice.

C) Venture capital is used to finance rapid growth or large capital expenditures.

D) Venture capital is a form of public equity financing.

 

Opportunities can be found through a structured search process. The example of Ancient Ales with their innovative line of craft beers demonstrates which of the following types of structured search?

A) Identify frustrations with current products or processes.

B) Talk to people who know including suppliers, customers, frontline employees.

C) Borrow ideas from other markets.

D) Find historical ideas and re-purpose them.

 

According to the text, new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by

A) established corporations.

B) lone wolf entrepreneurs.

C) bootstraps.

D) individual investors.

 

Which of the following is the most important resource for a start-up activity?

A) social recognition

B) land

C) personnel

D) money

 

________ provide(s) a key avenue for growth for many young and small firms through partnering to obtain resources and to expand into new markets.

A) Strategic alliances

B) Funding

C) Banking

D) Research and development

 

The U.S. Small Business Administration supports small business through all the following except

A) government contracting.

B) investing venture capital.

C) underwriting loans.

D) training and counseling.

 

Which of the following is not one of the three characteristics of entrepreneurial leadership mentioned by the text?

A) clarifying job responsibilities

B) dedication and drive

C) commitment to excellence

D) vision

 

Vision is an important element of entrepreneurial leadership because

A) a vision statement is part of the documentation used to obtain venture financing.

B) the entrepreneur has to envision realities that do not yet exist.

C) organizations cannot function without a detailed and operational vision.

D) banking institutions require it.

 

Jeannine Fradelizio noticed that at parties she hosted, guests would set down their wine glasses and forget which one was their glass. She designed the Wine Glass Writer to solve this problem. She used the process of

A) differentiation.

B) entrepreneurial resources.

C) opportunity recognition.

D) focus strategy.

 

Precision Hawk, a company using drones to do aerial data analysis reached out to Hahn Estate Winery to understand their needs in analyzing crop health. Precision Hawk was conversing with Hahn Estate Winery in order to

A) offer to build a new winery.

B) get into wine production.

C) develop a focus strategy.

D) identify an opportunity.

 

According to the textbook, which of the following is not a common new entry strategy?

A) imitative new entry

B) adaptive new entry

C) pioneering new entry

D) proactive new entry

 

Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as ________ new entry.

A) adaptive

B) imitative

C) proactive

D) pioneering

 

When launching a new venture, finding a way to begin doing business must ________ generate cash flow, build credibility, attract good employees, and overcome the liability of newness.

A) slowly

B) quickly

C) steadily

D) painlessly

 

The first personal computer revolutionized computing and how business is conducted. It was using a(n) ________ entry strategy.

A) imitative

B) pioneering

C) adaptive

D) creative

 

The new entry strategy that a firm chooses is dependent upon the ________ and the ________ of the new business concept.

A) riskiness; cost

B) riskiness; potential sales

C) riskiness; innovativeness

D) idea; innovativeness

 

Smell-O-Vision designed an invention to pump odors into movie theatres. It flopped, in spite of its innovativeness. What kind of new entry strategy was the company using to penetrate the market?

A) imitative

B) adaptive

C) pioneering

D) differentiated

 

Square provides a means for small businesses to process credit and debit card sales without signing up for a traditional credit card arrangement of monthly fees and minimum charges. When its business grew rapidly, Apple, Google, and PayPal responded with ________ actions.

A) pioneering

B) imitative

C) adaptive

D) differentiated

 

Tom Monahan, a business creativity coach, says that every new idea is merely a spin of an old idea. A company that enters the market by offering a product or service that is somewhat new and sufficiently different in order to create value for customers by capitalizing on current trends is using which new entry strategy?

A) imitative

B) pioneering

C) differentiated

D) adaptive

 

In 2005, Plum Organics entered the market with convenient organic baby food and snack foods for children. It now has over 20 products and had sales of over $50M in 2017. It used which new entry strategy in 2005?

A) imitative

B) pioneering

C) differentiated

D) adaptive

 

Mint entered the market in 2005 with comprehensive online money management systems that tells users what they are spending by aggregating financial information from online bank and credit card accounts. Today it has over 20 million users and is helping them manage over 3 billion USD in assets. It used which new entry strategy in 2005?

A) imitative

B) adaptive

C) pioneering

D) differentiated

 

Founded in 1995, Under Armour, Inc. sells undershirts and other athletic gear using moisture-wicking fabric for sweaty sports. By 2016, it reached the number two athletic clothing firm spot with over 5.2 billion in sales. It used which new entry strategy in 2005?

A) imitative

B) pioneering

C) adaptive

D) differentiated

 

Spanx, the footless pantyhose and other undergarments for women company was founded in 2000. It combined nylon and Lycra to create a new type of undergarment that is comfortable and eliminates panty lines. It now produces over 200 products, generating over 400 million USD in annual sales. It used which new entry strategy in 2005?

