Entrepreneurship and Innovation Strategy
Review Questions
Course Introduction
Entrepreneurship and Innovation Strategy explores the fundamental principles and practices of launching and growing innovative ventures in todays dynamic business environment. The course covers topics such as opportunity recognition, business model development, strategic decision-making, and resource acquisition. Students will analyze case studies of successful startups and established companies, learn frameworks for fostering innovation, and develop strategies for navigating competitive markets. Through interactive discussions and hands-on projects, participants will build practical skills in identifying market needs, evaluating risks, and implementing creative solutions to drive organizational growth and value creation.
Recommended Textbook
Strategic Management and Competitive Advantage Concepts and Cases 5th Edition by Jay B.
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11 Chapters
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Chapter 1: What Is Strategy and the Strategic Management Process
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Sample Questions
Q1) The size of a firm's competitive advantage is the sum of the economic value a firm is able to create and the economic value rivals are able to create.
A)True
B)False
Answer: False
Q2) Differentiate between business level and corporate level strategies and give examples of each.
Answer: Business level strategies are actions firms take to gain competitive advantages in a single market or industry. The two most common business level strategies are cost leadership, such as Wal-Mart, and product differentiation, such as Tiffany's. Corporate level strategies are actions firms take to gain competitive advantages in multiple markets or industries simultaneously. Common corporate level strategies include vertical integration strategies, diversification strategies, strategic alliance strategies and merger and acquisition strategies.
Q3) A "good strategy" does not necessarily have to create a competitive advantage.
A)True
B)False
Answer: False
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Chapter 2: Evaluating a Firms External Environment
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Sample Questions
Q1) ________ are resources required to successfully compete in an industry.
A) Strategically valuable assets
B) Technological leader strategies
C) Process innovations
D) Product innovations
Answer: A
Q2) The threat of direct competition tends to be high when
A) there are few firms in an industry and these firms tend to be unequal in size.
B) the industry growth rate is higher.
C) firms are unable to differentiate their products.
D) production capacity can be added in small increments.
Answer: C
Q3) In general, it is rarely the case that all five forces in the five forces framework will be equally threatening at the same time.
A)True
B)False
Answer: True
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Chapter 3: Evaluating a Firms Internal Capabilities
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Sample Questions
Q1) The VRIO assumption that some of the resource and capability differences among firms may be long lasting because it may be very costly for firms without certain resources and capabilities to develop or acquire them is known as A) resource mobility.
B) resource homogeneity.
C) resource immobility.
D) resource heterogeneity.
Answer: C
Q2) If a firm's resources and capabilities are costly to imitate because imitating firms may not understand the relationship between the resources and capabilities controlled by a firm and that firm's competitive advantage, this competitive advantage is said to be protected from imitation by A) path dependence.
B) causal ambiguity.
C) unique historical conditions.
D) social complexity.
Answer: B
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Chapter 4: Cost Leadership
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Sample Questions
Q1) Identify four reasons why economies of scale can exist and four reasons why diseconomies of scale can exist.
Q2) The best example of a firm following a cost-leadership business strategy is
A) Mercedes Benz.
B) Macy's.
C) Ryanair.
D) Rolls Royce.
Q3) Firms for whom the prices of the products or services they sell are determined by market conditions and not by the individual decisions of the firms themselves are known as price makers.
A)True
B)False
Q4) Physical technology-based cost advantages apply only in manufacturing firms.
A)True
B)False
Q5) Which of the following is less likely to be a rare source of cost advantage?
A) technological software
B) learning-curve economies of scale
C) differential low-cost access to productive inputs
D) policy choices
6
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Chapter 5: Product Differentiation
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Sample Questions
Q1) To the extent that differences in product complexity lead customers to conclude that the products of some firms are more valuable than the product of other firms, then product complexity can be a basis of product differentiation.
A)True
B)False
Q2) Product features, by themselves, are
A) usually not a source of temporary competitive advantage, but they can be a source of a sustainable competitive advantage.
B) usually not a source of either a temporary competitive advantage, or a source of a sustainable competitive advantage.
C) usually can be a source of both a temporary competitive advantage and a source of a sustainable competitive advantage.
D) usually not a source of sustained competitive advantage, but they can be a source of a temporary competitive advantage.
