Foundations of Strategy By Robert M.Grant - Test Bank

Foundations of Strategy By Robert M.Grant – Test Bank

 

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Sample Questions Are Posted Below

 

Chapter 5

Business Strategies in Different Industry and Cultural Contexts

 

1. Change in industries is driven chiefly by the forces of technology, market demand and economics.

@Pages and References: Page 210

*a. T

1. F

 

2. Massive and unpredictable changes occur in some industries, but less so in others.

@Pages and References: Page 210

*a. T

1. F

 

3. Firms are continually trying to erode the competitive advantage of rivals, and to build and maintain their own competitive advantage.

@Pages and References: Page 210

*a. T

1. F

 

4. The industry life cycle comprises 4 stages: introduction, growth, maturity, decline – so is indistinguishable from the product life cycle.

@Pages and References: Pages 214-221

1. T

*b. F

 

5. Two main factors drive industry evolution: demand growth and the production and diffusion of knowledge.

@Pages and References: Pages 214-221

*a. T

1. F

 

6. The introduction to maturity phases of the industry life cycle curve are characteristically S-shaped.

@Pages and References: Page 215

*a. T

1. F

 

7. The industry life cycle consists of four stages: 1) Introductory, 2) Growth, 3) Plateau, and 4) Rejuvenation.

@Pages and References: Pages 214-221

1. T

*b. F

 

8. Knowledge influences the characteristics of an industry in different ways depending on the stage of the industry life cycle.

@Pages and References: Pages 215-216

*a. T

1. F

 

9. The duration of the industry life cycle varies greatly from one industry to another.

@Pages and References: Pages 214-220

*a. T

1. F

 

10. Over time, industry life cycles become longer and longer.

@Pages and References: Pages 214-220

1. T

*b. F

 

11. A shift from radical to incremental innovation takes place when an industry coalesces around a leading technology and design.

@Pages and References: Pages 215-216

*a. T

1. F

 

12. A dominant design is one which is the most noticeable, or receives the most publicity.

@Pages and References: Pages 216-220

1. T

*b. F

 

13. Technical standards have the most dramatic effect in markets exhibiting network effects – that is users not adopting the standard risk isolation.

@Pages and References: Pages 216-220

*a. T

1. F

 

14. Emphasis often shifts from product innovation to process innovation, once a dominant design emerges.

@Pages and References: Pages 216-220

*a. T

1. F

 

15. It’s a good idea to reduce product innovation as soon as possible so as to precipitate a shift to the growth phase.

@Pages and References: Pages 221-228

1. T

*b. F

 

16. The terms “public sector” and “not-for-profit” sector are different terms for the same thing.

@Pages and References: Pages 228-236

1. T

*b. F

 

17. A not-for-profit organisation is legally obliged not to make any profit.

@Pages and References: Pages 228-236

1. T

*b. F

 

18. Some public sector organisations provide services which the private sector could not possibly provide.

@Pages and References: Pages 228-236

*a. T

1. F

 

19. Public sector organisations are not driven by the need to return a profit for shareholders, and are therefore less accountable than private sector firms.

@Pages and References: Pages 228-236

1. T

*b. F

 

20. In scenario planning, the scenarios constructed are often somewhat unrealistic.

@Pages and References: Pages 238-241

1. T

*b. F

 

21. Change in the industry environment faced by a firm is:

@Pages and References: Page 210

1. Massive and unpredictable
2. Gradual and predictable

*c. Could be either answer a or b, depending on the industry and the prevailing conditions

1. Easier for large firms to cope with

 

22. Change in an industry is the result of:

@Pages and References: Page 210

1. The forces of technology, consumer preferences, and economic growth

*b. Both external forces and the incumbents’ competitive strategies

1. The effect of the “5 forces” model of competition
2. Economic and psychological factors

 

23. Regarding change, a firm really needs to:

@Pages and References: Page 210

1. Understand and predict change
2. Understand, predict, and manage change

*c. Understand, predict, manage change, and adapt its strategy to it

1. Predict and manage change

 

24. The industry life cycle:

@Pages and References: Pages 214-220

1. Is an extension of the concept of the product life cycle
2. Uses the same stages as the product life cycle
3. Nearly always lasts much longer than a typical product life cycle in that industry

*d. All of the above

 

25. The text claims that two factors are fundamental to the industry life cycle. One of these is:

@Pages and References: Pages 214-220

*a. The production and diffusion of knowledge

1. Industrial production and the diffusion of knowledge
2. Demand during the growth phase
3. Demand for growth in the diffusion of knowledge

 

26. The decline phase of the industry life cycle is caused by:

@Pages and References: Pages 214-220

*a. The emergence of a radically better substitute product, representing a new industry

1. Tired old firms running out of new ideas
2. Existing firms leaving the industry to move to a more profitable one
3. Excessive market saturation

 

27. A new industry life cycle begins when:

@Pages and References: Pages 214-220

1. A very large gap in the market emerges
2. Another industry dies

*c. New knowledge manifests itself in the guise of a sufficiently radical product innovation