A) adaptive

B) pioneering

C) differentiated

D) imitative

 

Which of the following is not a factor that makes it more difficult for new ventures to be successful as differentiators?

A) The strategy is thought to be expensive to put into action.

B) Establishing a brand, important to a differentiation strategy, is thought to be expensive.

C) Superior innovation is often very costly.

D) Customer service is often costly, but it does not affect a differentiation strategy.

 

Amazon is an example of a company that used the differentiation strategy to enter the market. The differentiation features included

A) minimal customer service.

B) traditional back office logistics.

C) exceptional customer service.

D) traditional delivery logistics.

 

Shakespeare & Co. was reimagined in 2015 to meet the current needs of the market when Dan Neller purchased the NY bookstore. He provided a place to find the hottest books, the ability to print more obscure titles, and a rare level of service that made the store feel like a destination. He used which generic strategy to achieve competitive advantages?

A) overall cost leadership

B) differentiation

C) focus

D) low cost leadership

 

One of the ways entrepreneurs achieve success is by using resources more efficiently. This is an example of how entrepreneurs use a(n) ________ strategy.

A) imitative

B) low-cost leader

C) differentiation

D) combination

 

Entrepreneurial firms that pursue a low-cost leadership strategy use all the following to achieve lower costs except

A) cost-saving technology.

B) simple organizational structures.

C) rapid decision making.

D) extensive investment in order to achieve economies of scale.

 

When an industry is mature, a(n) ________ strategy is considered one of the most effective approaches for a new entrant.

A) focus

B) differentiation

C) overall low-cost

D) small business

 

According to the text, which of the following does not make it difficult for entrepreneurial firms to effectively pursue a strategy of differentiation?

A) Differentiation strategies are often expensive to enact.

B) Incumbent firms are constantly seeking opportunities to specialize in market niches.

C) It may be difficult for a young firm to establish a strong brand identity.

D) Implementing superior new technologies may be challenging for entrepreneurial firms.

 

New ventures may find it difficult to use differentiation strategies successfully because they lack ________ and ________.

A) sufficient funding; superior innovation

B) competitors; superior technology

C) sufficient funding; qualified entrepreneurs

D) innovative ideas; potential customers

 

Running Press launched the Miniature Editions line of books in 1993. Today it has sold over 20 million copies. Which of the following most closely represents their strategy?

A) differentiation

B) overall cost leadership

C) focus

D) combination

 

________ is the intense rivalry involving actions and responses among similar competitors vying for the same customers in a marketplace.

A) Competitive dynamics

B) Resource similarity

C) The threat of substitutes

D) Pioneering new entry

 

Competitors in a mature market typically find that a new entrant is threatening because

A) nearly all market need is already being met.

B) the new entrant might increase prices.

C) the new entrant offers the same product.

D) the new entrant is a pioneer.

 

In competitive dynamics, new entrants may be forced to change their strategies or develop new ones to ________ competitive challenges by ________.

A) overcome; other new rivals

B) succumb; potential rivals

C) survive; incumbents

D) survive; former rivals

 

Unilever has taken a dominant position (65 percent market share) in the Vietnamese laundry detergent market by employing an investment and marketing campaign that decimated the market position of the local, incumbent competitors. According to the Stalk and Lachenauer book, this is an example of ________ strategy.

A) plagiarize with pride

B) deceive the competition

C) raise competitors’ costs

D) unleash massive and overwhelming force

 

Walmart began offering low-priced extended warranties on home electronics after learning that its rivals such as Best Buy derived most of their profits from extended warranties. According to the Stalk and Lachenauer book, this is an example of the strategy to

A) plagiarize with pride.

B) deceive the competition.

C) devastate rivals’ profit sanctuaries.

D) unleash massive and overwhelming force.

 

In designing its smartphones, Samsung copied the look, feel, and technological attributes of the Apple iPhone. By copying Apple, Samsung was able to improve its market position. According to the Stalk and Lachenauer book, this is an example of strategy to

A) plagiarize with pride.

B) deceive the competition.

C) raise competitors’ costs.

D) unleash massive and overwhelming force.

 

The business-to-business cleaning supply company, Ecolab, encouraged a leading competitor, Diversity, to adopt a strategy to go after low-volume, high-margin customers. What Ecolab knew that Diversity did not is that the high servicing costs involved with the segment makes it unprofitable. Ecolab bid high enough to lose the contracts to Diversity but low enough to ensure that Diversity lost money. According to the Stalk and Lachenauer book, this is an example of the strategy to

A) plagiarize with pride.

B) deceive the competition.

C) raise competitors’ costs.

D) unleash massive and overwhelming force.