Q3) The physical location of a firm cannot be a source of product differentiation. A)True B)False
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Chapter 6: Vertical Integration
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Sample Questions
Q1) The essence of the ________ to vertical integration is that if a firm possesses valuable, rare, and costly-to-imitate resources in a business activity, it should vertically integrate into that activity otherwise it should not vertically integrate into that activity.
A) flexibility-based explanation
B) opportunism-based explanation
C) firm capability explanation
D) opportunity-based explanation
Q2) If a computer company decided to open its own call centers to provide technical support to its corporate customers because the employees in these call centers need a significant level of in-depth training that was highly specialized to the computer company's products, this would be consistent with which explanation of vertical integration?
A) opportunism-based
B) flexibility-based
C) firm capabilities-based
D) alliance-based
Q3) Flexibility is low when the cost of changing strategic choices is low.
A)True
B)False
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Page 8
Chapter 7: Corporate Diversification
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Sample Questions
Q1) Employee compensation is an example of costly-to-duplicate economies of scope.
A)True
B)False
Q2) Most of the different types of economies of scope cannot be realized by equity holders on their own.
A)True
B)False
Q3) If one of the reasons that Peach Computers entered into the electronics industry was to offset weakness in the computer industry because when the computer industry was weak, the electronics industry was strong, and vice versa, Peach Computers would be pursuing which economy of scope?
A) core competencies
B) multipoint competition
C) tax advantages
D) risk reduction
Q4) Both shared activities and internal capital allocation are examples of economies of scope that have the potential for generating positive returns for a firm's equity holders.
A)True
B)False
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Chapter 8: Organizing to Implement Corporate
Diversification
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Sample Questions
Q1) In an M-form organization, the management of day-to-day operations is delegated to
A) divisional general managers and corporate staff managers.
B) corporate staff managers and functional managers who report to corporate staff managers.
C) divisional general managers and functional managers who report to division general managers.
D) the board of directors and corporate staff managers who report to the board of directors.
Q2) If a well-managed diversified firm uses both accounting and economic measures, it will be able to unambiguously evaluate divisional performance.
A)True
B)False
Q3) In zero-based budgeting, each project has to stand on its own merits each year by being included among the important projects that a firm can afford to fund and no project receives funding for the future simply because it received funding in the past.
A)True
B)False
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Chapter 9: Strategic Alliances
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Sample Questions
Q1) When one firm makes more transaction-specific investments in a strategic alliance than partner firms make, that firm may be subject to a form of cheating called ________ that occurs when a firm that has not made significant transaction-specific investments demands returns from an alliance that are higher than what the partners agreed to when they created the alliance.
A) adverse selection
B) holdup
C) moral hazard
D) noncompliance
Q2) When the probability of cheating in a cooperative relationship is lowest, a joint venture is usually the preferred form of cooperation.
A)True
B)False
Q3) Two possible substitutes for strategic alliances include
A) going it alone and tacit collision.
B) going it alone and acquisitions.
C) acquisitions and explicit collusion.
D) explicit collusion and tacit collusion.
Q4) Discuss when strategic alliances may be costly to directly duplicate.
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Chapter 10: Mergers and Acquisitions
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Sample Questions
Q1) ________ include a variety of relatively minor corporate governance changes that, in principle, are supposed to make it more difficult to acquire a target firm.
A) Shark repellents
B) White knights
C) Greenmail
D) Poison pills
Q2) Strategy researchers have found that in mergers and acquisitions, the more strategically related bidding and target firms are, the more economic value these mergers and acquisitions create.
A)True
B)False
Q3) Mergers and acquisitions used to create diversification strategies should be managed through the
A) M-form structure.
B) functional structure.
C) U-form structure.
D) matrix structure.
Q4) How are poison pills different from shark repellents?
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Page 12
Chapter 11: International Strategies
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Sample Questions
Q1) ________ requires a firm to modify or abandon traditional ways of engaging in business.
A) Unlearning
B) Learning
C) Relearning
D) Absorbing
Q2) A ________ strategy exploits all the advantages of both international integration and local responsiveness.
A) corporate
B) multinational
C) transnational
D) global
Q3) Describe the relationship between international strategy and other corporate strategies.
Q4) In some international markets, adequate distribution networks exist but are tied up by new entrants to these markets.
A)True
B)False
Q5) What is financial risk? How can firms hedge?
Q6) Is learning from international operations automatic for firms? Why or why not?
Page 13
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