1. There are sufficient entrepreneurs

 

28. A dominant design is:

@Pages and References: Pages 214-220

1. One which has won the most industrial design awards

*b. An emergent de facto industry standard broad product format

1. The one advertised most strongly by the market leader
2. The latest new product which gains the most media attention

 

29. A technical standard:

@Pages and References: Pages 214-220

1. Only occurs in computing when there is a network effect
2. Emerges when there are interconnectivity and interface compatibility issues
3. Can emerge for safety and other reasons from standards bodies eg ISO

*d. Answers b and c

 

30. The different stages of the industry life cycles are characterised by:

@Pages and References: Pages 214-220

*a. The evolution of the industry growth rate over time

1. The evolution of the competition in the industry
2. The evolution of a firm’s market share
3. None of the above

 

31. An industry life cycle:

@Pages and References: Pages 214-220

1. Always follows the theoretical pattern

*b. May never enter the decline phase, in some industries supplying basic essential products or services

1. Must be the same everywhere, due to globalisation
2. Can never really experience a resurgence

 

32. The PC industry clearly began in the 1970’s because:

@Pages and References: Pages 211-214

1. It did not exist at all prior to this time
2. The introduction phase was typical: no mass market, many product variants, small firms
3. By the 1980’s, the growth phase had begun, with a design standard emerging

*D. All of the above

 

33. IBM initially ignored the PC market because:

@Pages and References: Pages 211-214

1. IBM did not recognise the PC market as a separate industry

*b. IBM had seen the PC as a tiny, hobbyist’s niche within the computer industry, not worth IBM’s attention

1. IBM knew they weren’t innovative enough to compete against Apple
2. IBM are not good at spotting new opportunities

 

34. When IBM did enter the PC market, they:

@Pages and References: Pages 211-214

1. Did so with a maverick offshoot, and by buying in sub-systems, which went against the IBM usual methods
2. Suffered slow growth since they were late to market
3. Relied on business users recognising the established IBM reputation

*d. Answers a and c

 

35. The essence of IBM’s success in the PC industry in the 1980’s was:

@Pages and References: Pages 211-214

1. IBM established a dominant design
2. IBM had an established access to the business market, which Apple et al did not have
3. IBM opted to encourage 3rd parties to write software and provide additional hardware, unlike Apple

*d. All of the above

 

36. IBM sold its PC division to a Chinese company because:

@Pages and References: Pages 211-214

1. IBM realised that labour costs are lower in China
2. The PC market in the developed world was saturated, so was no longer attractive to IBM
3. The PC was increasingly becoming a multimedia consumer product, whereas IBM is a business-oriented firm

*d. Answers b and c

 

37. Is the PC industry in the maturity stage of the life cycle?

@Pages and References: Pages 218-219

1. Yes – growth has started to decline, and shakeout occurred years ago
2. Yes – emphasis is on production efficiency, and the PC is being commoditised
3. No – there is still huge growth potential in China, India, Brazil and so on

*d. Answers a and b

 

38. As the industry life cycle progresses, overall strategies need to:

@Pages and References: Pages 221-228

1. Stay steady and not waver; don’t change anything

*b. Change in every major aspect e.g. product evolution, the nature of competition

1. Primarily focus on cost-cutting
2. None of the above

 

39. Start-up firms in a new industry are also sometimes known as:

@Pages and References: Pages 223-224

1. dallaglio entrants

*b. de novo entrants

1. de bono entrants
2. de facto entrants

 

40. Firms entering a new industry who were already established in a related industry are sometimes known as:

@Pages and References: Pages 223-224

1. dallaglio entrants
2. de aglio entrants

*c. de alio entrants

1. de olio entrants

 

41. The basis of entering a new industry at the Introduction phase is:

@Pages and References: Pages 223-224

*a. Effective product innovation

1. Effective process innovation
2. Effective promotional material
3. Effective sales people

 

42. A “born global” company is one which:

@Pages and References: Pages 223-224

*a. Interacts across the world from the outset – especially regarding selling

1. Is a “virtual” company
2. Is spun out of an existing global company
3. Has an international cultural appreciation

 

43. Often, to succeed in the evolution from Introduction to Growth a firm:

@Pages and References: Page 224

1. Needs to acquire an injection of cash from a venture capital company

*b. Needs to be closely associated with the dominant design which emerges

1. Needs to buy a major competitor
2. Needs to pull back on product innovation

 

44. To succeed as a leading player in the Growth phase a firm should:

@Pages and References: Page 224

1. Offer a product or service which is designed to be “scaled up” in volume
2. Obtain sufficient resources and build capabilities to support effective scaling-up of operations
3. Have sufficient market access or commercial muscle to sell scaled-up volume

*d. All of the above

 

45. To survive the Growth phase profitably a firm NOT having all the attributes of a leading player could:

@Pages and References: Page 224

1. Sell the company to a more well-prepared rival

*b. Operate as a specialist, niche player, thus avoiding the necessity to fully “scale up”

1. Find another industry to move into
2. None of the above; without the ability to dramatically scale up, the firm will fail