 

Which of the following is not one of the reasons a company might launch new competitive actions?

A) to obtain first mover advantages

B) to improve market position

C) to find new sources of raw materials

D) to capitalize on growing demand

 

BCG authors Stalk and Lachenauer published a book in which they listed competitive strategy for winning against incumbent rivals. Which of the following is not one of their suggested strategies?

A) devastate profit sanctuaries of rivals

B) lower competitors’ costs

C) unleash massive and overwhelming force

D) plagiarize with pride

 

Aircraft makers Boeing and Airbus have a high degree of ________ because they make very similar products and have many buyers in common.

A) dynamic capabilities

B) first mover advantages

C) market commonality

D) equity funding

 

Telecommunication equipment providers, Huawei and Nokia, have a high degree of ________ because they have patent rights to similar technologies, high-quality engineering staffs, and global sales forces.

A) dynamic capabilities

B) resource similarity

C) market commonality

D) equity funding

 

The Wall Street Journal and New York Times have seen the intensity of their rivalry increase. One factor driving this is that The Wall Street Journal has moved from financial news reporting to general national and global news reporting and finally, to adding local New York news. The rivalry of these two news providers has increased due to

A) increased dynamic capabilities.

B) erosion of first mover advantages.

C) increased market commonality.

D) the choice of tactical over strategic actions.

 

When any two firms have both a high degree of market commonality and highly similar resources, a ________ threat is present.

A) weaker competitive

B) successful marketing

C) stronger competitive

D) stronger marketing

 

Which of the below best describes the competitive tendencies of small firms?

A) Small firms tend to signal their competitive actions long before they launch those actions because they lack legitimacy in the marketplace.

B) Small firms typically have more resources available as they undertake competitive attacks than do large firms.

C) Small firms are more nimble and can respond quickly to competitive attacks.

D) Small firms are more nimble and cannot respond quickly to competitive attacks.

 

Southwest Airlines began its no frills, no meals strategy in the late 1960s as a direct assault on the major carriers of the day. What type of competitive action does this represent?

A) A strategic action because it includes a refinement of an existing strategy.

B) A tactical action because it is a refinement of an existing strategy.

C) A strategic action because it was a breakthrough innovative offer.

D) A guerrilla offensive because it is fast and will surprise its rivals.

 

All the following are examples of strategic actions a firm might take except

A) partner with competitors to reduce competition.

B) expand into neglected markets.

C) tie up raw materials sources.

D) change product packaging.

 

The best example of a tactical action that a company might use in response to a competitive attack is to

A) acquire the competitor.

B) offer price discounts and rebates.

C) expand into new geographical areas.

D) target the markets of the rival.

 

Which of the following is not a factor that affects how a competitor will respond to a competitive attack?

A) how dependent the competitor is on that industry or particular market segment

B) the degree of market power and reputation of the company that initiated the attack

C) the stock market reaction to the initial competitive attack

D) the resources which are available for a firm to respond

 

Which of the following refers to a situation where a company has a high concentration of its business in a particular industry market?

A) competitor resources

B) resource similarity

C) market dependence

D) actor reputation

 

A firm is considering a large price cut on its leading product to gain market share. One executive strongly disagrees with the price cut. He observes that they are in the same marketplace as their rivals and do not have any competitive advantages in their cost structure. If they cut prices, their competitors will likely do the same. The result is that everyone will make less money. These arguments are an example of a

A) strategy of co-opetition.

B) strategy of forbearance.

C) hardball strategy.

D) weakness strategy.

 

Strategic competitive actions include all the following except

A) new product introductions.

B) mergers and alliances.

C) product and service enhancements.

D) changing production capacity.

 

When a company chooses to maintain low-price dominance, it is using which tactical action?

A) product and service enhancements

B) price cutting

C) increased marketing efforts

D) changing production capacity

 

When a company chooses to use guerrilla marketing, it is using a ________ competitive action.

A) strategic

B) tactical

C) focused advantage

D) differentiated

 

TOMS Shoes generates interest in its products without a large advertising budget. It uses a Facebook page to create buzz. This is an example of a

A) strategic action.

B) tactical action.

C) focused advantage.

D) differentiated focus.

 

A small firm may be unable to mount a serious attack due to lack of resources. As a result, it is more likely to react to ________ actions, such as incentive pricing or enhanced service offerings, because they are less costly to attack than large-scale strategic actions.

A) forbearance

B) co-opetition

C) tactical

D) strategic

 

When GM offers discounts and incentives, rivals Ford and Chrysler cannot afford to ignore the challenge and quickly follow suit. Which one of the following is a reason Ford and Chrysler are more likely to respond?

A) a history of forbearance with GM

B) a history of co-opetition with GM

C) the reputation and history of GM in the market

D) GM's resources