Chapter 7 Annecdote

A firm that consistently seeks out new opportunities in advance of market demand shifts demonstrates which dimension of Entrepreneurial Orientation (EO) (pg. 7.2 John

• Competitive Aggressiveness
  

• Autonomy

• Risk-taking

• Proactiveness

Answer explanation

Definition of Proactiveness: The tendency to anticipate and act on future opportunities rather than rely solely on existing products and services.

1. In a blue ocean strategy, companies try to make their competitors irrelevant by inventing new markets (pg. 7.3 Jade Laudermilk)

• True

• False

Answer explanation

Definition: A blue ocean strategy involves creating a new, untapped market rather than competing with rivals in an existing market (ignore this)

Which of the following is a disadvantage of being a first-mover into a new market? (pg. 7.4 John Kim)

• The organization that acts as a first-mover must set the industry standard in that new market

• Higher risk of failure due to entry in an untested market as well as higher initial costs

• Decreased innovative drive due to uncertainty within the new market

• Feeling lonely

Answer explanation

First-mover organizations can not be sure if customers will embrace their offerings, making a first move inherently risky. First-movers also need to commit sufficient resources, almost blindly, into the new market for their pioneering efforts, making initial costs high and uncertain.

What is a potential downside to lowering prices in response to a competitor’s lower prices (pg. 7.6 Jade Laudermilk)

• Increase in customer loyalty

• Devaluation of the firm’s brand

• Loss of product differentiation

•  Increased production cost

Answer explanation

A firm’s success can be undermined when a competitor tries to lure away its customers by charging lower prices for its goods or services. Such a scenario is especially scary if the quality of the competitor’s offerings is reasonably comparable to the firm’s. One possible response would be for the firm to lower its prices to prevent customers from abandoning it. This can be effective in the short term, but it creates a long-term problem. Specifically, the firm will have trouble increasing its prices back to their original level in the future because charging lower prices for a time will devalue the firm’s brand and make customers question why they should accept price increases.

Which of the following is not part of the product life cycle? (pg. 7.5 AJ Sutphin)

• Introduction

• Recession

• Maturity

• Decline

Answer explanation

All of these are parts of the product life cycle except Recession. The product life cycle consists of the following stages: Introduction, Growth, Maturity, and Decline.

A firm’s success can be undermined when a competitor tries to lure away its customers by charging lower prices. The creation of a(n) ______ can help prevent this problem. (pg 7.6 AJ Sutphin)

• Fighting Brand

• Acquisition

• Strategic Alliance

• Internal Development

Answer explanation

Fighting brands are lower end brands that firms introduce to protect the firm's market share without damaging its reputation. An example of this is when General Motors introduced Geo in the 1980's to compete with the sale of small, inexpensive Japanese cars.

What is the term for somebody with entrepreneurial attributes who is

employed rather than running their own business (pg 7.2 Jake Keeling)

• Execpreneur

• Autopreneur

• Corporapreneur

• Intrapreneur

Answer explanation

Entrepreneurship within an organization is called intrapreneurship. Companies often grow by offering new services or launching new products. Rather than acquire another company that provides that product or service, they develop it themselves. This is a method of strategy implementation called internal development. To maximize opportunities for intrapreneurship, companies need employees with a high entrepreneurial orientation.

What is the best description of incremental innovation? (pg 7.4 Jake Keeling)

• Creating a completely new product or service that has never been seen before.

• Making improvements on an existing product or service.

• Disrupting an industry with a revolutionary new technology.

• Abandoning a current product or service to start a new one from scratch.

Answer explanation

Innovation can be classified into four types:

1. Incremental Innovation: Making improvements on existing products (New iphones)

3. Disruptive Innovation: Conflicts/or threatens to replace traditional approaches(tablets replacing laptops)

5. Architectural Innovation: Using existing technology to create new markets/consumers (peleton packages bicycle, internet, and communication)

7. Radical Innovation: New products/services developed using technology to open up new markets (airpods from wired earbuds)