 

46. To survive going into the Maturity phase of the industry life cycle a firm needs to:

@Pages and References: Pages 224-225

1. Outsource all production
2. Get rid of all research and development staff

*c. Emphasise cost efficiency

1. Cut wages

 

47. With the onset of the maturity stage, the number of firms in most industries:

@Pages and References: Pages 224-225

1. Remains relatively stable

*b. Tends to decrease significantly

1. Increases significantly
2. Decreases or increases, depending on the industry

 

48. With maturity, the type of firms who fail to survive are typically:

@Pages and References: Pages 224-225

1. The smallest companies

*b. The middle-sized companies

1. The largest companies
2. None of the above; there is no typical pattern

 

49. The typical cause of the Decline phase in an industry is:

@Pages and References: Pages 225-226

1. Technological substitution e.g. the horse and cart replaced by the car
2. Local regional decline due to low-cost foreign competition
3. Changing consumer tastes e.g. tobacco

*d. Any of the above

 

50. The decline phase of the industry life cycle is characterised by:

@ Pages and References: Pages 225-226

1. Ceasing of product and process innovation
2. Incumbents going out of business
3. Remnant niche-sized players may survive profitably

*d. All of the above

 

51. The determining factors of how calamitous the Decline phase turns out to be are:

@Pages and References: Pages 225-226

*a. The way capacity is dismantled as demand declines, and how dramatic is the decline in demand

1. Whether a price war breaks out, and how many firms remain
2. The actions of foreign competition, and how fast workers can be fired
3. How quickly the new industry can ramp up production, and what prices they sell at

 

52. The key success factor in the Introduction phase of the industry is:

@Pages and References: Pages 223-224

*a. Effective product innovation i.e. getting new products launched and in front of customers

1. Making sure the workforce is multi-skilled
2. Having a committed workforce, e.g. prepared to work weekends for no extra wages
3. Just being creative

 

53. The key success factor for leading firms in the Growth phase is:

@Pages and References: Pages 224-224

1. Knowing what competitors are doing – even resorting to espionage
2. Taking business away from rivals
3. A commission-oriented sales force

*d. Being able to scale up volume production and operations effectively and efficiently

 

54. The key success factor for firms surviving in the Maturity phase is:

@Pages and References: Pages 224-225

1. Buying as many competitors as you can

*b. Maintaining cost efficiency as good as competitors

1. “Two for One” deals and other special offers
2. All of the above

 

55. Public sector firms differ from private sector firms in that:

@Pages and References: Pages 228-236

1. They are owned by the government
2. They are wholly or partly government-funded
3. They often provide a service at price well below that of an equivalent private sector firm

*d. All of the above

 

56. In some cases, public sector organisations provide:

@Pages and References: Pages 228-236

*a. Services which cannot be provided by the private sector e.g. an army for defence

1. Services which the private sector would be incompetent at providing
2. Services at very low or zero price to stop the private sector providing them
3. Services which the private sector does not require because no-one wants them

 

57. Public sector organisations:

@Pages and References: Pages 228-236

1. Do not have stakeholders

*b. Have stakeholders some of whom are obliged by law to act in the national or public interest

1. Do not have shareholders
2. Never make as much profit as they could as private sector firms doing the same thing

 

58. Not-for-profit organisations:

@Pages and References: Pages 228-236

1. Are required by law not to make any profit
2. Avoid making profits as far as possible

*c. Often do make profits (called a surplus), but these are re-invested in the organisation

1. Must explain any profit they inadvertently make to the government

 

59. The aims, goals and objectives of public sector firms are characteristically:

@Pages and References: Pages 230-236

1. Shaped by political considerations
2. Multiple, often conflicting and shifting
3. Lacking the overriding obligation to return a profit to shareholders

*d. All of the above

 

60. Further characteristics of –some not all – public sector organisations include:

@Pages and References: Pages 230-236

1. The absence of a market e.g. the police
2. A legally enforced monopoly
3. Heavily unionised workforces

*d. Answers a and b

 

61. Stakeholder analysis for public sector organisations is particularly important because:

@Pages and References: Pages 236-238

1. In the absence of making a profit, it’s difficult to know what the stakeholders actually want
2. There is a legal obligation to conduct stakeholder analysis

*c. Public sector organisations are often legally obliged to take a wide spectrum of stakeholders’ views into account

1. The set of stakeholders changes more rapidly than in the private sector

 

62. Stakeholder analysis in the public sector is about:

@Pages and References: Pages 236-238

*a. Identifying, understanding and prioritizing the needs of stakeholders

1. Identifying stakeholders, and prioritizing which ones to explain the needs of the organisation to
2. Understanding the power and interest of each stakeholder
3. Answers a and c

 

63. Scenario planning is a tool for:

@Pages and References: Pages 238-241

1. Planning for how a firm wants the world to look in the future
2. Mainly governments to envisage downstream consequences of their actions
3. Analysing the most certain or likeliest future

*d. Easily constructing alternative plausible views of how the world may look, often in the more distant future eg 25 years