Chapter 04 Strategy over Time: Growth and Innovation Answer Key
Multiple Choice Questions
1.
(p. 98)
Which of the following is threatened by industry evolution?
2.
(p. 104)
The innovation life cycle implies that firms in Stage 1 of an industry’s evolution grow through
which two types of investments?
3.
(p. 121)
Why might high short-term opportunity costs slow an incumbent’s response to an industry
disruption?
4.
(p. 103)
Firms improve their market positions over time through which of the following?
5.
(p. 104)
A dynamic capability is always:
6.
(p. 119)
The performance of small firms in niche markets is threatened by:
7.
(p. 118)
Hypercompetition is the combination of:
8.
(p. 114)
Which of the following determines the duration and severity of a shakeout?
9.
(p. 121)
Which of the following is a major source of industry disruption?
Blooms: Remember
Difficulty: 2 Medium
10.
(p. 110)
Strategic pricing depends on which of the following assumptions?
True / False Questions
11.
Industries spend about the same amount of time in the growth stage.
Difficulty: 2 Medium
12.
Survival is generally determined more by a firm’s size than its age.
13.
(p. 112)
A dominant design is the culmination of a series of innovations in a product’s components and
architecture.
14.
(p. 116)
Investing in projects based on the learning curve is more attractive in the mature phase of
industry evolution and growth has slowed.
15.
(p. 117)
To counter experienced buyers, firms should invest in value drivers that raise customer search
and transition costs.
16.
Industry concentration among large firms depends on sunk investments in cost drivers.
17.
(p. 147)
Technological substitution involves the introduction of a radically new technology that has a
higher marginal rate of return on investment in R&D than the current technology in the
industry.
18.
(p. 115)
An industry’s shakeout stage tends to be longer when dominant firms lack strong mechanisms
to protect their positions from rivals.
19.
Cost drivers vary in their effectiveness over the course of industry evolution.
20.
Over the industry life cycle, firms shift from process to product innovation.
Short Answer Questions
21.
(p. 99–
100)
Explain the difference between a product life cycle and an industry life cycle.
22.
(p. 103–
106)
How might path dependence contribute to a firm’s innovation cycle?
23.
(p. 123)
Describe the difference between a sustaining technology and a disruptive technology and give
one example of a disruptive technology.